- Nexus Mutual uses a risk-sharing pool to allow anyone to purchase an insurance cover or contribute capital to the pool for future rewards.
- The mutual’s first insurance product is smart contract covers for purchasing protection for value storing contracts.
- WNXM represents wrapped NXM tokens that are freely transferable and only KYC-ed members of the Nexus Mutual can wrap and unwrap NXM.
- The platform's native token, NXM, can only be purchased on Nexus Mutual and token holders are also technically members.
- The NXM price is formula-driven and its variables are based on the Minimum Capital Requirement (MCR) and MCR%, which is determined by the members of the Nexus Mutual.
- Token Standard - ERC-20
- NXM Price - $42.91 USD
- NXM ROI - 373.57%
- Market Rank - #62
- Market Cap - $235,837,637 USD
- 24 Hour Volume - $39,523,672 USD
- Circulating Supply - 5,495,831 NXM
- Total Supply - 7,419,859 NXM
- All Time High - $82.35 USD (Aug 30, 2020)
- All Time Low - $6.84 USD (Jul 23, 2020)
Nexus Mutual offers DeFi investors “cover” or “protection” for specific activities within the crypto ecosystem. The platform is built on the public Ethereum network. It aims to disrupt the insurance industry by transitioning the power from large insurance companies back to the individual. Thus, anyone is allowed to participate, as the mutual property is wholly owned by its members. Members can add Ether (ETH) to the pool in exchange for NXM, the protocols' native token.
Joining Nexus Mutual entails paying 0.002 ETH and filling out standard KYC/AML processes. Though it is a DeFi-centric protocol, Nexus Mutual is a legally registered company based in the United Kingdom.
Being a member also means that you are an NXM token holder. Members are responsible for arbitrating governance proposals, as well as claims and risk assessments.
The Role of Nexus Mutual Members
Members are responsible for assessing the risk level associated with each smart contract. Also, and in the case of an exploit, members will be asked to vote on whether the claims are legitimate and a payout should be executed.
Members can stake their tokens with certain smart contracts proportional to how secure the members think the contract is. The more NXM that a contract has staked, the cheaper it is for other members to buy coverage. This is because the Nexus Mutual community has, in theory, put real money at risk to say that a specific smart contract is a low risk.
The NXM token represents membership rights in the mutual along with the ability to participate in the ecosystem through claims assessment, risk assessment, and governance. The token model uses the linking curve (or continuous token model) to determine the price of NXM, driven by two main factors:
- How much capital the mutual has
- How much capital is needed for mutual to meet all the requirements with a certain probability
The linking curve is used so that tokens can be bought at any time at variable prices based on the amount of capital locked in the mutual and how much of the capital is needed to payout the covers within the system. Moreover, members are entitled to a share of any capital held over what’s necessary to pay potential claims. In other words, the more capital in the mutual, the higher the price of NXM.
WNXM represents wrapped NXM tokens that are freely transferable outside of the Nexus Mutual platform. They were created by the community members and are 1:1 redeemable against genuine NXM. Prior to this feature, NXM could only be acquired by undergoing KYC to join the mutual. While this has a fair share of benefits in regards to organic growth and transparent distribution, it also limits the number of users keen to get involved. In practice, only KYC’ed mutual members can wrap and unwrap NXM, keeping the core token supply compliant with regulatory standards.
- Jul 2020: Announced the first Bug Bounty;
- Jul 2020: Listing on Bibox;
- Aug 2020: Listing on Binance;
- Aug 2020: Listing on BiKi;
- Aug 2020: Listing on Poloniex.
The team is currently exploring implementing secondary purchases into third-party applications. Implementing this feature in a handful of the prominent DeFi applications would widely increase the accessibility for the mutual at large.
To make third-party integrations possible, the mutual will have to enable the option to operate memberships via smart contracts. By doing so, this would drastically increase integration options from third-party applications and allow aggregator-like projects to programmatically buy covers on behalf of users.
As it stands today, users looking to participate in risk assessment are subject to queues for receiving rewards based on cover purchases. Rather than relying on a queue-based rewards system, the team is exploring a new distribution model through a pooled reward system. With this system, risk assessors will be rewarded on a more consistent basis with a pro-rata rate based on the amount staked. The hope of implementing this type of rewards system is to encourage more staking activity and significantly reduce the barriers to entry when it comes to knowledge on risk assessment.
One of the more interesting things that the team is currently exploring is leveraging the existing capital pool to earn investment returns on the float. This is viable in two ways: (1) integrating the Dai Savings Rate (DSR) or (2) Staking in ETH 2.0.
The project’s roadmap provides the building blocks to scale the mutual while providing the best product possible for its community and includes:
- Pooled Staking - this is a fundamental building block for most future development.
- Simplified Pricing - the pricing model working with only one input, the amount of NXM staked.
- Partial Claims - an ability to pay partial amounts of cover for partial loss as this will open up the design space for new products enormously.
- Cover Wording Architecture - to link the 3 layers of cover wording to an ID and make sure the details are stored on-chain so that it is clear what terms apply to each cover.
Insurance is a fundamental financial infrastructure that all economies need. The affordability nature of DeFi provides an intriguing opportunity for insurance applications to enter underserved markets. Shortly, viable applications can be envisioned to disrupt the insurance industry. Nexus Mutual is taking an innovative approach intending to provide the basic financial infrastructure for a parallel financial economy to thrive. As the industry and Ethereum in particular develop, the platform will grow and expand its activities.