We’ve been building up to this, ever since the July Thorchain hack we asked ourselves, “Could we use this to test both the Pharo protocol and the Pharo Wisdom of Crowds (WoC) algorithm?” A little planning, surveys, feedback, new bots, python, solidity, blah blah and we’re happy to announce our initial results!
TL;DR
The dotted green line represents ~11 months, the conservative estimate of when Thorchain is likely to be hacked next. This enables Pharo to support cover premiums of $0.11 per $1.00 of cover, or $2.2MM per month to purchase $20MM of cover.
Designing the Experiment
Our first challenge was attracting, filtering, and curating the right crowd. We reasoned that if you were willing to jump through a series of hoops, and if winning $25k gets your attention, you would put real thought into your hack rate estimate.
The hoops we set up have purpose, real and valuable purpose.
First, eliminate the bots and the “wen moon?”, “airdrop please”, and “where poap?” crowd by,
- the survey requires knowing or googling who gizmoduck is,
- the Pharo discord requires you to be human,
- participants are required to join our Pharo discord.
Second, test $PHRO staking by,
- connect to the kovan testnet,
- add the $PHRO token to your wallet,
- go to app.pharo.tech and stake your $PHRO for gPHRO.
Third, engage our DAO by,
- go to snapshot.org/#/pharo.eth and join our DAO,
- speculate on our private discord channel and AMAs.
Fourth… and finally.. give your Thorchain Hack Rate estimate on snapshot.
In our mind, if you’re willing to go through all that, then there is a good chance you’ll give an honest informed estimate.
Our results are proving us right.
Good Look at a T-Bone
As of this blog we’ve received 192 estimates! We’ve also eliminated THOUSANDS of bots and wenmooners 😆 The chart above, a duplicate of the tldr chart further above with a twist, shows a gold gamma curve fit to the underlying Thorchain estimates in grey, flanked by a matrix green 95% confidence interval. The estimates are discretized by snapshot estimates being limited to months between (1–18) 1 and 18 months. If you’d like to go further down this rabbit hole, which I LOVE to do, ping us on our discord.
We have confidence in these estimates not only because of our extensive user filtering, but because the answers it yields support a Thorchain cover market that’s comparable to existing Thorchain insurance markets like Nexus Mutual’s. Nexus Mutual is currently offering limited Thorchain insurance, which their forum goes into depth on, and we believe Pharo can step outside these limitations and support current players like Nexus Mutual in creating a more robust market.
With the current results, Pharo could support a $0.11 premium per $1.00 of cover; In other words, Pharo could cover $100MM in Thorchain TVL for $11MM per month. Pharo is also flexible… phlexible 😏 For Liquidity Providers this estimate assumes 95% confidence of the event occurring, but Pharo allows you to accept more risk by prioritizing your better offer with Cover Buyers. All users can buy or provide as much as they need, as long as the market has demand in the form of staked positions in the protocol.
Summary
The Pharo Thorchain results are confirming our “Wisdom of Crowds’ “ (WoC) approach to cover markets. With these results, Pharo could extend cover options to complement existing insurance providers by providing more phlexible options. Stay tuned as we dive down the rabbit hole, further, and explore: Thorchain Markets, $PHRO Rewards, WoC & Actuaries, and 🥁🥁🥁 Pharo NFTs!
