Validator Selection
A claim validator is a crucial component of every insurance pool in Covest protocol, as it is responsible for verifying the validity of claims submitted by policyholders. As an incentive, every single claim assessor i.e. claim validator who performs claim assessment will receive a service fee for each and every assessment that they conduct. If the consensus mechanism is going to be successful, there has to be an incentive for people to validate, and there also needs to be a significant disincentive in place to discourage people from making false validations. For example, policyholders who buy an insurance product with a low incidence rate may be able to get a high coverage at a decent cost. After that, they work together with the claim validator to get the payout. Then, they give the claims validator part of the claim amount and keep the rest for themselves.
A solution to this problem is to require claims validator to have a major interest in the overall pool's performance, creating a strong deterrent to act dishonestly. This can be accomplished by requiring a stake in the form of Mutual Interest Tokens (MI Tokens). Mutual Interest Tokens (MI Tokens) are tokens that are created in exchange for a person who contributes funds as mutual insurance reserves for a certain product pool, and they are utilized as collateral. Eventually, those who own MI Tokens will receive profit-sharing in the form of a dividend, which includes earnings from insurance service margin revenue. MI Tokens are designed to tie owners' token funds to the pool's performance and long-term viability as collateralized value, posing a strong disincentive to cheating or generating revenue from insurance services without having to run any business operation. to be deposited. The stake is placed for a set amount of time, after which it is refunded if the claims are evaluated fairly.
Validator Score
In the matter of selecting the person who will evaluate the claim as "Claim Validator", a number of factors should be taken into consideration, including the capacity of the validator, its reputation and the use of a random function on the blockchain.
In this equation, the variable Score represents the overall score that is assigned to each claim validator. This score is calculated by adding together the values of three factors: Reputation, Capacity, and Randomness
Capacity Factor
One important factor to consider is the capacity factor of the claim validator. The selected validator should have the necessary resources and expertise to handle the volume of claims that are likely to be submitted to the insurance pool. This could include factors such as the availability of trained personnel, amount of the task at hand, the ability to handle large amounts of data, and the availability of necessary infrastructure and technology.
The claim capacity factor is a measure of the amount of resources that a claim validator has available to process claims. It is represented by the variable Capacity and takes a value between 0 and 1, with higher values indicating a greater capacity to process claims. The weight w1 determines the relative importance of this factor in the overall score.
To calculate the available claim capacity, you can use the amount of MI Tokens that a claim validator has staked as a measure of the resources they have available to process claims. You can then subtract the amount of claims that the validator is currently processing from this total to get the available claim capacity. For example, if a claim validator has staked 1,000 MI Tokens and is currently processing claims worth 500 MI Tokens, their available claim capacity would be 500 MI Tokens.
validatorNetStakedis the total amount of MI Tokens that the claim validator has staked deduct the amount of the penalty for that claim validator.
validatorOnHoldStaked is the amount of MI Tokens that the claim validator is currently using to process claims.
totalPoolStaked is the total amount of MI Tokens staked in the insurance pool.
This equation takes into account both the amount of resources that the claim validator has available to process claims (validatorNetStaked - validatorOnHoldStaked) and the overall size of the insurance pool (totalPoolStaked). By dividing the available claim capacity by the total pool size, the formula ensures that the score is normalized and can be compared across different claim validators.
It's important to note that the available claim capacity is just one factor that can be used to determine a claim validator's overall score. Other factors, such as the validator's reputation and the quality of their claim assessments, may also be taken into account.
In addition to capacity, the reputation of the claim validator on the blockchain should also be taken into consideration. The selected validator should have a proven track record of successfully validating claims on the blockchain, and should be well-regarded by other participants in the network. This can help to ensure that the validation process is efficient and effective, and that policyholders can trust the results of the validation process.
Reputation Factor
The reputation factor is represented by the variable Reputation, which can take a value between 0 and 1, with higher values indicating a better reputation. This factor is given a weight of w2 , which means that it will contribute a certain proportion to the overall score.
To calculate the reputation factor based on the accumulative point for successful claim assessments and penalties from claim challenges, you can use the following formula:
validatorEarnedPoint is the total point received for successfully assessing claims for specific claim validator.
validatorIncurredPenalty is the total penalty received from claim challenges for specific claim validator.
totalPoolPoint is the maximum pool point that is already distributed to all claim validators at that moment in time.
It's important to note that the values of validatorEarnedPoint, validatorIncurredPenalty, and totalPoolPoint can be adjusted to suit the specific needs of each pool for the Covest protocol. For example, you may choose to set the totalPoolPoint to a higher value to give more weight to the reputation factor, or you may choose to set the validatorIncurredPenalty to a lower value to make it less impactful on the reputation factor.
Random Factor
The random factor, represented by the variable Randomness, is used to reduce bias in the claim assessment process. This factor can take on a value between 0 and 1 and is given a weight of w3, indicating that it will contribute a certain proportion to the overall score. The inclusion of the random factor helps to ensure that the claim assessment process is not influenced by any biases or prejudices that may exist within the system or among the individuals involved in the assessment. By introducing an element of randomness, the system can better account for the inherent uncertainty and subjectivity that exists in the process of assessing claims. This can help to increase the fairness and objectivity of the assessment process, as well as the overall accuracy of the results.
Score Calculation
To calculate a claim validator's score, the values for each of these parameters are multiplied by their corresponding weight and then added together. This score might then be compared to the scores of other potential claim assessors to decide which ones should be chosen as claim validators. Using this equation, it is feasible to objectively analyze the eligibility of each node to serve as a validator and select the nodes that are most suited to the particular claim case's criteria.
The claim assessor or claim validator who is not selected as the case's validator will be transferred to the position of claim voter, who will vote against the claim assessment.
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