A lot of people think @NexusMutual sells insurance, and as I covered in my first thread, that isn’t quite accurate.

The mutual offers cover products: smart contract cover and custody cover.

Nexus Mutual members can buy cover to protect deposited assets. (1/9)
Smart contact cover gives members protection against losses due to hacks/exploits and/or smart contract code being used in an unintended way. Wording here: nexusmutual.io/pages/SmartCon… (2/9)
Custody cover gives members protection against losses due to a custodian being hacked, which results in a material loss of 10% of cover or greater OR if withdrawals are halted for more than 90 days. Wording here: nexusmutual.io/pages/CustodyC… (3/9)
The community passed a proposal to transition smart contract cover to protocol cover, which takes effect on 26 April 2021 at 9:00 UTC.

More on Proposal #131 here: app.govblocks.io/proposals/NEXU… (4/9)
To be brief: Nexus Mutual is a decentralized alternative to insurance that aligns incentives between owners and customers. Members are both.

Cover is available for me to purchase because other members are staking $NXM against protocols/custodians they think are secure. (5/9)
When cover is bought, 100% of the funds from the premiums flow to the capital pool & the mutual increases ownership of Risk Assessors by 50% of the cover premium in the form of $NXM.

If no claim is filed & cover period ends, 10% of premium is returned to the cover holder. (6/9)
Risk Assessors receive dividends in $NXM for staking against platforms they believe are trustworthy.

Claims Assessors earn $NXM for reviewing a claim and determining if a payout should occur.

Malicious behavior results in a Claims Assessor having their stake burned. (7/9)
All of this ensures members run the mutual in a trustless system and incentives are aligned.

Members protect members and earn $NXM for risking their capital as Risk Assessors. (8/9)
The next thread will cover how to become a member, so you can buy cover to protect your assets and be an active member of the mutual. (9/9)

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More from @BraveDeFi

8 Apr
If a mutual member’s funds are lost due to an event outlined in the cover agreement, they can file a claim.

Any cover purchased after 21 October 2021 requires proof of loss when filing a claim. (1/9)
As I mentioned in the tweet below, 10% of your cover premium is reserved for filing a claim. You need to stake 5% of the cover premium to file a claim.

Because 10% is reserved for filing a claim, you can submit a claim for assessment 2 times. (2/9)
If a claim is accepted, the 5% staked for claims assessment is returned.

If a claim is denied, the 5% staked for claims assessment is forfeited. (4/9)
Read 8 tweets
8 Apr
Happy Thursday, everyone!

Here are today’s @NexusMutual helpful threads!

I'm going with information about buying cover through the Mutual 🐢
When a member wants to purchase cover, they can choose cover for any of the 68 protocols’ smart contracts & 10 custodians: app.nexusmutual.io/cover

A member would click “Buy Cover” to get to the interface where the protocol or custodian is selected. (1/6)
In the “Buy Cover” menu, you can see all of your options, which looks like the below. The “Yearly Cost” and “Capacity” for each platform. (2/6) Image
Read 7 tweets
7 Apr
The mutual’s capital pool is held in ETH. Below you can see a graphic that shows how funds flow through the capital pool when cover is purchased. (1/7) Image
Funds flow into the capital pool when cover is purchased & when ETH is swapped for $NXM.

When capital levels in the pool are low, the price of $NXM lowers to encourage token purchases, which add funds to the capital pool. (2/7)
Each member has contributed to the capital pool as represented by their $NXM holdings.

When more members purchase cover to protect assets, the capitalization level increases.

As the capitalization level increases, the MCR% goes up, too, since MCR% = V/MCReth. (3/7)
Read 7 tweets
7 Apr
The bonding curve determines the price of $NXM using a formula with multiple inputs. In the graphic, I have included the fixed constants. Because the capital pool is held in ETH, the bonding curve uses MCReth as a factor in the equation. (1/9) Image
The graphic in the previous tweet is from the latest post Nexus put up on their Medium about the bonding curve. More on that here: (medium.com/nexus-mutual/o…)

If you see this equation and feel your mind going blank, don’t worry: I’ve got you. (2/9)
MCReth = Minimum Capital Requirement in ETH. The floor amount was first set by the Nexus team when the protocol went live on mainnet, but members have voted since then to change the threshold for MCReth. (3/9)
Read 9 tweets
7 Apr
Here are today’s @NexusMutual helpful threads!
Membership in Nexus Mutual is represented by the $NXM token.

The $NXM token is the key that unlocks Nexus Mutual’s potential. (1/8)
Members use $NXM to buy cover, stake as Risk Assessors and Claims Assessors, and vote in governance.

NXM can only be purchased through the mutual’s bonding curve, and only members can hold NXM tokens. Just the same, NXM can only be transferred between members. (2/8)
Read 9 tweets
6 Apr
In order to buy cover through Nexus Mutual, you need to be a member. It’s an easy process.

You need to pay a membership fee of 0.002ETH and undergo a KYC/AML check.

You can read the details here: app.nexusmutual.io/membership (1/5)
There are many benefits for mutual members.

You can buy cover products and protect your assets in DeFi.

Members run the mutual. They are responsible for Risk Assessment, Claims Assessment, and Governance. (2/5)
Risk Assessors create open cover by staking $NXM against platforms they believe are trustworthy/secure.

Claims Assessors review claims & vote using their discretion on whether to accept/decline a claim.

Members create proposals & vote to implement changes in the mutual. (3/5)
Read 5 tweets

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