These competitors focus on more specific niches, which also enables them to offer better rates, more types of cover, or cross-chain compatibility. Nowadays, a lot of new insurance and risk management protocols are popping up including Opium Finance, Nsure Network, Union Finance, and Tidal Finance. These include the BZX flash loan event in February 2020 and the Yearn Finance hack in February 2021. Since its inception in 2017, Nexus Mutual has covered and paid out claims for some of the biggest and highest-profile DeFi events in history. These pools cover over 70 different DeFi protocols and centralized exchanges including major players like Uniswap, Curve, Yearn, Aave, BlockFi, Coinbase, and FTX. In total, there are over 90 types of cover available on the platform today. Protocol Cover: protects against a hack on a specific protocol.Ĭustody Cover: protects against halted withdrawals and haircuts on funds stored on centralized exchanges. Yield Token Cover: protects against yield-bearing token de-pegging. The protocol currently provides three types of cover: Users interact directly with the smart contracts themselves, bypassing the manual intervention common in traditional insurance services. Anyone can join as a member of the DAO by going through KYC and purchasing NXM using DAI or ETH. Nexus Mutual distinguishes itself by offering a clean, institutional-grade UI/UX. Nexus Mutual charges a deposit of 5% of the cover premium per claim to discourage fraudulent claims.Ĭlaims are assessed and voted on by the DAO within 72 hours of submission, usually with a community discussion in the Nexus Mutual Discord. When a user suffers a material loss on the underlying DeFi protocol, a claim for payout can be submitted for a vote. If the request is approved, the user pays a premium to the platform's DAO for the coverage If a DeFi user wants to buy cover for a specific product, a request must be submitted for a vote with the coverage amount and duration. They undergo AML/KYC (as it's required for UK entities like Nexus Mutual) and then become legal members of the DAO.Įach DAO member provides cover, or deposits, for trusted DeFi projects by buying and staking NXM, the platform governance token. Users sign up on the website and pay a small one-time fee of 0.002 ETH (or around $5 based on current prices). To do this, Nexus Mutual's ecosystem includes two parties: (1) DAO members who pool funds to cover claims, and (2) users who pay the members for this cover. Nexus Mutual enables users to better assess and manage risk. good user interface and experience)? Score: 4/5 P: Product - How innovative and differentiated is the product? Is there product-market fit? How easy is it to use the product (i.e. As more players join the space, there will be more competition, innovation, and an overall bigger pie. In March 2021, Aon, the world's second-largest insurance services firm, recently announced a pilot for Nayms, a decentralized risk management platform that provides cover against hacks and bugs. We are beginning to see traditional financial institutions experimenting with decentralized technology and governance. Based on research from Mordor Intelligence, the global cybersecurity insurance market is currently valued at $7.4 billion and expected to grow at a CAGR of around 24% over a 5 year forecast period (2021-2026). In comparison, no other DeFi insurance protocol has over $10 million TVL.Ī second way to measure TAM is to look at traditional cybersecurity insurance, which plays a similar role in mitigating technology risks. TVL in DeFi on Ethereum is around $49 billion at the time of writing. Comparing Total Value Locked ("TVL"), Nexus Mutual currently ranks 22nd on DeFi Pulse with $314 million TVL. Total Addressable Market or "TAM" can be viewed in a few different ways. It's important to note that the platform is legally not considered insurance because claims are assessed by members of the Nexus Mutual DAO. The project provides cover for a number of risks across DeFi. Nexus Mutual tackles this by being one of the first and largest protocols to offer decentralized risk coverage called “mutuals,” similar to traditional insurance but more decentralized. The question naturally becomes - "how do I, as a user, manage these risks?" User funds are exposed to various risks, such as hacks, exploits, and rug pulls. Decentralized applications hold more assets than ever within their smart contracts. O: Opportunity - How large is the Total Addressable Market? Does the project disrupt an existing market, or does it create a new market? Score: 3.5/5ĭeFi is a highly experimental and risky intersection of technology and finance.
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