NFT Asset Protection via Hack Prediction and Dynamic Insurance
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Solution Overview
Problem
NFTs are vulnerable to hacking, leading to potential loss of private keys and unrecoverable assets, necessitating improved risk management systems for digital asset custody and private key protection.
Innovation Solution
A system utilizing a policy monitoring tool with machine learning models to predict hack attempts, validate insurance claims, and set insurance rates based on market prices, incorporating a hack attempt model, claim validation model, and market price setting model to manage NFT assets.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If traditional blockchain custody methods are used, then asset ownership can be established, but the assets become vulnerable to hacking and private key theft
Solution Approach 1:
The patent introduces an insurance policy as an intermediary mechanism between the NFT owner and potential hackers. The insurance policy acts as a mediator that compensates for losses without directly preventing the hacking attempt, thereby addressing the vulnerability while maintaining the underlying blockchain custody system.
Solution Approach 2:
The system performs preliminary actions by monitoring blockchain transactions and predicting potential hack attempts before they succeed. The insurance policy is activated in advance to prepare compensation mechanisms, and the system proactively identifies vulnerable assets through continuous monitoring of private key movements and transaction patterns.
2Reliability
If insurance coverage is provided for NFT assets, then financial loss protection is achieved, but the system complexity increases
Solution Approach 1:
The insurance system performs self-service through automated monitoring and evaluation of blockchain transactions. The system automatically detects potential hack attempts, evaluates insurance claims, and processes payouts without requiring manual intervention, thereby reducing operational complexity while maintaining comprehensive protection.
Solution Approach 2:
The system implements continuous feedback loops where blockchain transaction data is constantly monitored, analyzed, and used to update risk assessments. The insurance policy terms are dynamically adjusted based on real-time monitoring of asset vulnerability, creating a adaptive system that manages complexity through intelligent feedback mechanisms.
3Measurement precision
If real-time market price monitoring is implemented, then accurate insurance rate setting is achieved, but the processing time and computational resources increase
Solution Approach 1:
The system applies partial monitoring by focusing real-time price tracking only on NFT assets that are currently held in custody or show signs of vulnerability. Rather than continuously monitoring all NFTs in the marketplace, the system selectively monitors a subset of high-risk or high-value assets, thereby reducing computational overhead while maintaining sufficient price accuracy for insurance rate setting.
Data Source
AI summary
Systems and methods for non-fungible token (NFT) asset protection via policy monitoring tool include predicting a prediction that a hack attempt of an NFT asset of a user of the policy monitoring tool has occurred, receiving based on the prediction an insurance claim for processing, validating the insurance claims, determining market price for the NFT asset in real-time based on one or more monitored NFT marketplaces, setting an insurance rate for the NFT asset based on the market price, and transmitting the insurance rate to a graphical user interface (GUI) of a computing device of the user.