AIP-53: Reserve kept for stolen Apes

Proposal Name: Reserve kept for stolen Apes
Proposal Category: Core: Ecosystem Fund Allocation
AIP Draft
Abstract | Two or three sentences that summarize the proposal.

[•]A percentage of the treasury to be set aside for stolen apes/otherside deeds to allow a buy back protection for those effected or partial reimbursement.

Motivation | A statement on why the APE Community should implement the proposal.

[•]Being the lead company in the ‘web3’ community, I believe yugalabs could offer a service that most competitors simply cannot afford. A sense of security offered from the largest brand in the NFT space can only attract more consumers in that no other brand can guarantee a ‘safe’ investment/membership. If NFT’s are to grow to a larger population which are fearful of the space and ignorant to the on going scams we have grown with then a protection against losing it all would only entice a larger customer base. Hence i bring an idea which sees a sense of protection for the newer, and existing, members to venture into the deep without the same amount of fear.

Rationale | An explanation of how the proposal aligns with the APE Community’s mission and guiding values.

[•]Similar to the motivation, the rationale of this would be a new utility to the leading brand in the NFT that other brands don’t have the funding for. Most brands are still growing to a slither of the size our ecosystem is and with implementing a safety net under a purchase adds an extra incentive to choose yugalabs over any competitor.

Key Terms (optional) | Definitions of any terms within the proposal that are unique to the proposal, new to the APE Community, and/or industry-specific.

[•]

Specifications | A detailed breakdown of the platforms and technologies that will be used.

[•]Initially, the user would be asked to complete a KYC. A way to link funding to people. This would be totally optional if they would like to have an insurance on their NFT. Along with this the address of the stolen asset would be required also. From this an online ‘Contract’ would be presented to the user asking them that they are not trying to commit fraud and they wouldn’t do anything unlawful. As we have seen in recent news Nate Chastain was indited for insider-trading, this indicates to us that the law makers are treating NFT’s as securities and allows us to have a legal standpoint. The KYC will then allow us to see if they moved funds into and out of an exchange which would flag a dedicated team to investigate the address the wallet was stolen from and therefor tracked to see if the team determines if it is legit or not.

Steps to Implement | The steps to implement the proposal, including associated costs, manpower, and other resources for each step where applicable.

[•] All costs are yearly - A KYC software such as Seon.io would cost around $4500 - in addition possible prosecution fees would be minimal as this would be used mostly as a deterrent. Going off recent scams i believe a team of 4 or 5 people would suffice to handle the tracking and investigating, rewards for the team that investigates would be negotiated with the individuals, as the cases could be sporadic, a pay on completion structure could be the best way forward. A possible personnel to create the webpage needed to have this held on.

Timeline | Relevant timing details, including but not limited to start date, milestones, and completion dates.

[•]Assuming this passes, setting it up could be relatively quick as it does not need much. After an announcement that a % of the capital has been dedicated from the treasury and yugalabs are allowed to sell off then the security could go live. As for milestones, the more prominent scams become and the more members we lose the more traffic we would experience, only then would we need to think about increasing personnel. No completion date is required as this would be an on going event.

Overall Cost | The total cost to implement the proposal.

[•]Using the Apecoin locked up from the otherdeed sale ~ roughly $186 million is locked up for one year. 3% of this would give $5,611,272 at the time of writing the proposition which would suffice for 2 BAYC, 3 MAYC and 10 Otherdeeds monthly, to be reimbursed at full cost price. After year one we could then readjust costs depending on the previous year. ( calculations where done with APE - $6.12 - ETH - $1780 - FPs(ETH) BAYC - 94.690 - MAYC - 19.4 - Otherdeeds - 2.9 )

1 Like

@thinkinggl how might you account for adversaries?

How does one prove that an NFT is genuinely stolen?

And what would prevent someone from claiming their NFT was stolen, and then claiming a reward for the theft, when in fact it was always the same actor?

5 Likes

As for adversaries such as the fake link on the official instagram account of BAYC if you recall was relatively easy to see what was stolen and who it came from so I believe it would be easy to determine if it is genuinely stolen.

As for prevention of fraud, a similar system to the Opensea protocol for locking your account when you believe it has been compromised, if you are not familiar here is a brief summary of how it could apply to our ecosystem:

On submitting your ticket requesting compensation on your stolen NFT you need to submit a sworn statement certified by a notary public where in which you confirm this is not fraudulent on the users part in order to gain financially. A dedicated ’ Trust and Safety team ’ would then review the case and deem it valid or not.

overall the points you make are very important and any further input on how YOU feel you could solve them would be great.

BORING SECURITY was just approved to hopefully better educate the members on how to protect their assets.

I feel this only goes to allow people to take security even less seriously - as they will know they can get compensated should the worst happen.

9 Likes

Hi @ThinkingGL
I really like your idea. I think that for NFTs to become mainstream, particularly blue chips, need some time of protection solution given the abundance of scams/hacks that have arisen because of the popularity and wealth creation that they have created. Stolen apes have two impacts both on the original owner and sometimes the follow-on buyer - who is also often a victim too. I think education is really important and BORING SECURITY can play a role on this but I think there is a gap where DAOs with sufficient treasury e.g. APE DAO could generate a level of protection - like a mutual insurance policy for Apes using treasury assets. I have actually been working on a AIP for this. It would be great to throw around some ideas if your interested

1 Like

This topic was automatically closed after 7 days. New replies are no longer allowed.

Hi @ThinkingGL,

Are you content with the feedback received, or do you wish to extend community discussion for a further 7 days?

We look forward to hearing from you.

- river

Thank you @ThinkingGL for your ideas and the ApeCoin DAO community for the thoughtful discussions. A moderator will get in touch with the author to draft the AIP in the appropriate template. Once the AIP is drafted and meets all the DAO-approved guidelines, the proposal will be posted on Snapshot for live official voting at: Snapshot

Follow this Topic as further updates will be posted here in the comments. @ThinkingGL please see your messages for the next steps.

-moonkt

1 Like

Hi ApeCoin DAO Community,

@ThinkingGL has completed editing their AIP Idea to be their AIP Draft.

Follow this Topic as further updates will be posted here in the comments.

Kind Regards,

-moonkt

I think its not neccesary, always we will be facing with those people who just lose his money on level ground

2 Likes

Moral hazard? If we were to do this, we might want to view ourselves more like Lloyd’s of London~Excess Insurance and not as primary insurance. The stolen NFT holder would sustain the first 20% - 40% (some number) of the loss before our coverage would kick in. Then we’d have to carefully consider the terms of coverage. Would it be cost versus current market value (which ever is lowest or else bad actors will have a field day).

If we’re going to act as an insurance provider, that might require a Reserve Account would need to be established. etc etc etc

Legal opinion probably would be necessary since the DAO maybe inviting unforeseen liabilities.

Maybe sell insurance for the apes:)p Jk. But, to show the world that theres some form of protection, anyhting is better than nothing, shows the world that you believe in your OWN SECURITY, that you trust your own block chains, websites and your entire community. It gives alook as if were safe, something no one else looks like now a days, hehe! So yea, I’d vote for something that showed the world we were safe, like one of the if not THE, safest nft and crypto community in the world. Reputation will follow, accounts will blow up soon after.

The insurance idea is pretty good. You could create (off the top of my head):

  • Create an insurance contract that people would pay into
    • The contract itself, could also contain a cryptographic token that represents your stake within the pool
    • This would create a pool of capital that would be used to refund a person who lost the asset
    • Pool members would need to contribute a monthly payment in order to keep their insurance policy active
    • The contract could be maintained by a third party and holders would vote on the validity of a lost asset claim
  • This would require a claim system, a cryptographic web of trust between claimant and the pool of users within the pool, a voting system that allows the members of the pool to vote on the validity of a claim (since any approved claims would remove capital from the pool)
  • The company designing this contract could hire some actuaries to determine the right risk models, but you would need to maintain the data for the model on chain as well (kind of like a DataDAO)

Happy to explore this idea with anyone interested

4 Likes

@bc

Someone that understood my vision and seemingly has a much better way to execute it, I love this idea!

2 Likes

Hi ApeCoin DAO Community,

Our team has received, reviewed and discussed @ThinkingGL 's AIP Draft and have sent a list of initial questions. We await answers.

Follow this Topic as further updates will be posted here in the comments.

Kind Regards,

-moonkt

This approach can also work with services that need escrow or dispute resolutions, so maybe better to creare such a framework and then utilise for different niches.

1 Like

Great ideas. I’d like to help. I do have a bit of a background in the insurance field (on the claims side).
Investigated and settled aviation accidents.

1 Like

This would be a very hard project, it would probably take ~18 months to get a beta up with a ton of R&D required. I know of a few teams exploring similar ideas (in that they are trying to build onchain insurance pools, not specific to NFT insurance). I like @ASEC thinking to ensure the service can be used in a wide array of scenarios.

A guess at the first year resources needed:

  1. Actuary ~200K / annually (so important)
  2. 3 / 4 engineers @ 150-200K / annually (front end, smart contract, cryptography)
  3. Business Analysis $120K
  4. Technical Writer - $120K
  5. Security Audit - $250K
  6. QA - $130K
  7. Experienced insurance personnel (unclear what this would cost)?
2 Likes

Alternatively, we could look for teams that are further along and invite them to develop an AIP for funding.

1 Like