As the value locked within DeFi continue to rise, the need to insure that capital becomes more and more vital to the long term success for the ecosystem as a whole. One DeFi project – Nexus Mutual – aims to be the leader in this niche through their distributed insurance protocol built on Ethereum.
As it currently stands today, the mutual allows members to take out smart contract covers, effectively ensuring them that they are entitled to a predefined payout in the event that the contract is hacked and funds are lost. Up until this point, the mutual has seen a steady amount of traction with roughly $1.5M locked within the protocol as a capital reserve. For more information on how Nexus works, we recommend brushing up with this resource.
Over the course of the next few weeks, Nexus will be rolling out a number of governance proposals including:
- Updates to how staking NXM against a specific smart contract will work
- How rewards are shared
- How reward withdraw windows function
- Capping total stakes per contract (to encourage early stakers)
In short, NXM token holders aim to see a swift rise in the number of polls that require member participation in the next few weeks.
What Makes this Unique?
For those unfamiliar with Nexus’s governance system, public proposals are released with an “incentive” in which those who participate in the poll stand to share the reward equally amongst everyone who votes. This not only provides a direct incentive to participate in governance, it also introduces an interesting mechanism for evenly balancing voting weight.
Proposals can be offered either to the public or to the advisory board, with advisory board decisions being those that pose greater changes to the way different things like governance are handled. Here’s an example of what an advisory board proposal looks like.
Earlier today, Nexus released two new member proposals, each with an incentive of 100 NXM (currently valued at ~$200). These proposals surrounding the migration from SAI to DAI and for members to be able to switch their address.
Both of these updates are relatively minor, but go to serve as good examples of governance “heating up” in the coming weeks. Seeing as Nexus members are required to KYC upon registration, this provides a strong guarantee that each address is a unique person – something that may be problematic with other governance schemas.
Furthermore, the notion of NXM token ownership not influencing voting weight signals more ability for users to stake tokens to smart contract claims – the primary use case of the token economy.
Moving forward, we encourage those who are not currently members of Nexus Mutual to consider this a good time to get started. The process is very straightforward with the membership costing less than $5 at current ETH prices.
Beyond the prospect of being able to earn rewards from governance participation, we largely expect the mutual to experience increased traction in the coming months due to the following upgrades which have been discussed in the official Discord:
- Secondary Purchase Covers – Making it easier to purchase covers
- New Token Incentives – Pro-rata staking rewards (as opposed to existing queue)
- Investment Earning – Maker DSR integration and/or ETH 2.0 staking
In summary, Nexus is set to enjoy a big year and we’re excited to watch these upgrades play out.
In the meantime, for more news on all things DeFi, follow us on Twitter.
Cooper is focused on building compelling blockchain products. He currently works as the managing director at Fitzner Blockchain Consulting and is a contributor to DAOs like MetaCartel and Moloch. He is an active member of the Ethereum community and has a strong interest in for-profit businesses such as The Block Crypto and Messari.