6022 FAQ’s
Frequently Asked Questions
The operation of the protocol is based on the principle of a smart contract established between the insurer and the policyholder alongside an insurance contract. The protocol allows the insurer to request the policyholder to deposit a certain amount in cryptocurrency into a smart contract. The protocol enables the insurer to set up the contract by specifying the exact amount of collateral, the required cryptocurrency for the collateral, and the retention period.
Step 1: Initialization of the 6022 Smart Contract by the Insurer
The insurer initiates the contract with the policyholder by creating a 6022 smart contract with these parameters:
- collateral cryptocurrency,
- expected amount,
- declarative value of the collateral in 6022 tokens,
- lock end date.
The insurer pays the fees to the protocol corresponding to 2% of the declared collateral amount in 6022 tokens and receives 3 NFT keys.
The insurer transfers one NFT key to the policyholder (this operation does not require the use of the 6022 protocol).
Step 2: Collateral Deposit by the Policyholder
The policyholder receives their NFT key and the insurer's instructions to deposit their collateral. They deposit the exact requested amount in the specified cryptocurrency. Their collateral is now locked by the protocol until the end of the lock period.
Step 3: Rewards Distribution via the Reward Pool during lock period
Thanks to the reward pool, the policyholder receives rewards in 6022 tokens based on the insurer's activity (new 6022 contracts, 6022 rewards confiscated on other contracts). These reward tokens are capitalized on their 6022 contract in addition to their collateral. At the end of the lock period, the policyholder can freely dispose of these rewards. During the lock period, their rewards are locked along with the collateral.
Step 4_1 : Case Where the Insurer Decides to Seize the Collateral
If the insurer uses their two NFT keys to seize the collateral, the insurer recovers the entirety of the collateral. The accumulated rewards are transferred to the reward pool and immediately redistributed to policyholders with an active 6022 contract (i.e., before the end of the lock period with deposited collateral).
Step 4_2 : Case Where the Collateral Has Not Been Seized Before the End of the Lock Period
If the collateral has not been seized before the end of the lock period, the policyholder can use one key to retrieve the intact collateral and the accumulated 6022 rewards.
When a 6022 smart contract is created, the protocol generates 3 keys in the form of NFTs. These 3 keys are distributed to the insurer, who must send one to the policyholder so that they can deposit the collateral.
The policyholder hold one of the three NFT keys generated by the protocol at the time of the smart contract initialization. This NFT key is provided to them by the insurer and allows them to deposit their collateral into the protocol and retrieve their collateral at the end of the lock period. Without this NFT key, the collateral deposit is impossible.
The 6022 protocol leverages the deposit of collateral to secure the relationship between the insurer and the policyholder. This approach aims to limit abuses and accident-prone behaviors while increasing transparency on the insurer's practices through a public blockchain. Here are the key psychological principles explaining why collateral can change policyholder behavior:
Passing the Marshmallow Test: By agreeing to deposit collateral on a smart contract of the 6022 protocol—in exchange for a deferred benefit—policyholders demonstrate a low-risk behavior profile. This concept is analogous to passing the Marshmallow Test, a psychological experiment where children choose between a small immediate reward or two rewards if they wait for a short period. The ability to delay gratification, as shown in this test, is linked to better life outcomes, including academic achievement and other measures of success. By committing to the protocol, policyholders show their ability to delay gratification, indicating a lower risk profile. Thus, insurers using the protocol are effectively selecting this type of low-risk profile.
Experiencing the Endowment Effect: By putting their own money at risk through the blockchain, policyholders experience the endowment effect. This cognitive bias causes individuals to value items they own more highly than items they do not. As a result, the psychological value of the collateral becomes higher than its actual value.
Enhancing Loss Aversion: A collateral on a blockchain enhances the policyholder's loss aversion. With blockchain transparency, policyholders feel a stronger sense of ownership over their assets. Loss aversion, a concept from behavioral economics, explains that the pain of losing something is psychologically more powerful than the pleasure of gaining something of equal value. A practical example of this is the use of shopping cart tokens in supermarkets. Customers are more likely to return their shopping carts to the designated area to retrieve their token or coin, even though the token has a very low monetary value. This behavior is driven by the desire to avoid the small loss associated with not getting their token back. Similarly, the risk of losing their collateral is promoting safer and more responsible behavior.
By incorporating these psychological effects, the 6022 protocol allows insurers to select upfront the best profiles (positive selection) and effectively incentivizes policyholders to adopt less accident-prone behavior, thus reducing risks for both insurers and policyholders, and creating a more transparent and trust-based relationship.
Fee redistribution is proportional to the value of each policyholder’s collateral.
Policyholders with eligible collateral receive and accumulate, throughout the lock period, 6022 tokens that have been collected from fees paid to the protocol.
All the fees collected from insurers by the protocol are 100% redistributed to the policyholders. There is no hidden fees.
Any insurer or policyholder with a blockchain wallet can participate. It is a permission-less protocol
Even if the protocol does not assign fixed roles, allowing users to act as both insurers and policyholders depending on the contract, it is better to use the protocol how it is designed for.
Token 6022 is the native utility token of the protocol, used to:
Pay fees for initiating smart contracts.
Reward policyholders who adhere to the protocol's terms.
In the insurance sector, trust plays a crucial role. Policyholders need to trust insurance companies to compensate them in times of need, and insurance companies need to trust policyholders to pay premiums and file genuine claims. Unfortunately, this trust has significantly eroded in certain portfolios today. The relationships between insurers and policyholders resemble more of a cat-and-mouse game, where insurers add 'fine print' at the bottom of contracts to limit compensation, and policyholders do not hesitate to exaggerate or multiply claims to 'recoup' their premiums, with increasing cases of fraud.
The 6022 Protocol is not intended to replace insurance contracts or the relationships between insurers and policyholders. Its sole purpose is to establish a parallel relationship of trust alongside existing contracts. The 6022 Protocol constitutes a first thin technological layer that can be added to existing relationships or used to explore new insurance concepts without disrupting the existing contractual architecture.
The 6022 protocol leverages the deposit of collateral to secure the relationship between the insurer and the policyholder. This approach aims to limit abuses and accident-prone behaviors while increasing transparency on the insurer's practices through a public blockchain.
This protocol mechanism ensures that the fees received by each policyholder are directly proportional to their contribution to the total eligible collateral. This means that a policyholder who has provided a large amount of collateral during his lock period (and therefore refrains from investing the same amount elsewhere) will receive more fees than another policyholder with a small amount of collateral.
Example of fee redistribution
For example, suppose there are three policyholders with a collateral of 100, 200, and 300 (i.e., in total 600), and that the total fees collected at time t are 60 $6022.
The fees will then be redistributed as follows
- Redistribution of fees to policyholder 1: 60 × 100/600 = 10 $6022
- Redistribution of fees to policyholder 2 : 60 × 200/600 = 20 $6022
- Redistribution of fees to policyholder 3 : 60 × 300/600 = 30 $6022
This fee redistribution mechanism is designed to ensure a fair and proportional redistribution of fees, encouraging participants to contribute to the system's collateral pool. By aligning fee redistributions with collateral, the protocol aims to maintain a healthy and robust economic ecosystem.
If the collateral has not been seized before the end of the lock period, the policyholder can use one key to retrieve the intact collateral and the accumulated 6022 rewards
No. Rewards are locked along with the collateral during the lock period. They can only be withdrawn at the end of the lock period alongside the original collateral.
The 6022 Protocol represents a significant advancement in the insurance industry, leveraging blockchain technology to enhance trust, transparency, and efficiency. By requiring policyholders to deposit collateral, the protocol incentivizes responsible behavior, reducing the risk of fraudulent claims and accident-prone actions. This approach is reinforced by psychological principles such as the Marshmallow Test, the Endowment Effect, and Loss Aversion, which collectively promote more conscientious decision-making.
For insurers, the 6022 Protocol offers a transformative tool to rebuild trust with policyholders. The transparency of the blockchain allows policyholders to monitor collateral restitution rates, holding insurers accountable for their actions and promoting fairer practices. This increased transparency, combined with the financial stake that policyholders have in their collateral, helps to diminish suspicion and reduce fraudulent claims, ultimately lowering operational costs and enabling insurers to offer more competitive premiums.
The tokenomics of the 6022 Protocol, particularly the use of T6022 tokens for collateral and fee payments, create a sustainable and incentivized ecosystem. The redistribution of fees and rewards ensures that policyholders who adhere to the protocol's rules are fairly compensated, further aligning the interests of both parties.
As a first step towards integrating blockchain technology in the insurance industry, the 6022 Protocol allows insurers to experience the benefits of digital trust. It adds a thin technological layer without altering the existing contractual architecture, making it a seamless integration for traditional insurance models. Additionally, it caters to a customer base that has embraced the principles of DeFi and digital trust, positioning insurers to meet the evolving expectations of modern and younger clients.
