The Cardano InsurToken Protocol leverages Cardano’s secure blockchain and Plutus smart contracts to tokenize Insurance Industry Assets (IIAs), initially focusing on insurance premium finance receivables through a strategic partnership with PremFina, a leader in premium financing. This innovation transforms traditionally illiquid assets into fractionalized digital securities offering stable, attractive yields (8–10% annually). ⸻ Premium finance receivables generate predictable revenues with low default rates (~0.2%) but historically lack liquidity, accessible markets, and transparent valuation. The Protocol directly addresses these issues by converting these assets into tradable tokens, enabling fractional ownership, enhanced liquidity via decentralized exchanges (DEXs), transparent yield distribution through automated smart contracts, and accurate, continuous pricing from active trading. ⸻ The rollout occurs in phases: • Phase 1: Initial tokenization of $15M from PremFina’s portfolio, demonstrating immediate liquidity and compliance through regulatory-aligned SPVs. ⸻ • Phase 2: Expansion into Insurance-Linked Securities (ILSs), offering diversified, uncorrelated returns with greater transparency and liquidity. ⸻ • Future Phases: Broader asset class expansion aligned with market and regulatory developments. ⸻ Integration into Cardano’s DeFi ecosystem allows tokens’ use as collateral, enhancing utility and investor returns. Comprehensive technical implementation includes rigorous security audits, oracle integrations, and regulatory engagement, particularly with the UK’s FCA. ⸻ The Protocol positions Cardano strategically within real-world finance (RealFi), providing institutional-grade transparency, liquidity, and accessibility—setting a strong foundation for long-term adoption and innovation.

Insurance Industry Assets (IIAs)—primarily encompassing revenue streams derived from the financing and distribution of annual insurance premiums—represent a significant yet currently untapped opportunity within the financial markets. Assets like insurance premium financing receivables offer stable yields (typically ~8–10% annually, to the funder), exhibit remarkably low historical default rates (~0.20%), and deliver consistent, predictable cash flows, making them particularly attractive to yield-seeking investors. ⸻ However, despite their inherent value and stability, these assets suffer from considerable liquidity and accessibility constraints. Currently, these insurance premium finance loans are held predominantly by specialized financial institutions or originators like PremFina and remain trapped within traditional financing mechanisms that lack secondary markets. The absence of transparent trading venues prevents accurate price discovery, thus creating inefficiencies in asset valuation and capital allocation. ⸻ Moreover, the significant barriers to entry—such as large minimum investment sizes, complex legal documentation, and absence of fractional ownership structures—exclude a wider pool of potential investors, particularly retail and smaller institutional players. This reduces available liquidity, increases the cost of capital, and restricts the overall growth potential of the insurance premium financing sector. ⸻ If left unresolved, this liquidity and accessibility gap will continue to limit innovation and capital efficiency, resulting in a substantial missed economic opportunity. Additionally, the potential to expand into other insurance-related assets, such as Insurance-Linked Securities (ILSs), remains largely unexploited. These securities, driven uniquely by insurance loss events and uncorrelated to general financial markets, also lack effective tokenization and liquidity solutions.

Our proposal addresses these specific issues by establishing the Cardano InsurToken Protocol, a blockchain-based platform designed explicitly for tokenizing Insurance Industry Assets. Initially, we focus specifically on insurance premium financing assets, leveraging PremFina’s established premium finance business and Fineqia’s blockchain and digital asset expertise. By tokenizing these assets on Cardano’s secure and scalable blockchain infrastructure, we achieve several immediate and strategic benefits:

1. Liquidity and Accessibility: Tokenization converts traditionally illiquid premium finance receivables into tradable digital assets, unlocking immediate liquidity. Tokens representing fractionalized ownership can be traded globally on Cardano’s decentralized exchanges, significantly lowering investment barriers and opening access to retail and institutional investors alike.

2. Transparent and Secure Yield Distribution: Through the use of Plutus smart contracts, investor distributions derived from the premium repayments become automated, secure, and transparent. Investors benefit from consistent yields (~8–10% APY), delivered seamlessly into their wallets, removing intermediaries and enhancing investor confidence.

3. Expansion Potential into Insurance-Linked Securities (ILSs): After successfully establishing premium finance tokenization, our protocol will expand into tokenizing ILS assets. These provide investors exposure to non-correlated returns driven uniquely by insurance risk events, creating valuable portfolio diversification opportunities within Cardano’s DeFi ecosystem.

4. Cross-Protocol Integration and Ecosystem Growth: Our tokens will integrate into broader DeFi platforms (e.g., Pi Protocol), providing collateralization, yield farming, and liquidity provisioning opportunities. This deepens the utility of Cardano-based assets, significantly increasing Cardano’s Total Value Locked (TVL) and institutional adoption.

Strategically, this project clearly aligns with Cardano’s RealFi ambitions—bridging real-world financial systems with blockchain, thus positioning Cardano as a market leader in regulated, compliant asset tokenization. It showcases Cardano’s blockchain as a credible institutional solution, setting the stage for broader adoption across financial sectors globally.

Tangible deliverables: ⸻ -Fully operational Cardano InsurToken Protocol deployed on Cardano mainnet. -Successful tokenization and issuance of ~$15M insurance premium finance assets (PremFina assets initially). -Automated, transparent yield distribution demonstrated clearly via smart contracts. -Verified secondary market liquidity with active trading volumes on Cardano decentralized exchanges. -Integration and active use of tokenized assets within at least one major Cardano DeFi protocol (e.g., Pi Protocol). -Comprehensive security audit reports, formal verification documentation, and complete regulatory compliance framework clearly established and documented.

Definition of Done: ⸻ The project is considered successfully completed when the Cardano InsurToken Protocol is fully operational on mainnet, proven secure through third-party audits, assets tokenized (~$15M initial), yields accurately and transparently distributed to investors, active liquidity achieved in secondary markets, and documented institutional adoption metrics provided.

Preferred Payment Mode: ADA

We are requesting 4,150,000 ADA to fund the phased implementation of the Cardano InsurToken Protocol. The proposed budget breakdown supports delivery across tech, legal, marketing, and integration workstreams.

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1. Technology & Infrastructure (25% – 1,050,000 ADA / $525K) • Node & Infrastructure Setup: Cardano node hosting, secure storage, test environments – 375K ADA • Dev/Test Environments: Cloud resources, DevOps tooling – 375K ADA • Oracle Integration: For real-time event triggers and payment data – 300K ADA

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2. Smart Contracts & Audit (30% – 1,250,000 ADA / $625K) • Plutus Contract Development: Secure asset/token logic – 800K ADA • Formal Verification & Testnet Validation: Robust code assurance – 200K ADA • 3rd-Party Security Audits: By CertiK, Tweag, etc. – 250K ADA

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3. Legal & Regulatory (15% – 625,000 ADA / $312.5K) • SPV Structuring: Legal entities for asset holding – 250K ADA • KYC/AML Integration: Regulatory onboarding compliance – 225K ADA • Licensing & Regulatory Engagement: FCA sandbox, filings – 150K ADA

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4. Marketing & Institutional Adoption (15% – 625,000 ADA / $312.5K) • Branding & Content Creation: Videos, docs, investor materials – 275K ADA • Institutional Outreach: Events, roadshows, onboarding – 200K ADA • Community Engagement: Ecosystem partnerships, Catalyst – 150K ADA

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5. Integrations & Partnerships (10% – 400,000 ADA / $200K) • Cross-Protocol Integration: With Pi Protocol & others – 250K ADA • DEX Listings & Market Support: Liquidity, pool incentives – 150K ADA

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6. Operations & Contingency (5% – 200,000 ADA / $100K) • Admin & Oversight: Team, travel, comms – 100K ADA • Contingency Buffer: Risk management – 100K ADA

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Total Requested: 4,150,000 ADA (est. $2.07M USD)

Total Project Duration: 12 months

Team Size: Approximately 10–12 dedicated personnel (blockchain developers, engineers, auditors, legal/compliance specialists, institutional relationship managers, marketing and community engagement professionals).

PremFina has demonstrated proven success in Web2.0 premium finance through its tech-driven approach to insurance asset management, achieving 13.6% average yield and ultra-low 0.20% bad debt rates over multi-year periods. Here's how this translates to Web3.0 tokenization readiness: ⸻ Performance Highlights (Web2.0 Track Record) ⸻ High-Yield Engine: Maintains 8.2-11.5% net interest margins through: -Mandatory insurance product focus (motor, property, professional liability) -13.6% average gross yield on premiums financed -Short <1 year loan tenor minimizing duration risk ⸻ Defensive Risk Profile: ⸻ 0.20% historical credit losses via 6-layer protection: -Collateralized by rebatable unused premiums (quasi-cash security) -Broker commission clawbacks on defaults -FSCS insurance against insurer insolvency -Essential nature of insured assets -Automated cancellations after 28-day payment lags -Direct debit penetration >90% ⸻ Fintech Based Loan Origination ⸻ PremFina's Web2.0 infrastructure shows scalable asset management capabilities: -$3.6b premiums under management projected by 2027 -AI-driven KYC/AML automation -78% broker conversion rate through API-first SaaS platform ⸻ Institutional Validation ⸻ -VC and private equity backed with a 10 year track record -Morgan Stanley and HSBC-backed SPV financing since 2022 -5-year contracts with top UK brokers locking 30% of 2027 volumes -Top 10 premium finance company worldwide; top 3 in the UK ⸻ This Web2.0 success with insurance-backed receivables demonstrates the asset class's suitability for tokenization - predictable cash flows, embedded collateralization, and automated enforcement mechanisms create ideal conditions for blockchain integration. PremFina's existing tech stack and performance metrics provide a blueprint for implementing Web3.0 solutions while maintaining yield integrity and risk controls.

Maintenance: How will this proposal be maintained after initial development? ⸻ Post-launch maintenance and ongoing operations will be sustainably funded through modest management fees derived from yield distributions and minimal transaction fees associated with token transfers. PremFina and Fineqia, as project leaders, will jointly provide ongoing operational oversight, including regular platform updates, security reviews, smart contract maintenance, regulatory compliance updates, investor reporting, and community engagement. ⸻ Regular updates to the Catalyst community, transparency reports, and audit reports will ensure continuous accountability and demonstrate measurable progress against stated KPIs.

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