Imagine the next round of narrative on the storage track: data insurance

撰文：Marshal Orange @ Contributor of PermaDAO

审阅：Xiaosong HU @ Contributor of PermaDAO

On May 11 this year, Chinese Insurance successfully issued the country's first data intellectual property infringement loss insurance, and the definition of data intellectual property infringement Chinese loss insurance here is: "Based on the enterprise's risk protection needs for its own data intellectual property rights, it provides a series of risk protection such as intellectual property infringement risks for legally owned data and obtaining data intellectual property registration certificates or evidence preservation certificates in the data intellectual property registration system or evidence preservation platform." Recently, Hangzhou High-tech Zone has also landed the city's first single data intellectual property infringement loss insurance, a company in Hangzhou insured its 2276 quarterly updated data, if there is an infringement of data intellectual property rights, the company can get a huge amount of compensation from the insurance company, which undoubtedly allows more users to have a data security guarantee.

But have you ever wondered if insurance can also be combined with decentralized storage to launch data security insurance for decentralized storage products, so as to bring certain ecological growth?**

Data security insurance for decentralized storage, in short, it is a data assurance service for Web3 users, users store data in decentralized storage projects, and users who have purchased data security insurance can alleviate users' concerns about data security management, thereby encouraging more users to adopt decentralized storage. In the event of accidental loss, damage, or hacking of data stored in decentralized storage, users will be entitled to compensation accordingly.

At present, the adoption rate of decentralized storage projects in C-end users is not high, the reason is not because decentralized storage products are not good enough, taking Arweave ecological products as an example, Akord digital vault has been able to provide individual users with safe, convenient, privacy-controlled data storage and management services, so that decentralized data storage can achieve bank-level security. But in fact, it is because users still subconsciously do not trust decentralized storage products so much, and if we launch a data security insurance for decentralized storage, it directly responds to users' stereotypes of decentralized storage, and also dispels users' increasing concerns about data security and privacy, and at the same time, through insurance, more decentralized storage solution providers can further improve the quality of service, and improve the decentralized storage ecology with unlimited potential. **

In fact, the insurance industry has been exploring blockchain applications for a long time, dating back to Etherisc, the first decentralized insurance platform launched on Ethereum in 2017, which provided a peer-to-peer insurance marketplace where users could buy or sell generic insurance policies, such as flight delays and hurricane losses, without going through traditional insurance companies. The turning point was the launch of Nexus Mutual, the first insurance protocol purpose-built for the DeFi (decentralized finance) ecosystem, in 2019, especially as many DeFi applications experienced security incidents that resulted in billions of dollars in losses, and blockchain DeFi insurance has grown rapidly, ensuring widespread participation by investors and institutions by mitigating the risks inherent in DeFi and rebuilding market confidence among investors and institutions DeFi.

! [Imagining the next round of narrative on the storage track: data insurance] (https://img-cdn.gateio.im/resized-social/moments-69a80767fe-b956f03a70-dd1a6f-cd5cc0)

So how does DeFi insurance work?**DeFi insurance allows individuals and businesses to secure their funds in DeFi from uncertain risks through a decentralized pool of providers. In this model, users are required to pay a certain amount of premiums to be protected when they purchase insurance, and the insurance provider receives a portion of the interest on the locked funds in the pool through the premiums paid, thus establishing a correlation between insurance and risk. **

By accessing the insurance products of the insurance providers of DeFi assets, users can purchase insurance that covers the loss of funds on the platform according to their insurance needs. The premium for DeFi insurance depends on different factors, including the type of insurance, provider, and duration. Popular DeFi insurance is generally aimed at attacks on DeFi protocols, stablecoin price crashes, and exchange hacks, while some can also cover specific smart contract vulnerabilities, slashing events, Yield Token losses, and more.

The launch of decentralized storage insurance benefits both users and project parties:**

From the user's perspective: Web3 data storage insurance generally covers data breaches and hacks, and users will feel more at ease with their data stored on decentralized storage networks without worrying about data theft or misuse. For some particularly important commercial and government confidential documents, users may still prefer to store them in private physical hard drives, but for personal privacy data, such as photos, audio and video, etc., which are worth cherishing for a lifetime (which will accumulate a lot), if you still use the hard disk, it may not be so convenient to update the data at any time, in addition to the need to buy expensive hard disks, you also need to worry about the life of the hard disk, quality and other issues. And if you first store your data in a decentralized storage network such as Arweave, and then buy a data insurance, then you don't have to worry so much at all, you just need to check your data regularly, if the data is lost or abnormal, then you will get sky-high insurance compensation, although it seems to be a good thing, but we don't want this to happen. At the same time, the introduction of data storage insurance is also a kind of Web3 national data security science, which will increase users' awareness of data security and may take more measures to strengthen the protection of their data, such as using stronger passwords, enabling multi-factor authentication, etc. From the perspective of the project party (ecosystem): The project party that provides Web3 data storage insurance will definitely bring exponential growth in data storage to the ecosystem. In order to attract more users, the competition between decentralized storage projects will not only be about storage space and price, but will also evolve into a competition for data security, which may disrupt the current decentralized storage landscape, and Filecoin, which is at risk of data loss, is likely to lose its leading position. Competition will also greatly encourage them to continuously improve their data security and backup mechanisms, after all, if they make mistakes, they will have to pay sky-high insurance amounts, and decentralized storage projects may further improve their data redundancy, backup and recovery mechanisms to ensure that data is always available in order to reduce data loss and risk.

DeFi insurance can provide some valuable insights into decentralized data insurance, especially from a consumer psychology perspective, where the success of a project depends largely on whether it is trusted by users. DeFi insurance really increases the sense of security in the dark forest, allowing users to find trust in a decentralized ecosystem full of uncertainty, which is also important for decentralized storage projects, where consumers need to trust that their data is safe on the decentralized network, and at this time, there must be an insurance that guarantees users that their data will not be lost, misused, or leaked.

! [Imagining the next round of narrative on the storage track: data insurance] (https://img-cdn.gateio.im/resized-social/moments-69a80767fe-d5110f63b0-dd1a6f-cd5cc0)

**Arweave is inherently suitable for data storage insurance and is already able to technically realize the permanent and secure storage of data, and can also build a data guarantee market through smart contracts to achieve data storage insurance. However, it seems that the promotion of data insurance for decentralized storage is not so easy, after all, there is no commercial-grade data storage insurance use case in Web3 until now, indicating that the introduction of data storage insurance may also raise some new challenges, such as:

Premiums vs. Sum Insured: Insurance providers need to use complex mathematical models and risk assessment criteria different from Web2 to price premiums and sum assured to ensure they can sustain while taking on risk. At the same time, the premium of data storage insurance may once again lead to an increase in the cost of using decentralized storage for users, which may affect the willingness of a group of small businesses and individual users to pay, although the security of data that generally needs to be insured cannot be measured in money, although the storage cost still cannot be reduced in the short term. Market Acceptance: The introduction of decentralized data storage insurance requires widespread market acceptance. It may also take time for users and businesses to adapt to this new insurance model, including the perception of risk and the need for data security, as user education doesn't happen overnight. Developing data storage insurance products for different use cases may also require a very detailed analysis of industry needs, pain points, and risks. Legal and Regulatory Challenges: Decentralization is global, and while the enforcement of insurance can be carried out by smart contracts, the rights and obligations of insurance still need to be defined by law, but the legal and regulatory requirements for data storage and data protection vary from country to country, and determining the scope of liability and compensation for data storage insurance can be complex. **The definition of data damage on the decentralized network needs to be developed to develop a consensus, so as not to make the process of compensation and accountability difficult due to information asymmetry between users and project parties.

All in all, the introduction of Web3 data storage insurance marks another new level of decentralized storage, which has the potential to increase user trust in decentralized storage and provide additional safeguards against data security issues. However, data security insurance services are a complex decision that involves multiple aspects such as technology, law, policy, and user education, and it also requires collaboration between providers, insurance providers, and regulators to ensure their effectiveness and compliance, so that both users and suppliers need to have more understanding and transparency in terms of premiums, data privacy, and policy provisions, and clarify the rights and responsibilities of both parties. **

The global traditional insurance market is still huge, and we've already seen the rise of DeFi insurance, making decentralized insurance a small but promising area in the blockchain industry. In the unknown dark forest of Web3, Web3 data storage insurance can greatly enhance users' trust in decentralized storage, and the development of decentralized storage data insurance must also require the concerted efforts of technology, law, regulation and business, and we look forward to the emergence of more innovative use cases of decentralized storage insurance to jointly empower the future of decentralized storage!