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The Digital Executive
Decentralizing Trust: Mike Miglio on Reinventing Insurance for the DeFi Era | Ep 1152
00:13:48
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- [00:00]
A
Foreign. Welcome to Coruscant Technologies, home of the Digital Executive Podcast. Do you work in emerging tech? Working on something innovative? Maybe an entrepreneur? Apply to be a guest at www.corazon.com brand welcome to the Digital Executive. Today's guest is Mike Miglio. Mike Miglio is CEO and founder of the in the decentralized marketplace for risk and insurance. A seasoned entrepreneur with six years of experience, he previously served as founding partner of two of the world's first cryptocurrency law firms, ICO Law Group and Wolf Miglio, in 2017, guiding dozens of projects and exchanges through the uncertain legal landscape of the ICO era. In 2020, he launched his first protocol, Bridge Mutual. Over the years, Mike has built and deployed protocols and projects with a combined market cap of US$1 billion and has invested in or advised more than 50 other DeFi protocols across the crypto space. Most recently, DN earned first place in the Amazon Prime TV series Crypto Nights for its innovation and ingenuity. Well, good afternoon, Mike. Welcome to the show.
- [01:15]
B
Thank you. Thank you for having me, Brian.
- [01:17]
A
Absolutely, my friend. I appreciate it. You're in Puerto Rico, I'm in Kansas City. Love going international. I do most of my podcasts in North America, But I've done 54 countries now, so I appreciate you making the time. I know sometimes it's difficult, so thank you. And Mike, if you don't mind, I'm going to jump into your first question here. Rightfully, you've said that insurance is ultimately about trust. How is den creating a decentralized trust layer that defi markets can rely on?
- [01:44]
B
Yeah, that's right. So right now defi is based almost entirely on reputation. So for example, if a good VC backs it, if good exchanges launch a certain protocol, the protocols tend to attract traction and capital, whether or not it's really deserved. And what we are doing is transforming that the deep defi into a transparent on chain market so people are able to put their money where their mouth is. If people believe that something is trustworthy, they underwrite it. It attracts capital. If people don't believe that it's trustworthy, then their demand tends to be high. And there is a high utilization ratio of the pool, which makes the the cost of the insurance more expensive, but also makes the underwriting more rewarding for the underwriter.
- [02:27]
A
Thank you, I appreciate that. And you're right, trust goes a long way and that's why people like you get on a podcast, right? People trust people, not necessarily companies. And I think that's so important nowadays. And there's always sometimes a lot of hype initially about a particular chain or service that people are offering out there. So I appreciate your insights. And Mike, moving into the next question. Den's marketplace model lets users determine coverage and pricing. How do you maintain underwriting discipline and capital stability in such an open system?
- [02:59]
B
Yeah, that's a broad and interesting topic. Basically, there is no great way to currently price risk within defi protocols. We have very many different variables. You've got lots of different chains, coding languages. We have different stuff, stablecoins underpinning different protocols. And if they were to de pag, the protocols would unwind. There's just so many things to consider and we only have about, I would say less than 10 good years of defi data and it's not even organized. So if you compare that to traditional insurance where you have certain fields with hundreds of years, like centuries of data for actuarial risk, it's very difficult to properly price these things. So what we do is we open it up, we make it a free market. All the different protocols within defi and in our case we're multi chain so we cover every chain actually and anyone can add any protocol. All of them have siloed pools, so the capital is all distinct and doesn't overlap and all the claims are 100% collateralized. If, if. Oh, I, I forgot to mention we have a, we have a, the way we price it is we have a, an equation that we created through our first protocol with years of data. So we had a, another protocol called Bridge Mutual and we, we figured out how much people are willing to pay. Right. But that looks like a, a bonding curve. So it goes, it goes up sharply around 90% utilization and the price gets really high up there. But underneath that 90% utilization RA ratio, the, the price is quite reasonable. And so people can look at the price and they can decide if they want to buy it. And if the, there's a lot of demand for a certain pool, the ratio will go high, like really high, like towards 90% and that'll increase their reward for that pool and attract more liquidity. And that's how it works. So it's a constantly evolving landscape on the markets on the inside with lots of different pools and ratios changing all the time and the price updating in real time as well.
- [04:49]
A
Thank you a lot to unpack, but I really appreciate that. And again, talk to a lot of guests on the show that are in this space as well. And it is sometimes hard to price the risk right in these defi Protocols, there's so many data points to measure and there's not a lot of historical data as you mentioned, only about 10 years worth. So I like how you are multi chain though. That's important. Important to our listeners as well. But I like that the pricing is, is updated regularly. It's real time and trans. There's transparency in there. So that's really important to me. And Mike, as Dean expands across more than 50 chains, what's the biggest strategic challenge in scaling decentralized insurance globally?
- [05:27]
B
Yes, we're actually, we're launching at 150 chains roughly and we'll keep adding them. Right. So the issue in the past has been that traditionally there hasn't been insurance where people are interested in having it as defi crypto. It's a hot market. New narratives come up. People first they want some new chain and they want some bitcoin layer two stuff and they want to go back, focus on polygon and bnb. The flavor of the month kind of keeps things interesting and rolling. And for protocols that are like manually managed or insurance protocols that are manually managed, they can't keep up, they can't scale, they can't keep shifting their focus and moving around their capital to keep up with the market. That's what makes Deen so cool, is it is so modular and anyone can add any chain, add any protocol from any chain. We'll have the newest and hottest products and a risk marketplace open for it within minutes of it launching. Right. The big difficulty, the challenge is not a backend coding one because it's all autonomous already. We have it figured out. That part is quick and easy and scalable. The harder part is optimizing the front end so that the users don't feel inundated with over information and too many choices. And we try to put things that are of interest to the user at the top of their dashboard because when you connect your wallet, the protocol scans your wallet activity and it suggests things that are relevant to you. So that's. That will help quite a bit.
- [06:48]
A
Awesome. I appreciate that. I like how it is so modular, as you mentioned, and flexible to connect to any chain, making it easy for consumers to access. And at the same time, you talked about again, you got a new coin coming in and there's so much hype around it and people can't keep up. But I like how really you're just eliminating that noise and you're just able to meet the consumer's needs. So I appreciate that. And then Mike, what milestones need to be reached before Decentralized insurance like DN can gain traction with traditional financial institutions and regulations.
- [07:23]
B
Sure. So the, the whole point of doing a decentralized protocol in my opinion, is to avoid all of the regulatory friction, take out all the middlemen, basically make it direct from underwriter to policy buyer. And the only time anyone intervenes in the center is the adjudicators if there's an active claim, if something has to be figured out. So that's our goal. And we do want to, we do want to move into traditional insurance as well. I think we'll start with life insurance and real property insurance. I think those are the two probably easiest. And they're not easy by any means, they're daunting, they're huge. But there is a lot of data for those things and it's easier to prove that things happen in the real world when it comes to whether someone's alive or dead or whether or not your house burned down or not. It's less nuanced than things like car insurance where it's a lot of he said, she said and there's no evidence and no proof and you need like on site investigators and stuff. The first step though will be to launch the dao. For those who are listening that don't know what a DAO is, it's dao. It stands for decentralized Autonomous Organization. That word gets thrown around a lot. There's a lot of self proposed DAOs out there that are not DAOs because they're not actually decentralized nor autonomous. They're a small group of people that control the whole thing. And that's not what we're talking about in our case. What I'm talking about with our DAO is that you've got this code that exists as the DAO and the tokens control it. The tokens can vote on things. And as the tokens vote, whatever the outcome is, the code that was proposed gets enacted and the change gets made to the system. And that's what makes it slippery in terms of regulatory friction and kind of cuts that out. Because even after we launch this thing, if regulators want to go and say like, hey, that's what you're doing there, like what your protocol does, it does that that you created. It's doing regulated activity. And that that may be true, but you can't turn it off, you can't shut it down, or at least I can't. The token holders would have to all collectively vote to make a change or to shut it down or something like that. So that's what makes it really cool and unstoppable and interesting and scalable and has a real shot at making a dent in traditional insurance.
- [09:24]
A
I really love that and that's why I like DEFI so much. Our publication's actually built on blockchain as well, so pretty excited. But I like how you are looking to move into traditional insurance. That space maybe the not traditional but life and property. There's lots of data behind that of course in those industries easy to prove an mvp. But what I really liked and I took away and I think Matt is going to love this is the explanation definition of a dao. And I think it's so important that we have truedaos and that term is thrown out around pretty loosely quite a bit. And a true DAO ensures that there is long term sustainability and transparency in this particular realm of the world which we all love. So thank you. And Mike, the last question of the day. What does success look like for Dean? Give me a window into the roadmap for the next few years.
- [10:15]
B
Yeah, sure. So the first thing would be to transition governance fully into the community so that like I said, it can't be taken down. All we'll have is access and control over the front end. But hopefully people will create many front ends to our backend system of smart contracts that creates this decentralized insurance network and then expanding the products in the scope to make many things beyond just defi on chain coverage to like I mentioned real estate insurance and then health insurance and then life insurance, energy, weather, other things like that. And then eventually success would mean Dean becoming the trust backbone of just not just defi but risks at large. Every, every protocol, every asset chains carrying verifiable risk scores powered by D.N. markets and Metrics that are created by our free markets, people buying and selling and trading risk ends up being a truer metric to accurately assess risk than audits for example, or then news publications or whatever. And in that sense it's very similar to polymarket, right? And these two things are very similar also like insurance and predictions. Insurance being essentially a prediction market where you have to prove a loss and you get made whole, right? It's not that much different. But what's cool is like you can see what the world really thinks via polymarket and the polls because people put their money where their mouth is and typically they tend to be right. Or if they're not, the markets adjust very quickly and it'll be the same for insurance. Like if there's a big scare with hyper liquid for example which is a very big app right now with a few hundred million locked in value. If there's a scare you'll see the demand jump up and the price go up. It'll reflect like more accurately what the true risk of having your capital on hyper liquid is. And then I think very long term to wrap that up. My, my dream would be that there are thousands of claims happening on dien every single day. And the people who are token holders who have staked their tokens and are voting on these claims and getting paid to adjudicate claims as rewards, this becomes like their job. So they become part of the decentralized network by owning some of these tokens. And these tokens represent a chunk of their net worth but it also is a thing that allows them to have access to the and continue to work and earn income on chain. And they basically like they invest into their job and their job bring them brings them back rewards and it's all like that. There's no employer, there's no again no middleman. It's just they're part of the system and that's a great opportunity I think for people like in second and third world countries where the reward amount is actually a significant sum for them for where they live. So that's the idea.
- [12:52]
A
That's pretty cool really like that token owners and the community becoming part of DN ecosystem so to speak. Right. I think that's pretty cool. But I like your vision. Expand into all areas of insurance. I think it's bold yet visionary and I really think you could become the premier defi insurance platform of choice. So I really appreciate everything that you've shared today and it was such a pleasure to have you on Mike and I look forward to speaking with you real soon. Yeah.
- [13:18]
B
As we wrap up I'll just mention D E I N F I DN FI is our website. You can check us out on X and telegram. DNFI is our handles for those things. Keep up with us and we launch soon. I think it's going to be quarter one of this coming year which is 2026 so keep, keep an eye out.
- [13:38]
A
Thank you. Bye for now.