Chainlink to Provide Data for Farming Insurance Startup Arbol
Chainlink will provide climate data for insurance startup Arbol’s weather derivatives. Small to medium sized firms can use the Ethereum-based dapp for hedging natural events.
Data provider Chainlink will provide decentralized weather data for insurance startup Arbol, according to a blog shared with CoinDesk.
Arbol provides crop insurance for small to medium-sized farmers or enterprises. Smart contracts pay claims to subscribers when a preset value – such as the average monthly temperature or rainfall – turns out different than the contract specifies, the firm said.
Called parametric insurance, the financial derivative is often used in agriculture to hedge against future events, such as a bad harvest. Other firms, notably CME Group, also offer weather derivatives that require middlemen.
Arbol insurance, on the other hand, self-executes using a mix of smart contracts and Chainlink data – no holdups on payments.
“Users are able to create derivatives on the blockchain that pay out based on weather outcomes. This allows weather-exposed entities like farmers to hedge their weather risk,” Arbol said in the blog.
The startup launched out of stealth in April after raising $2 million in a 2019 seed round, according to Crunchbase.
Decentralized weather data
Chainlink pipes data from the National Oceanic and Atmospheric Administration (NOAA) and other sources, the blog states.
Tamper-resistant data is necessary for parametric insurance products that don't require middlemen, Arbol founder and CEO Siddhartha Jha told CoinDesk in a phone interview.
Arbol’s application is built on Ethereum smart contracts and also secures data via the Interplanetary File System (IPFS), according to a recent Arbol blog. The firm currently operates in the United States, Cambodia and Costa Rica.
Chainlink first presented decentralized data networks, known as oracles, as agnostic reporters for insurance companies up to four years ago, Chainlink founder Sergey Nazarov said in a telephone interview.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.