apidays LIVE London 2021 - Reaching Maximum Potential in Banking & Insurance with API Mindset October 27 & 28, 2021 APIs in Finance: The Next Evolution Open Insurance & Smart Contracts Giovanni Lesna, Head of Enterprise at API3

1. api3.org
Smart Contracts &
Insurance

2. api3.org
Presenter
Giovanni Lesna
Head of Enterprise & Partnerships
gio@api3.org
CMC
MBA Digital Business (UB)
Masters in Blockchain (UB) ; BCom Economics Hons (UNISA)
LinkedIn: Giovanni Lesna
Twitter: @giannilesna

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Agenda
1.Primer: Blockchain and Smart Contracts
2. Open Finance & Insurance
• Open Finance
• Open Banking
• Open Insurance
3. API3 & OBP – Connectors of API Economy & Smart Contract
4. Q&A (Please post Questions in the chat)
15 Min
5 Min
5 Min

4. Blockchain Primer
api3.org | 4
Trust with Blockchain: A distributed ledger
1. Shared by all participants;
2. Replicated;
3. Decentralized;
4. Append-only;
5. No update, no delete;
6. Distributed transaction;
7. Validation;
8. Consensus;
9. Unfalsiable, verifiable.
Block 1 Block 2 Block 3
Hash: 6U9P2
Previous hash:
00000
Hash: 8Y5C9
Previous hash:
6U9P2
Hash: 9L4Z1
Previous hash:
8Y5C9
Blockchain Promises
▵ Increased trust in value exchange;
▵ Trust the data, not the participants;
▵ No single point of failure ;
▵ Increased security ;
▵ Efficient, consistent transactions between participants;
▵ Faster and cheaper than relying on a long chain of
intermediaries, with incompatible systems and rules.
All Towards: Programmable blockchain/money, e.g. Ethereum
Virtual Machine (EVM).

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6. What are Smart Contracts?
api3.org | 5
Smart Contracts Primer
▵ History traced back to the 1990s;
▵ Blockchain as the catalyst tech;
▵ Wei Dai, a created an anonymous loan scheme with redeemable
bonds and lump-sum taxes to be collected at maturity;
▵ Nick Szabo proposed to use cryptographic mechanisms to
enhance security;
▵ Think of: Smart contracts are computer programs running on
blockchain nodes and can be issued among untrusted, anonymous
parties without the involvement of any third party.
▵ The first successful implementation was Bitcoin Script;
▵ A simple form such as pay-to-public-key-hash (P2PKH) and pay-to-
script-hash (P2SH);
▵ Evolved to more complex contractual functionalities and
flexibilities, e.g., Ethereum;
▵ Technology is still in its infancy;
▵ Lawrence Lessig, Harvard Law School: Smart contract as "Code is
law“ i.e. the program;
▵ Smart contracts enabled on-chain governance and DAOs.

7. Why do we need Smart Contacts?
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Why do we need Smart Contracts
▵ Immutable record of data;
▵ Mitigate single points of failure;
▵ Smart contract enable autonomous functions with other
smart contracts;
▵ Automatically trigger transactions under certain conditions
(parametric)
▵ Traditional paper contracts rely on middlemen and third-
party intermediaries for execution;
▵ Smart contracts automate contractual procedures, minimize
interactions between parties, and reduce administration cost;
▵ Smart contracts can be public or permissioned .
Caveat: Challenges Exist
▵ Bug-free code, which requires code certification ;
▵ Compliance with mandatory regulation, which requires
collaboration between programmers and lawyers;
▵ Changes to legacy law definitions;
▵ Updates to underlying blockchain;
Two main types
▵ Public vs Permissioned Smart Contracts.

8. Public vs Permissioned Smart Contracts
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Public Smart Contracts
▵ Open ledger for all to view;
▵ Peers have the right to deploy smart contracts;
▵ To prevent spamming, required to pay a certain amount of fee i.e.
gas;
▵ E.g. general-purpose Solidity language Ethereum.
Applications
▵ Creation of decentralized apps (dApps);
▵ Identity Management;
▵ Financial / Value;
▵ Synthetics or Tokenization (Assets).
Permissioned Smart Contracts
▵ Increasingly popular in business collaborations;
▵ E.g. the Hyperledger project.
Applications
More sensitive business use cases:
Banking
Insurance
IOT
Voting
Provenance & Supply Chain

9. Open Finance
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Open banking (OB) and insurance is a subset of open finance
1. An extension of OB data-sharing principles to enable
third party providers to access customers' data across a
broader range of financial sectors and products,
including savings and investments
2. Decentralized Finance (DeFi & Web3.0)
3. Centralized Finance (CeFi & Web 2.0)
4. Cross sector & Ecosystem focus

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Tap into external APIs from other financial services providers to use financial data and create
innovative applications and new business models.
Insurance
dApps
Pension Funds
Bank account information Payment
Initiation
Open Finance Data For Web 3.0
Open Banking APIs Enable:
○ Read Account Information.
○ Payment Initiation.
○ Banking-as-a-Service.
○ Banking-as-a-Platform.
○ Account Aggregation - Credit Scoring
○ Insurance, stocks, and pensions
○ DeFI<>TradFi

11. Open Insurance
api3.org | 10
The Open Insurance movement is growing but not mandate as of yet.
This would follow in the success of open banking footsteps:
1. Allow consumers to access and share their data with other
insurers or third parties, in a safe, agile, accurate and
convenient way;
2. Interoperability & Integration;
3. Placing the customer at the heart of the business and
processes;
4. Creating new use-cases that would not be possible.
Parametric insurance, integration with 3rd party service
providers e.g. medical practitioners, auto repairs);
5. Insurance-as-a-service (IaaS) – micro-insurance – e.g. cycling
6. Some equivalent of PSD2 & GDPR.
Some nations pursuing this through public consultations
1. SUSEP (Brazil) , Superintendence of Private Insurance-
Just published guidelines & standards ;
2. EIOPA (EU) , European Insurance and Occupational
Pension Authority (EIOPA) / European Commission’s
Digital Finance Strategy;
3. Open Insurance Initiative (Italy), Italy Working group –
API Playground.
Willis Towers Watson estimates 67% of insurers will modify
business models by 2025.
1. AIA’s partnership with WeDoctor (110 million users) –
win-win- Medical Insurance;
2. ‘InsureMyTesla’ - underwritten by AXA to simplify car
insurance;
3. Ping An + Samsung with Samsung’s digital health
capabilities, such as heart rate sensing smart watches;
4. Nationwide & RiskStream exploring interesting use-
cases.

12. Blockchain Use-Cases
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Banking
▵ Smart contracts in mortgage, consumers could potentially save
$480-960 per loan(Cap Gemini).
▵ Banks would be able to cut $3-11 billion of annual costs in the US
and Europe (Cap Gemini).
▵ Know your customer (KYC) and anti-money laundering (AML)
policies embedded easily with the smart contract logic.
▵ Open banking APIs to Web 3.0
▵ Enable Frictionless Digital Services
Insurance
Smart contracts can perform:
▵ Error checking, routing, approve workflows, and calculate
pay-outs based on the type of claim and the underlying
policy.;
▵ For example, the processing of travel insurance claims can be
automatically verified against flight delays or cancellations;
▵ Removes the human factor involved in the process,
decreasing the overall administrative cost for the insurers;
▵ Increases the transparency for the consumers;
▵ Regulatory Compliance in Insurance;
▵ Blockchain-based insurance products (Parametric)
▵ E.g. Solar, Travel, Auto, Agri, logistics
▵ Blockchain Proof of Insurance.

13. Smart Contracts, APIs, dApps
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Smart contracts rely on two important aspects:
1.Data input function
▵ Though the use of trusted data oracles;
▵ Via APIs through API Gateway.
2.Data validation function
▵ Blockchain consensus mechanism;
▵ Cryptography.
▵ If any of these two are compromised, smart contract exploits can
occur;
▵ Yesterday over $100m exploit occurred on Cream Finance –
exploitation of the smart contract/ the data input function;
▵ Introducing API3

14. API3 Overview
api3.org | 13
API3’s mission is to make APIs fully compatible
to Web 3.0 for dApps/Smart Contracts
▵ APIs are the glue to the internet. Salesforce, Ebay, FB, Google, Expedia, Uber,
Airbnb are powered by APIs.
▵ Web 3.0 must be able to access the kind of services that Web APIs offer in
order to interact with the real world.
▵ Connecting APIs directly to Web 3.0 will create new dAPPs and digital
agreements, expanding the markets for decentralized networks.

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▵ Since 2018, API3 predecessor worked on connecting APIs to
Web 3.0. Limitations drove us to innovate.
▵ Holistic view closing supply (API Provider side) and demand
(dApps/smart contracts) gaps acknowledging the chicken-and-
egg problem experienced in growing ecosystems.
▵ Integrations to multiple EVM compatible chains, inc. Ethereum,
Polygon, Fantom, Harmony, Plasm, TomoChain, Conflux +
blockchain agnosticism
▵ Investors inc. Digital Currency Group, Placeholder, Pantera,
CoinFund, Accomplice, Hashed.
▵ API3 + OBP enter into a 10-year partnership to bridge OB APIs
to Web 3.0.
API3 Investors
API3 Partners
What is ?

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API3 is an API gateway to the API economy.
▵ API3 is a decentralized API (dAPI) network that enables data
providers to become their own blockchain 'oracles, as first-
parties.
▵ API3 is an open source initiative and collaborative effort to
build, manage and monetize decentralized APIs (dAPIs) at scale.
What is
▵ dAPIs are blockchain-native, decentralized API services built by
combining multiple provider-operated oracle nodes into
aggregated data feeds, without the use of third parties.
▵ The API3 project’s business model centres around ecosystem
products for example. providing data insurance on mission
critical data feeds.
Airnode codebase is fully open source, audited, and actively developed by the API3 Foundation and its partners.

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Smart Contract & dApp API
Connectivity Problem
▵ Due to the consensus mechanism of a blockchain, smart
contracts & dApps cannot directly connect to APIs for real-world
data and services.
▵ “Oracles” facilitate API connectivity by providing a middleman
service where they act as a bridge between the smart contract
and the API.
▵ Use of third party oracles degrades smart contract security by
introducing a trusted middlemen into the data provision
process, with the ability to redistribute API access without
owner’s consent.
▵ Trust-minimization through decentralization of oracle operators
significantly complicates the set-up process and decreases cost-
efficiency.
Airnode codebase is fully open source, audited, and actively developed by the API3 Foundation and its partners.

18. Airnode: Enterprise-Ready Smart
Contract API Gateway – Open Source
api3.org | 17
▵ Airnode is a simple serverless function that allows an API to be
queried by smart contracts, without the use of any third parties.
▵ Once deployed, it is maintenance-free and requires no active
management.
▵ The serverless Airnode can be deployed with no blockchain-
specific knowhow, on the same cloud provider as the rest of the
API infrastructure, e.g. on AWS, as a Lambda function.
▵ Without middlemen, the API owner remains in full control of
their data and no third parties are able to access it without
owner consent.
Airnode codebase is fully open source, audited, and actively developed by the API3 Foundation and its partners.

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Airnode: Enterprise-Ready
and GDPR compliant
▵ Airnode is the only on-chain blockchain API gateway project that
is fully GDPR compliant.
▵ The transparent nature of the Airnode allows enterprise and
public sector clients to extend their own GDPR compliance
envelope and environment out to the edge of the blockchain
through the Airnode itself.
▵ Airnode’s GDPR compliance and privacy-by-design features also
allows enterprise and government clients to control ‘what’ is
published on-chain and ensure full compliance for client and
personal data.
▵ Built-in Airnode control features.
Sole Arbiter / API Key Control
Terms of use/access controlled
Whitelisting/Blacklisting i.e.
KYC required
Airnode codebase is fully open source, audited, and actively developed by the API3 Foundation and its partners.

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Quick to set up
Can be deployed as a part of the existing
API infrastructure in less than a day
Maintenance-free
Requires no operator management
due to fully managed serverless technology
Stateless
Extremely resilient against any problems requiring
operator intervention
Built on pay-as-you-go services
Can be deployed for free
Cryptocurrency free as an option
Accept fiat for your API
Sole Arbiter / API Key Control
Terms of use/access controlled
Whitelisting/Backlisting
KYC features embedded
Set-and-Forget
Requires no specific know-how to
deploy and operate
Airnode Benefits
Airnode codebase is fully open source, audited, and actively developed by the API3 Foundation and its partners.

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API3 Alliance: Over 150+ APIs
▵ API3 has announced over 150+ API Providers in the API3
Alliance ecosystem.
▵ API3 works with both data providers (e.g. market data sources)
and data consumers (dApps) to create a looped ecosystem.
▵ We work with dApps& Platforms, API Providers and
Enterprises/Governments to drive the adoption of the Airnode
and growth of blockchain-based services.
▵ For our data providers we also host Hackathons to accelerate
new use cases and developer adoption.
▵ Member of the Ethereum Enterprise Alliance (EEA) – working
with Fortune 2000 companies.
Airnode codebase is fully open source, audited, and actively developed by the API3 Foundation and its partners.

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Airnode: Bringing 400+ Banking-
grade APIs to Web 3.0
Airnode codebase is fully open source, audited, and actively developed by the API3 Foundation and its partners.
OBP Customers
▵ 10-year Partnership with API3.
▵ Open Bank Project (TESOBE) is the leading open source Open
Banking solution.
▵ German-based project in Berlin.
▵ Standard Catalogue of 400+ APIs covering several standards.
▵ Vibrant global developer and partner community of 11k+

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OBP works with many of the world’s
largest financial institutions
60+ FI Customers 11K+ Developers Regulators 20+ Partners ~

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Web 3.0 Services
d/Apps & Platforms
API Layer
Open Finance Data
Core Banking
Airnode Connected with Open Bank Project APIs
Accounts Payments KYC/AML Branches/Products Metadata API Metrics & Docs
Web 3.0 Connections
Self-sovereign
Identities
CBDCs Wallet
aggregation
DeFi Parametric
Insurance
Blockchain Banking
Services
Monetization
Monetization
Controlled
Access
Smart Contract Layer

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Contact Giovanni Lesna
gio@api3.org

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f
Questions

27. New York
JULY
Australia
SEPTEMBER
Singapore
APRIL
Helsinki & North
MARCH
Paris
DECEMBER
London
OCTOBER
Jakarta
FEBRUARY
Hong Kong
AUGUST
JUNE
India
MAY
Check out our API Conferences here
50+ events since 2012, 14 countries, 2,000+ speakers, 50,000+ attendees,
300k+ online community
Want to talk at one of our conferences?
Apply to speak here