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Ep 8: How Lemonade is using smart contracts to revolutionize crop insurance
116 Plays1 year ago
Join Roy Confino, Head of Strategy and Operations at Lemonade Foundation, and Justin Gunnell, counsel at Sher Tremonte LLP, for a deep dive into the innovative world of smart contracts in crop insurance. This episode explores how Lemonade Insurance is revolutionizing the field with blockchain technology. Delve into the Crypto Climate Coalition, blockchain's solutions to cost and access issues, and the intriguing concept of 'oracles'. Plus, we debate: should smart contracts be called 'live contracts' for their dynamic capabilities? Tune in for this compelling exploration of insurance and blockchain's intersection.
Find out more in our explainers at owlexplains.com
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Transcript
Introduction to 'Owl Explains Hootenanny'
00:00:06
Speaker
Hello and welcome to this Owl Explains Hootenanny, our podcast series where you can wise up on blockchain and web3 as we talk to the people seeking to build a better internet. Owl Explains is powered by Avalabs, a blockchain software company and participant in the avalanche ecosystem.
Speakers Introduction
00:00:24
Speaker
My name is Silvia Sanchez, project manager of Owl Explains and with that I'll hand it over to today's amazing speakers.
Smart Contracts: Concepts and Impact
00:00:34
Speaker
Smart Contracts This term is widely used in the Web3 ecosystem, but what does it mean? What are they doing in our world? How smart are smart contracts?
Lemonade Insurance: Blockchain for Social Good
00:00:44
Speaker
We will illustrate this today with a fascinating use case as we explore how Lemonade Insurance is using smart contracts to revolutionize crop insurance. We have Roy Confino, Head of Strategy and Operations at Lemonade Foundation.
00:00:58
Speaker
Roy leads business development at Lemonade and leads the Lemonade Crypto Climate Coalition, which is focused on finding world hunger using the blockchain. We also have Justin Gunnell, counsel at Shertrumonti LLP, who focuses on commercial litigation. Justin services blockchain clients and routinely works on matters involving soft IP issues. He also recently finished as a condiment working with Avalapse Internal Legal Department. So Justin, Roy, take it away.
Lemonade Foundation's Creation and Crypto Involvement
00:01:27
Speaker
Thank you, Sylvia. Pleasure to be here today and pleasure to be here with you, Roy. Why don't we start with a basic question. What is lemonade? Good question. So first of all, it's a pleasure to be here as well. And thanks so much for having me. So lemonade is
00:01:44
Speaker
basically an insurance company. We're a technology company. We specifically sell insurance. But I think one of the interesting things about Lemonade is our business model. And this is also connected to which we can expand further
00:02:01
Speaker
about it, I think, in a few minutes.
Blockchain vs Traditional Insurance
00:02:05
Speaker
Lemonade really is focused on not only being profitable, we're obviously, Lemonade is an insurance company that is public and we want to achieve profitability, but we're also focused on, we're a B Corp, so we're focused on also providing, we have a double bottom line, right? It's not only about the profit, it's also about doing good.
00:02:30
Speaker
And as part of that, we have a super interesting business model, which we can talk about if that's of interest. That kind of tries to deconflict the traditional insurance company and the customer where we take only a certain cut of whatever the premium is, and then we don't have, it's not in our interest to not pay claims because there's no gain in that for us.
00:02:59
Speaker
But another aspect of Lemonade being kind of like a B Corp or a company that's interested in also doing good or improving the world in some way, shape or form and excuse the cynicism here. When Lemonade was, when we IPO'd three years ago, we also created a nonprofit foundation
00:03:26
Speaker
called the Lemonade Foundation. And that foundation is very active in the project that we will talk about here, I'm assuming soon, in the crypto space.
Supporting Subsistence Farmers with Blockchain
00:03:39
Speaker
And that's also, I think one of the interesting things about Lemonade is, again, that the fact that we were able, we were fortunate enough to
00:03:50
Speaker
be able to create this nonprofit foundation, which I spend some of my time working in, to help push forward groundbreaking technological projects like the one that we'll discuss here that provides subsistence farmers with insurance. That's great. And I actually, well, before I knew anything about the blockchain was
00:04:17
Speaker
was a lemonade customer versus a renter and now as a condo owner because of that business model. I always found it odd that insurance companies could profit from denying claims, which are the very thing that they're charged with doing is evaluating claims fairly. So the fact that you guys collect a flat fee, pool that money, and then if there's extra for not paying claims,
00:04:42
Speaker
do givebacks, I think that's what you call them, to customer choices.
Funding and Model Separation Explained
00:04:47
Speaker
I think that's a great model. It's one that was personally resonated with me. But I wonder, is that how the Lemonade Foundation, which I'll ask you a little bit about next, but is that how that is funded or is it separate from the givebacks? No, it's separate.
00:05:06
Speaker
Givebacks is a super important part of the business model, which we fund, as you said, nonprofits that the customer chooses. In addition, when Lemonade was, when we IPO'd, basically the board of directors of Lemonade created this foundation and decided to give it shares from Lemonade or to
00:05:29
Speaker
basically grant it or gift its shares of lemonade. And then over time, the foundation was able to sell some of those shares and use that money to finance proceeds or something like that. So the lemonade foundation is completely separate from a legal perspective. It has completely separate funding sources, et cetera, et cetera. But it was created, founded and funded by lemonade. That's great.
Blockchain-based Insurance for African Farmers
00:05:55
Speaker
Why don't you tell us a little bit about your work with the lemonade foundation and
00:05:59
Speaker
particularly what I think is called the Crypto Climate Coalition? Sure. The Lemonade Foundation, its mission is to use exponential technology to drive change in the real world or make positive change in the real world, create positive change in the real world.
00:06:20
Speaker
The main focus right now, the main project we're working on is a project called Eliminate Crypto Climate Coalition, as you mentioned. The main thrust of the project is to provide subsistence farmers right now in Africa with crop insurance, which is based and operated from the blockchain.
00:06:44
Speaker
So what we basically did is, and we can go into the details whenever you feel is the right time, but what we did is we basically said, okay, as climate change intensifies, unfortunately, many of the people, especially in the tropics, are hit very hard by more droughts, more floods, and that
00:07:13
Speaker
poses a real risk to their livelihood, especially to subsistence farmers who are people who live off what they grow, right? So if they had a bad season, if the crop didn't grow, they can literally starve. And one of the good ways to help these people
00:07:32
Speaker
You know, be financially stable or have a financial cushion is if potentially they could buy insurance, right?
Cost Reduction and Efficiency in Insurance
00:07:40
Speaker
If they could pay for insurance that basically says if your crop doesn't grow and you usually get $100 worth of
00:07:48
Speaker
You know, maize, and you don't have that, you will get repaid for that sum. We thought that was a great way to solve or a great way to help these people contend with the situation they're in. Unfortunately, crop insurance in the developing world, specifically in Africa, is the traditional model of insurance just doesn't work for it.
00:08:16
Speaker
Underwriting is super, super complicated and expensive. Even if you were able to do underwriting, distribution is too costly because the premiums are very low. Premiums can be five, $10 a season. And even if you did do that, processing a claim can cost more than actually paying the claim. So in a world without blockchain, without automation, without that kind of thing,
00:08:43
Speaker
A traditional crop insurance model just doesn't work. So when we kind of came to that realization, we thought, okay, maybe there's something here. Maybe we can help solve this problem.
00:08:54
Speaker
by kind of like the intersection of blockchain data and insurance. And maybe there's a way for us to provide, to solve that main core problem that has inhibited the scale of insurance and that's costs by using a new and revolutionary technology like crypto.
Success Stories from Kenya
00:09:16
Speaker
That's what we did. That's fascinating. And you know, they often say that insurance is a product
00:09:23
Speaker
that is sold and not bought. And I think that's because of the model that's generally used where you need to have brokers and agents and there's a whole network in place to actually deliver that service to the end user. And because of that, there needs to be appropriate profit margins built into that price point. But here with the end user that we're trying to service, that you're trying to service, they're very price sensitive.
00:09:52
Speaker
They don't have much discretionary income, I would imagine. So there's not much room for that kind of model. And cost becomes all that more important. And every penny really matters. I was reading, you just said $5 to $10 for a season. I read in one instance, there was a lady who paid $0.83 to cover her entire plot of land for the season. So I think under a traditional model,
00:10:20
Speaker
in a way with the paperwork that has to be mailed to somebody. So can you maybe talk a little bit about that? Sure. I think what blockchain does here is the traditional insurance model, again, this is just as a side note, what I'm going to say now is not necessarily relevant for
00:10:50
Speaker
car insurance, home insurance, and other types of insurance that need a real world kind of like way of understanding and understanding what the damage actually was. But for crop insurance, we have a way that it's called parametric insurance that can really collapse the price of understanding if a claim needs to be paid.
00:11:21
Speaker
And if we accept that model, and I'll explain how that model works in a minute, what happens is when you use the blockchain and instead of working the traditional insurance
00:11:35
Speaker
way, what you can do is basically have a technology platform that is very similar to Uniswap, for example, that has a risk pool on one side and insurance buyers on the other side, right? Or someone who's providing insurance and someone who's buying insurance. And it's right there on chain. And you don't need to have a lot of middlemen or a lot of companies in the middle, like a, you know,
00:12:06
Speaker
a local insurer, and maybe a global insurer, and then a re-insurer, and then a distributor, and an aggregator, and yada, yada, yada. This value chain can be seven, eight companies deep. To make it profitable, every company needs to take 5%, 10% of whatever it costs.
00:12:29
Speaker
Basically, when you put things on the blockchain and you have, on the one hand, the farmer that buys using their feature phones, not even smartphone, using their feature phone directly from the blockchain through online payment platforms like M-Pesa in Kenya, which is a mobile wallet or things like that. And on the other hand, you have a risk pool that basically carries the risk.
00:12:59
Speaker
you can really collapse those costs. And you can do another thing that is very, very important. You can make that payment almost instantaneously. So for a subsistence farmer, if you have planted and the season is bad and nothing grew, the next season is six months away. You need money tomorrow because if you don't get reimbursed or if you don't get that indemnification, if you don't get the money,
00:13:29
Speaker
As I said, you can literally starve. Usually, payouts in the traditional insurance model, if a customer does have access to insurance, which most don't, but if they do, a payout can take easily six months, if not two years. For a subsistence farmer, that just doesn't make sense.
00:13:53
Speaker
What we have done is basically created a platform that allows these payments to be made almost instantaneously when the season ends, so a week later.
Long-term Potential of Blockchain in Insurance
00:14:04
Speaker
We were fortunate enough to, a couple of months ago, we visited Kenya at the end of the short-range season, which ends in January, end of January.
00:14:19
Speaker
We were there in the middle of February, and we had a chance to see the first payout cycle, which was two weeks after the season ended. And the farmers that we saw and we engaged with and we talked to basically said, look, this is amazing.
00:14:35
Speaker
This is much faster than the other options that we had. And it was really a touching event because our pilot that we did, we launched it in October of last year and the first season ended, as I said, in January, February. The pilot was in a county in Southern Kenya on the border with Tanzania called Taitataveta County.
00:15:04
Speaker
which unfortunately had experienced a really, really, like even in historic terms, drought, like one of the worst droughts in recorded history. And many of the farmers that were insured had nothing grow, right? So they had like a season where they had a complete loss. And a lot of these farmers, by the way, they're predominantly women,
00:15:31
Speaker
many of the farmers in the region are women, and there are also many of them are also sole breadwinners in their household. When we had the chance to chat with them to see the payment cycle, they basically said, you know, tonight,
00:15:57
Speaker
we're going to have a full belly. They knew that this was a situation where they have the money in their pocket to go buy food for their family. So it was really, really, really emotional, I think, for us. That's amazing. So, so impactful. You know, they, they often say that blockchain technology is a solution looking for a problem. But in a lot of ways, I think that this use case in particular really demonstrates
00:16:27
Speaker
a problem that was in search of a solution and that solution might just happen to be the blockchain. Given this work, I gather you agree with that statement and I would ask, you mentioned some of them already, the immediate payment feature, the efficient micro payment system that blockchain enables, but are there other advantages that the blockchain provides over a traditional model here?
00:16:57
Speaker
Yeah. So those, those two, I think are the main things that we are currently focused on. But when I think a bit more, um, let's call it medium term or long term, I think there are a number of interesting things here, um, that really could potentially be, um, I don't want to say revolutionary, but very, very impactful on, on a local and global level.
00:17:27
Speaker
One of the things here is that I think the interesting attributes of blockchain is the fact that it can help decentralize power. Today, you have a lot of the power centralized in an insurance company. When you use a platform that's decentralized, you basically
00:17:52
Speaker
that power dissipates to the nodes. And in this case, the nodes are farmers. So I think one of the interesting things is, for example, when I think about data collection or when I think about indemnification, the way it works today is that
00:18:13
Speaker
We send people into the field. We use what's called an area yield index. An area yield index is where we take a polygon of land. Let's say that polygon of land has 1,000 farms in it. And we sample, let's say, three or four farms in that polygon of land. If usually we see that three tons of maize grew, if this time in this season two tons of maize grew, we trigger a claim for all of the 1,000 farms in the region.
00:18:42
Speaker
So that's much more efficient than sampling each and every farm, but it still requires us to send a person into the field to sample those two, three farms. Over time, I think what we can do is the farmer knows
00:18:59
Speaker
what kind of season they had. Each farmer knows if it's a good season or a bad season and how much they grew. If we can find a way to using crypto economics and using this technology and this platform to basically help people provide that information in a way that we know is trustworthy,
00:19:26
Speaker
I think there's a super interesting way to basically kind of distribute that decision making process or that data collection process back to the farmers instead of having it centralized with an insurance company. Basically what you would do is you would have the farmers collect and report the data
00:19:53
Speaker
maybe an exchange for a token or for reduced fees for the insurance or whatever it is. Then that data is automatically uploaded through an oracle onto a smart contract, which automatically triggers claims.
Transparency and Trust in Blockchain Insurance
00:20:10
Speaker
Now, if we can find a way to do that in a way that we make sure that it's
00:20:17
Speaker
game theoretically stable, that no one has an interest to lie, and there are ways to do it, I think, then that's, again, this is not something for the near term, but that's a way, I think, to think about this as a way to kind of like bring power back to the local level, to the community. Fascinating. You know, we know that the blockchain offers immutability
00:20:46
Speaker
and auditability. And I don't think I'm going out on much of a limb to say that some people have a distrust of insurance companies. And I think it probably goes both ways. As you were just mentioning, insurance companies sometimes have a distrust of people for good reason, I think both ways. But is the aspect of a blockchain's trustlessness that feature, is that an important aspect of this?
00:21:16
Speaker
Yeah, I think so. So I think the way we usually think about it is that this is an opportunity to move from a model that's distrusted to a trustless model. So we believe that, by the way, it goes back to the core of what lemonade does, right? Lemonade the insurance company, not lemonade the foundation. We feel that there's a problem in the insurance space where people don't trust insurance companies.
00:21:45
Speaker
And I think that's very evident in the developing world, especially where, for example, a claim can take six months to get paid. That feels like a scam, even though from an insurance perspective, maybe there are good reasons for it. I don't think these companies are trying to deliver value. I don't think they're doing things on purpose. It's just the way the game works, right? It's not the player, it's the game, as they say. So, um,
00:22:17
Speaker
If we can help, and again, I think bringing that power back to the community is one aspect of it, but also the fact that there's no kind of bureaucracy in the background that's making some opaque decision. Everything is on chain. Everything is there to be audited, to be kind of like it's completely transparent.
00:22:41
Speaker
I think can build a lot of trust in both directions. One direction is towards the farmers and the people who are buying the insurance, but also towards the other way, which is to the people who are providing the insurance.
00:22:58
Speaker
I'll give you an example, especially in crop insurance, a lot of the funding still is from NGOs, from governments, from the UN, that kind of thing. For these organizations, it's very, very important to be able to see where their dollars are going. So if from, let's say, the Gates Foundation or whatever, some other, the UN.
00:23:22
Speaker
If they're able to see that every dollar that they put on the blockchain goes directly to fund and or subsidize or whatever it is to provide insurance to a subsistence farmer
00:23:37
Speaker
I think the potential for them to be their willingness to provide more funding will go up dramatically because I think in many of these cases, they have a bit of an apprehension that some of the money doesn't really reach the farmers in the end. It gets caught up in bureaucracy or whatever. That long chain of
00:24:05
Speaker
you know, companies or organizations in the middle. And this is a way to show that the money goes directly from the donor to the farmer.
Smart Contracts as Insurance Policies
00:24:17
Speaker
Yep, that's great. So I'd like to get minorly technical for a moment and talk about how all this really cool stuff that you're talking about is actually accomplished on the blockchain. But first,
00:24:32
Speaker
Given the episode's title today, I feel I should say a little bit about smart contracts. Personally, I think the name smart contracts is a bit of a misnomer. As a practicing lawyer, when I first became familiar with that term, you think of contracts 101, two parties negotiating to reach terms with one another, each having some bargaining power in the relationship. But a smart contract is really anything but that.
00:25:02
Speaker
There's no negotiation. It's not a traditional contract that memorializes lots of terms that parties are coming to agreement on. And it's not particularly smart. They're mostly static. And that's sort of a benefit to them. You know what you're getting when you engage with a smart contract. But somehow they got the name smart contracts anyway.
00:25:28
Speaker
And as we know, a smart contract really at its heart is a computer program, a bunch of code that lives on the blockchain and permits a receiving of inputs and executes on a set of instructions to generate some predetermined output. You know, some Avax or Ethereum in and ERC20 token out, probably the most basic smart contract we can cite an example of.
00:25:55
Speaker
But anyway, I digress a little bit. Regardless of whether they're aptly named, how do these packets of autonomous code or smart contracts, as we call them, how are they enabling the Lemonade Foundation to do what it's doing here? So I think the best way to think about it is that the smart contract is actually the insurance policy here.
00:26:23
Speaker
So the smart contract that we've built basically holds the logic that says, which is the exact same logic that sits in an insurance policy that says, if event X happens, payout Y happens. So like if you think about a regular insurance policy for my home, it says, for example, if there's an earthquake,
00:26:50
Speaker
I get paid the reconstruction cost of my house, which is a hundred thousand dollars. Let's say that is a contract between an insurance company and me, right? Lemonade, for example, and you in the case of your condo, um, it's the same exact thing with a smart contract.
00:27:18
Speaker
on the blockchain for crop insurance. It has something that says something like, if less than two tons of maize grew, trigger a payment of $70, for example. And then the trigger is we collect the data, we insert it through a Chainlink oracle into the blockchain,
00:27:42
Speaker
That triggers a payment of USDC. That USDC has converted to local currency, Kenyan shillings. And those Kenyan shillings are transferred directly to the same phone, the same e-wallet that bought the insurance.
00:27:58
Speaker
So again, from like an insurance perspective, the smart contract is the insurance policy. It's the contract between the farmer and whoever is providing the insurance, whoever donated the money or provided the capital. And you used the term earlier and just now used the term Oracle a few times.
00:28:21
Speaker
Can you explain just for our listeners, some may be intimately familiar with that. Some may not exactly know what an Oracle is in terms of smart contract usage. So what is an Oracle and how, I think you explained a little bit of how they're being used here, but just more basically, what is that? Sure. I think the best way to think about an Oracle, it's an API to the blockchain.
00:28:47
Speaker
So the best way, the best example I think is if you have data that you want to provide to Lemonade the insurance company, Lemonade has an API, you can connect to that API and provide that data. Let's say you're a credit bureau, you want to provide, or Lemonade wants to get that information from you, there's an API, you provide that data to it. It's the same exact thing. And Oracle is a way
00:29:16
Speaker
to transfer information from the real world onto the blockchain in a way that is verifiable and trustworthy. So everything on the blockchain, we want it to be basically cryptographically, I think chainly call it cryptographic truth. So everything needs to go through a process where
00:29:41
Speaker
It's validated, et cetera, et cetera. Chainlink is the platform that allows that information, the platform, the model, the tech that allows that information to be ingested into the blockchain. Interesting. You talked a little bit about the parametric sampling. That's actually boots on the ground. Someone has to go and physically sample
00:30:08
Speaker
not all of the farms, because that would be impractical, but through statistical analysis, you can sample certain defined regions and then make assumptions about the larger regions from the sampling if you conduct good sampling. Is the idea that eventually, I know you mentioned putting the power back in the hands of the farmers, is there a way to do this completely based on weather data that may be accessible from the blockchain, flood tables or
00:30:37
Speaker
levels of rainfall, things of that nature, or is there always going to need to be a human component, so to speak? Never say never, especially with what's going on with AI recently and the tremendous breakthroughs that we're seeing.
00:31:05
Speaker
But I will say that I don't really see that happening soon. I may be very, you know, pessimistic and I hope to be like surprised. But weather is not a great proxy for crop. The reason is that
00:31:27
Speaker
Weather is a proxy for, let's say,
Future Plans and Regulatory Environment
00:31:30
Speaker
rain. Rain is a proxy for how much water reached the ground. How much water reached the ground is a proxy for how much water went into the ground, which is a proxy for how much reached the root of the plant, which is a proxy for how much the plant grew. Those are too many proxies in the way. And we know that knowing even with a high degree of certainty what the weather was,
00:31:58
Speaker
does not give you enough information to predict what the losses were. It's not close enough to what happened in reality. So maybe, but I don't see that happening soon. Thanks for that. That's insightful. Are there ways for an average Web 3 adopter to become involved in this project either now, or is that something you're planning? Yes, yes.
00:32:29
Speaker
So again, as I said, we intend to issue a token in the future. That token will allow people to basically participate in the governance, but also potentially fund, provide insurance to this platform and that kind of thing. Right now, we haven't issued the token yet, so it's not available yet. But anyone who's interested in participating
00:32:59
Speaker
volunteering, working with us, providing capital, et cetera. I would love to chat with you. My Twitter is at Roy Confino.
00:33:12
Speaker
just like my name, R-O-Y-C-O-N-F-I-N-O. You can also find us on lemonade.org, which is the Lemonade Foundation. Drop us a line if you wanna be involved, if you wanna donate your time or money or whatever it is, we are super interested in anyone who's willing to help. And again, we hope to make that a bit more formal when we issue a token down the line.
00:33:41
Speaker
Great. And I know, um, Al explains as always, um, looking to, um, tie in its tree of wisdom and we want to make sure that tokens are always treated, um, and considered based on their underlying actual use. And they're just not treated as an amorphous, you know, concept of tokens, quote unquote here, it sounds like this would be probably a service token providing insurance service or maybe an intent tangible asset token.
00:34:10
Speaker
But in that vein and the regulatory aspects of all this, is that something Lemonade is thinking about and considering? And do you have any thoughts on the current regulatory environment that's taking place right now? So to the latter half of your question, I don't have thoughts on the regulatory environment.
00:34:35
Speaker
I know things are happening with the SEC and like players in the US. I'm not familiar enough with what that means. I will say that for the Lemonade Foundation,
00:34:53
Speaker
We are basically, the way that we've created this infrastructure, we call it insurance, but it's not really insurance. The reason it's not really insurance, and we can talk about that, maybe I'm not sure we have time today, but if we want to have another podcast, insurance is a situation where the risk that you carry is not fully collateralized. So an insurance company, kind of like a bank,
00:35:21
Speaker
takes risk, let's say they have risk of a trillion dollars on their books, they only have a billion dollars of capital in a bank account to hold against that risk. And there are different regulations that say how much money, how it's called surplus, how much money you have to hold in your bank account to hold onto a certain amount of risk. That's insurance.
00:35:46
Speaker
What we're doing is fully collateralized. Because it's fully collateralized, in other words, if the risk is $100,000, the potential risk, the total loss is $100,000. There's $100,000 on the blockchain. What it actually is, is a risk pool. It's a risk sharing environment. It's a risk sharing tool for farmers. So it's not really insurance from a regulatory perspective.
Reflecting on Smart Contracts' Intelligence
00:36:13
Speaker
So for us, that means that we weren't required to get regulatory licensing for insurance and that kind of thing. We're doing this completely. We have a foundation or we have an organization registered in Switzerland that kind of operates this. And that's the way that we do it from a regulatory perspective. It's not insurance. Thank you. That's great. And thank you for your
00:36:42
Speaker
time today, Roy. Thanks for having me. It was a pleasure. Awesome and thank you. And just to close our session and this amazing discussion, I want to circle back to our theme for today and ask, how smart are smart contracts then? Well, I'll take that one first and then let Roy have a stab at it. I already told you my view that I don't believe as a technical matter
00:37:05
Speaker
smart contracts are all that smart in the sense that society uses the term smart, smart phones, smart home, smart TVs. They're often dynamic electronics that can learn from the behaviors of their users or are very technologically advanced. Vitalik himself said he regretfully used the phrase smart contracts.
00:37:29
Speaker
wish to use the term persistent scripts, although I don't think that would have had quite the staying power that smart contracts do. But Roy makes a good argument. This is one of the best arguments I heard that keeps a smart contract in the lane of what an actual contract does. And in that vein, I do think they are smart in the colloquial sense of smart and sharp.
00:37:54
Speaker
and that they're enabling people to do the amazing types of things that Roy is doing here with the Lemonade Foundation. I applaud your work on this, and it's really an amazing use case. I look forward to what's to come. Thank you. First of all, thanks so much for the kind words. I can also take a stab at it. I would maybe say they're smart in the sense that they are
00:38:25
Speaker
not inanimate. So maybe they need to be called live contracts. But I think the main difference between this and a piece of paper or a Word document or a Google Doc with a contract is that this is a contract that interacts with the world.
00:38:45
Speaker
and is constantly being, it's able, just like a live being, I guess, to respond and make decisions on its own. So it's smart in that sense. It's smart kind of like AI is smart. Excellent. Excellent. Well, thanks for your wonderful insights. And again, thanks for taking the time. And this was a great conversation. So thanks again.
00:39:18
Speaker
We hope you enjoyed our Hootenanny. Thank you for listening. For more Hootful and hype-free resources, visit www.owlexplanes.com. There, you will find articles, quizzes, practical explainers, suggested reading materials, and lots more. Also, follow us on Twitter and LinkedIn to continue wising up on blockchain and Web3. That's all for now on Owl Explains. Until next time!