The Heartbeat of Cardano.

Introducing FiDa: Collateral-Based Insurance on Cardano

Applicant: Rodolfo Hansen

Additional members: Andrew Bowness

Funds Requested: 500,000

Open Source?



The project aims to introduce collateral-based insurance contracts (FiDa cards) into the Cardano blockchain. These cards aim to help with risk diversification and unlock under-collateralization for all investors, creating a more efficient marketplace.

Traditionally, insurance has been dominated by large companies due to the high costs involved, creating barriers for individuals and communities. This project seeks to democratize insurance by implementing a risk transfer protocol that enables various stakeholders, including small businesses and individuals, to participate in the insurance market. This would increase competition and potentially reduce costs while increasing coverage options.

The proposal is aligned with Cardano’s core values of sustainability, transparency, and inclusivity. It also aligns with the United Nations’ goal of reducing inequality. The project could attract new users from the insurance sector, strengthening the Cardano ecosystem and showing the real-world use of Cardano’s technology.

The success of the project would be measured using various indicators such as the number of insurance policy contracts deployed and managed on the Cardano blockchain, the number of investors participating, and the total value locked (TVL) within the protocol. They would also use feedback and opinions from users to measure success.

In terms of budget, the proposal accounts strictly for the development team’s salary across six months of development. The team includes Rodolfo Hansen as the CTO and Andrew Bowness as the COO. They are also working with developers who are currently contracting directly with IOG (Input Output Global). The cost of the project is seen as an investment in the future growth and development of the Cardano ecosystem. The potential impact, market potential, and future returns could greatly outweigh the initial costs.

They plan to focus on B2B application, partnering with traditional insurance companies and investment funds to use their protocol. They also aim to develop multiple user-friendly front-ends to ensure the protocol is accessible to all users.

Background on problem

The insurance industry, as it currently stands, is a significant sector, but one with a number of inherent challenges. Traditionally, insurance has been an industry dominated by large corporations and conglomerates that have the financial muscle to navigate through the complex and costly world of insurance underwriting. This has created a high barrier to entry, resulting in limited competition and reduced opportunities for innovation.

One of the primary issues in the insurance sector is the lack of capital willing or even capable of being allocated in the market. Insurance, at its core, involves pooling resources and sharing risk, which necessitates significant capital reserves. The reality is that only a select few entities have the capacity to do so effectively. This results in a lack of choice for consumers, with only a handful of insurance providers dominating the market.

Moreover, the overhead and upfront costs associated with running an insurance company can be prohibitive. From underwriting and claims handling to regulatory compliance and administrative expenses, the cost of operations can be daunting. This expense is often passed on to consumers in the form of higher premiums, making insurance less affordable for many individuals and communities.

The current centralized structure of the insurance industry also contributes to the inefficiencies. Each insurance company operates in a silo, with its own set of procedures, policies, and systems. This results in duplication of efforts, additional costs, and a lack of transparency, all of which lead to an inefficient marketplace.

Furthermore, underserved communities and individuals face significant barriers in accessing adequate insurance coverage. This could be due to factors such as geographical location, socioeconomic status, and even the nature of the risks they face. These communities are often left vulnerable, without the means to protect themselves against potential financial losses.

The traditional insurance model is also notorious for its lengthy and complex claims process. It’s not uncommon for claimants to experience delays, disagreements, and denials when trying to get their claims settled. This adds to the stress and financial burden faced by policyholders at a time when they are most in need of support.

In essence, the current state of the insurance industry is characterized by high costs, limited competition, lack of transparency, inefficiency, and significant barriers to access. The industry is ripe for disruption and innovation, particularly through the application of emerging technologies like blockchain. By addressing these issues, we can create a more equitable and inclusive insurance landscape, where risk is shared more fairly, and coverage is accessible to all.


FiDa represents a groundbreaking solution, aiming to democratize insurance by leveraging the power of the Cardano Ecosystem and introducing insurance technology through a Risk Transfer Protocol. The problem that FiDa addresses is the scarcity of capital allocated to the insurance market, a sector traditionally controlled by large insurance companies. By integrating with the decentralized nature of the Cardano Ecosystem, FiDa promises to overcome barriers that have previously hindered financial inclusion.

Here’s how FiDa works: An insurance policy is first assessed and priced by an underwriting insurer, who agrees to cover a percentage of the necessary coverage. The remaining coverage is then offered to the FiDa community, which comprises individual investors, small businesses, and community organizations. Insurance brokers, representing the insured, post these opportunities on FiDa.

The remaining coverage amount is then divided into small denominations, each represented by a FiDa Card on the marketplace. Each FiDa Card carries the same premium (and liability) proportionate to the main lead insurer. Investors have the option to buy as many FiDa Cards as they wish until the policy limit is reached.

Once the policy limit is met, FiDa Cards are minted. The associated funds are secured in a ‘time-locked’ smart contract, and the policy becomes ‘on risk’. This smart contract determines the premium distribution, liability for any potential claims, and identifies the party responsible for authorizing the contract execution, typically the lead insurer.

Premium payments are subsequently distributed proportionally to the Fida Card holders. Premiums are added to each investor’s Portfolio Premium Pool. Therefore, investors who hold many Fida cards representing multiple policies can utilize the combined premium to pay for any potential claims before using their underlying collateral. This encourages investors to diversify their portfolios, ensuring the ‘premiums of many pay for the claims of a few’.

When a claim is approved either due to a qualifying event (for parametric products) or validation by an official third party, payments are made proportionally to the risk exposure borne by the lead insurer and the Fida Card holders. Claims are first covered using the funds in the Investors Portfolio Premium Pool, and if necessary, the underlying collateral held in the policy smart contract.

At the end of the policy term, if no claim has been filed, each FiDa Card holder receives their collateral back. If a claim has been triggered but was covered by the Premium Pool, the full capital of the underlying collateral is returned to the FiDa Card holder. If a claim has been made and underlying collateral was used, the FiDa Card holder is reimbursed the face value of the card minus any claim exposure of the card, up to a maximum of 100% loss of the underlying capital.

FiDa, therefore, enables investors with a diversified portfolio to enhance their capital efficiency in two ways. Firstly, they can reduce collateralization requirements by leveraging collateral held across their portfolio, and demonstrate compliance with Solvency 2 regulations through the FiDa protocol. Secondly, they can access the Fida Fund, which takes a proportion of the risk but a disproportionately lower share of the premium.

Impact on Cardano Ecosystem

FiDa’s integration into the Cardano Ecosystem would have far-reaching implications, many of which align with Cardano’s mission of sustainability, transparency, and inclusivity. This initiative would prove Cardano’s determination to apply blockchain technology to address global issues, thereby solidifying its reputation as a tool for positive change. In particular, the proposal aligns with the United Nations Sustainable Development Goal 10, which advocates for reduced inequalities. By offering insurance solutions to underserved communities and enabling diverse stakeholders to participate, Cardano can play a vital role in attaining this global goal.

FiDa’s proposal addresses the critical objectives of widening the Cardano community, bolstering the ecosystem, and remedying a significant issue within the insurance sector. By drawing in users and stakeholders from the insurance world, FiDa would increase Cardano’s diversity and reach, fostering a more robust and dynamic community.

The integration of Insurance Tech via FiDa would not merely boost the ecosystem but also unlock unprecedented growth and innovation within the insurance industry. These advancements would echo Cardano’s core principles and further extend its influence.

The impact of FiDa on the Cardano ecosystem extends beyond simply funding the project team. It offers tangible value, showcasing a compelling real-world application of Cardano’s technology. FiDa demonstrates the scalability, security, and practicality of the Cardano blockchain in addressing insurance sector needs, which could significantly raise the platform’s profile.

FiDa is projected to attract significant usage and transactions in a reasonable time frame, bolstering Cardano’s overall activity. Although precise numbers depend on market adoption and external factors, the expectation is that FiDa will draw in a substantial user base and facilitate a notable volume of insurance-related transactions.

By introducing FiDa and Insurance Tech, Cardano could position itself as a premier blockchain platform for insurance solutions, further strengthening its reputation and reach. The platform could facilitate partnerships with insurance companies, brokers, and investors, enhancing Cardano’s impact on the global financial landscape. Moreover, FiDa’s mission to solve the issues of restricted capital allocation and competitiveness for smaller investors in the insurance market aligns with Cardano’s commitment to financial inclusion and reduction of inequality.

The applicant and the team — Can they deliver?

The team behind this innovative proposal combines technical acumen, deep insurance industry experience, and a proven track record in project execution, creating a strong foundation for successful implementation.

Leading the team, Rodolfo Hansen brings with him computer science expertise that, while not specifically rooted in blockchain, grants him a solid grasp of Plutus’ intricacies and the capacity to leverage off-chain computing. Hansen’s profile demonstrates his capability in navigating complex software environments, a crucial asset in this endeavor.

Accompanying Hansen, Andy Bowness comes with years of experience in the insurance sector. Having held a product manager role, he has crafted platforms for risk transfer within a traditional setting. His insights into the insurance world and his product management skills will be invaluable as FiDa ventures to revolutionize the industry.

In collaboration with Binar Apps, including Maciej Krasowski and other team members who have been directly contracting with IOG, the team boasts substantial blockchain and smart contract proficiency. This technical prowess is evidenced by the team’s significant progress in developing the Risk Transfer Protocol on Cardano, even creating a foundational codebase for two of the validators in Plutus v2.

The team’s dedication to the project, currently investing around four hours weekly despite limited resources, speaks to their commitment. With Catalyst Fund support, this commitment will be converted into full-time efforts, accelerating the project’s development.

Further Questions/Interview

I connected with the team and here is what he had to say.

How would you manage the risk associated with the FiDa protocol?

What are the possible challenges you foresee and how do you plan to tackle them?

Of course there are multiple forms of risk around the protocol:

Implementation Risk: Can the protocol as we require it be encoded on cardano: Yes, I wrote the pseudocode for all operations in scala and are currently translating everything to haskell + purescript with 2 of the transition types already written. The one question we have here is the maximum fractionalization we will be able to have for the fida cards. as the way we plan on doing the premium payout translation (atomically) will require n tx outputs where n is the number of cards the premium contract was split into. If it is too small (<100), then we will have to find a way around it.

Hacking Risk: This proposal does not include auditing the codebase, I have some security experience and believe the attack surface will be low enough, but will want to budget in auditing of the on-chain code

Marketing / Usage Risk: If the protocol is not used, then impact will not expand beyond being just a PoC. We have been looking for Angel investment the traditional way with some minor traction. Along the way, we have made contact with insurance companies and funds willing to participate in the protocol once it is ready, this is the really hard part for me, as I know tech, but getting such conservative players to come along will be tough. Building on Cardano oddly enough will be both a blessing (extremely HIGH security / stability history) and curse (relatively unpopular/unknown as far as VCs and other players)

Team Risk: I’m not going anywhere, I’ve been with Cardano since before Shelley, after I heard about it from Philip Wadler at an FP conference in 2019 (I think). We’re working on this with 0 funding while keeping our other jobs and lives going, so this will only help. We’re working with the Team behind Byron which was trying to build a Cardano DEX but are now figuring out what they’re going to do.

Can you describe your marketing and user adoption strategy? How do you plan to attract users and promote the FiDa protocol within the Cardano community and beyond?

As it stands, this is planned as B2B application, in the sense that we will be courting traditional insurance companies and investment funds to use our protocol in lieu of the physical contracts and bank transfers they currently rely on. The protocol is abstract and right now we’re planning on two front ends. The one I mentioned above and a parametric insurance product for small farmers we will start some talks with the people at Charlie3 to see how that goes.

The 2 key B2B users we need to attract are 1) Brokers 2) Capacity Providers (investment funds). The real problem we are solving here is delivering alternative capacity to a capital deprived industry. Thus, getting Capacity Providers is key. It’s a bit chicken-and-egg as it’s a marketplace so we need both sides but Capacity Providers is definitely the harder side of the market (i.e. if there is money there, the brokers will follow). 

To get Capacity Providers we need genuine attractive investment opportunities on the platform in a way that effectively distributes their risk while offering attractive returns. The ability to distribute risk is a unique aspect of the Fida protocol. Therefore, early on, it’s a networking game to bring both to the platform. Thus, marketing and adoption will focus on getting key stakeholders from the capacity side onto the platform whilst simultaneously asking brokers to post their opportunities.

How would you ensure that the Insurance Tech solution is accessible and user-friendly for all, especially considering the demographic you’re aiming to serve might not be tech-savvy?

Good question, as I started above, we plan on having multple front-ends, and for the first case it will be personalized support, and for the small farmers, we have to see how we can get help marketing and explaining the possibilities to the users.

The farmers won’t actually be the users — they will be the brokers and the investors. Therefore I believe they will be tech savvy.

What makes Cardano the most suitable blockchain platform for your project as opposed to others?

The eUTXO model allows us to break down the operations required to transfer risk and maintain the state of a policy contract atomically on-chain. An account based model without native assets would require more complicated tracking of funds and policy state. Honestly, the way we’ve been able to encode the whole process (albeit in the scala pseudocode right now) fits like a glove ontop of eUTXO and Cardano is the strongest blockchain with eUTXO + native assets. There’s no other place I can think of to SAFELY encode risk transfer.

Do you plan to collaborate with other organizations or entities within the Cardano ecosystem or the wider insurance industry? If so, could you share more about these potential partnerships and how they might contribute to the project?

So far: Charlie3, Fizen, Byron

We aim to partner with Brokers, Insurance companies and Capacity Providers. We have had discussions with all and there is definite intent. Obviously we require the product. SuperScript (a Lloyds London Broker) have already committed to working with us to bring us investment opportunities.

What will be your steps to ensure the security and privacy of user data, particularly in compliance with global data protection regulations?

We will be working with Fizen (Atala Prism Pioneer)

Is there a contingency plan in place if the project encounters unforeseen hurdles or delays? How flexible is the timeline and budget in terms of accommodating potential changes or challenges?

We will build this anyway, this will just help us deliver sooner.

Are there any legal implications or regulatory considerations for implementing Insurance Tech on the Cardano blockchain? If so, how do you plan to address them?

Yes, we have a separate proposal to research two jurisdictions: Bermuda and UAE.

Bermuda is a global leader in financial regulation related to the use of Blockchain and Crypto currencies. It therefore has the most favorable regulatory conditions and vision for the future of blockchain. The Bermuda Monetary Authority (BMA) is committed to working with InsureTech start-ups to provide innovative solutions in the ever-evolving insurance marketplace. The BMA has introduced the innovation ‘Class IIGB’ of insurers for the token economy. 

The new Class IIGB is designed for insurer business models utilising digital assets providing a case-by-case assessment that we believe FinBand will qualify. The Class IIGB insurer regulatory reporting framework and statutory financial statements is based upon audited US GAAP, IFRS or any other GAAP recognised by the BMA and will require Class IIGB insurers to provide for public filing of both these statements and the Declaration of Compliance.

Can you elaborate on the team’s previous experience in the insurance industry/ How does the team’s past experience in blockchain technology and smart contracts support the execution of this project?

This is me:

My software experience is not in blockchain, but I have the computer science experience to understand the workings of plutus and how to levarage off-chain computing to recover the needed expressiveness of the language.

Andy: has been in the insurance industry for multiple years now as a product manager; building platforms for risk transfer in a more traditional setting.

We’re also working with Maciej Krasowski (

and other members from Binar Apps as they have and are currently contracting with IOG on sidechains, plutus, and prism.

There are advisors specifically from the insurance industry that Andy can speak more to

How do you plan to navigate the traditionally conservative nature of the insurance industry towards new technologies/ What strategies will you employ to convince insurance providers to adopt and integrate the FiDa protocol?

What we have to our advantage is how severely underserved the industry is, and just a small experiment on their part is enough to sustain us as we continue to grow the application. Bermuda specifically has crypto friendly regulation which we have already started looking into; some of this research is in our deck.

The key consideration is capaicty. If there is capacity (money) available the insurance contracts will follow provided they comply with the regulatory juristiction we adopt and we can guarante the security of the locked capital. We therefore need to be able to demonstrate the captial efficiancy that Fida can provide when creating a portfolio of risk, So the big challange is the ability to attract capacity,

Are there existing relationships with insurance companies or brokers that the team can leverage to expedite the adoption of your platform?

SuperScript they have commited to bringing us insurance contracts to the platform

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