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)
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)
Members can choose to hold their $NXM but the real benefits come from participating in the mutual: in Governance, as a Risk Assessor, or as a Claims Assessor.

Risk Assessors stake NXM against protocols and/or custodians they believe are trustworthy and secure. (4/7)
When a platform has more $NXM staked against it, it creates more available cover for other members to purchase.

As more cover is purchased, the capital pool increases in size.

Members are able to cover their deposited assets and earn NXM by acting as a Risk Assessor. (5/7)
The bonding curve, MCR%, and capital pool are all intertwined.

Bonding curve: correctly incentives buys/sells of $NXM depending on capitalization level.

MCR%: if <=100%, $NXM sells are prohibited so the mutual is very sure claims can be paid. (6/7)
This is the general overview of how the $NXM token, bonding curve, MCR%, and capital pool relate to each other and function.

That’s it for today’s all-things-Nexus threads.

Tomorrow, I’ll cover the process of purchasing $NXM and filing a claim (in the event of a loss). (7/7)

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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:

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 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)
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: (…)

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: (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
6 Apr
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:… (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:… (3/9)
Read 9 tweets

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