Ripple successfully implemented a blockchain-based drought insurance program in Kenya, supporting hundreds of farming households with smart contracts.
The program uses the RLUSD stablecoin on Ethereum, collaborating with Mercy Corps and DIVA Donate, applying satellite data to automatically pay out when drought occurs, to help the most severely affected communities.
MAIN CONTENT
The drought insurance program using smart contracts with the RLUSD stablecoin was tested in Laikipia, Kenya.
NDVI data from satellites assesses vegetation health, determining the level of automatic payouts.
RLUSD reached a market capitalization of over $500 million, with reserves and liquidity managed by BNY Mellon.
How does Ripple's drought insurance program work?
According to the director of Ripple Impact, the insurance program in Laikipia registered 517 farming households, of which 70% are women, affected by prolonged droughts.
The model uses the NDVI (Normalized Difference Vegetation Index) index collected from satellites to measure plant stress levels. If this index is below the threshold of 0.55 by the end of May, the smart contract will trigger direct payouts in RLUSD to participants.
“Using blockchain to automate drought insurance enhances the efficiency of support distribution, reduces paperwork, and protects vulnerable farming communities.”
Brad Garlinghouse, CEO of Ripple, 04/2024, Ripple Impact Blog
The NDVI index ranged from 0.55 to 0.61, corresponding to payout rates from 100% to 0%. For example, an NDVI of 0.57 led to a payout of about 67% of the insurance fund. If it exceeds 0.61, there are no payouts.
The Laikipia region has faced many severe droughts from 2014 to 2022, leading to prolonged feed shortages. In 2023, the initial drought condition was relatively stable but deteriorated significantly from August to October.
However, during the testing phase, satellite data showed that vegetation was at a safe level, resulting in no insurance payouts.
How will the RLUSD fund for the insurance program be used?
The Vice President of Ripple Impact confirmed that the RLUSD reserves in the program will be kept for potential droughts in 2024, ensuring readiness to support when needed.
Ripple is committed to transferring remaining funds to adapt to climate changes and unstable weather conditions, enhancing the program's sustainability.
In the April 2024 blog post, Ripple stated it had helped raise the fundraising target to $40,000, insuring 533 farmers, each receiving $75 RLUSD, sufficient to sustain their livelihoods for 6 months.
“Our goal is to support the farming community with DeFi technology, helping them get through difficult years caused by prolonged drought.”
Maria Smith, Director of the Ripple Impact Project, 04/2024
According to the report from the National Drought Management Authority of Kenya, 23 regions, including Laikipia, are still facing the risk of severe drought, affecting millions at risk of hunger.
How does RLUSD expand its global influence?
According to CoinGecko, after 7 months of launch, Ripple's RLUSD stablecoin has surpassed a market capitalization of $500 million with over 501 million tokens in circulation.
On July 8, 2024, Ripple announced a partnership with BNY Mellon – an asset manager with $52 trillion in assets – to hold USD reserves to coordinate liquidity operations and ensure stability for RLUSD.
The choice of BNY Mellon confirms the credibility and position of RLUSD in the global cryptocurrency financial ecosystem.
What is the social significance of Ripple's drought insurance program?
Social finance experts believe that applying blockchain in drought insurance helps cut down on procedures, ensures payment transparency, and reduces risks for farmers in arid regions.
Moreover, Ripple Impact has demonstrated a commitment to using cryptocurrency technology to serve poor communities, contributing to sustainable DeFi development.
Frequently Asked Questions
What components are included in Ripple's drought insurance program?
Including the RLUSD stablecoin, smart contracts on Ethereum, NDVI satellite data, and collaboration with Mercy Corps, DIVA Donate.
How is the RLUSD stablecoin backed?
RLUSD is backed by USD and U.S. Treasury bonds, managed by BNY Mellon.
How many people does this program support?
The insurance trial in Laikipia involved 517 farmers, with plans to expand to 533 people with a budget of $40,000.
Why were there no payouts during the testing phase?
Weather conditions during the trial had vegetation levels good enough, with NDVI not dropping below the payout activation threshold.
Does Ripple plan to expand this program?
Yes, Ripple will maintain the RLUSD fund for future droughts and target other vulnerable communities.
Source: https://tintucbitcoin.com/ripple-thu-nghiem-bao-hiem-han-han-kenya/
Thank you for reading this article!
Please Like, Comment, and Follow TinTucBitcoin to stay updated on the latest news about the cryptocurrency market and not miss any important information!
