Yes there will always be predatory crowdfunding project creators. But do you really believe that the friends of the predators are willing to vouch for them and offer insurance to project backers.
this is peer to peer insurance in other words this is people who leverage their reputation to have their friends provide collateral for future refunds. If you are a predator you don't have any friends.
Thanks
Joshua
for that you need to be sure they are real people that could give a legit vouch, in that case, it is great to avoid all those scammers making crowdfunding campaigns
It is a good idea to get first a vouch before investing. But what if the person that giving a vouch is paid by the devs itself? I think the best way to make sure that investment is safe is to check the profile of the devs by your own research.
Ok I think this product is fundamentally being misunderstood. It works like this
1. Backers pledge funds
2. Backers pay a premium for insurance
3. Insurance is provided by someone who knows the project creator and needs to put up the ENTIRE VALUE of the collateral amt. for the future refund in advance.
4. Insurer places collateral bond into multisig.
5. If scammer doesn't ship a product then backer gets refund
6. Insurer looses their bond
So this moves the risk of scams from the backers to the insurers for the price of a premium.
Insurers need to realize that they should only put down collateral if they believe a project will succeed. Otherwise their collateral is lost. This shifts the due diligence from the backer to the insurer (refund seller).
So if you want to do your due diligence you will get paid for doing it. That payment is called a premium.
Its all there in the paper.
Thanks
Joshua