Collider Ventures leads a $2.7m strategic contribution to Nexus Mutual Blockchain Based Insurance alternative products
We are thrilled to announce our contribution to Nexus Mutual, an Ethereum blockchain-based insurance alternative provider. Collider Ventures led a strategic group of investors to contribute $2.7 million to the Nexus Mutual treasury. Among the investors are globally leading institutional Blockchain and crypto investors such as 1Confirmation, Blockchain Capital, Version One, Dialectic and several prominent Angel Investors.
This is our second contribution to Nexus after our initial backing with the same investors in Oct. 2019. The capital is meant to help in the platform’s development and expansion of its insurance cover capacity. We are also, together with the other investors, taking a proactive approach to support Nexus Mutual by participating in staking and governance.
Why are we excited about Nexus Mutual?
Nexus Mutual has demonstrated consistently their capacity to innovate at a rapid pace in an industry that is notoriously extremely regulated and stale. Nexus Mutual’s products address important market needs to cover smart contracts based financial applications. The team’s agile culture and abilities to deliver consistently in response to market needs has become a benchmark for the industry when considering Blockchain based products offering Coverage for DeFi.
Nexus is leveraging smart contract based coverage protocol to create mutual insurance alternative whereby cover-holders and contributors share this new platform. In this respect, everyone can become a member of Nexus Mutual by buying the platform’s native token, NXM.
NXM holders’ interests are aligned through Nexus Mutual’s platform, whether it’s cover-holders or contributors. The funds the mutual has collected through the NXM sale serves as the capital pool that supports the provision of coverage for its members.
To date, Nexus Mutual’s products have gained adoption in the fast growing DeFi space, most commonly by covering risks related to code errors and attacks. The platform further allows its members that have better insights and confidence in certain smart contracts to stake their NXM tokens to signal lower risk in comparison to other smart contracts. In turn, these members earn tokens from the premiums paid by the cover-holder as rewards for their participation in providing insurance for the specific smart contract.
Why did we decide to contribute to Nexus Mutual?
As the industry grows, we are witnessing incidents where large sums of capital are lost through smart contract errors and sophisticated attacks. These incidents have become so prevalent with the increasing growth of digital assets and blockchain based DeFi protocols, hence the idea of a blockchain-based mutual insurance alternative platform is very attractive to us.
With the rise of the Blockchain industry as it becomes a clear contender to legacy finance, the need for ecosystem wide derisking and security is very clear. Nexus Mutual offers that and has within a short duration, built a track record of providing the much-needed coverage solutions to support the rapid expansion of the DeFi space.
Up to date, Nexus Mutual managed to sell over $872M in active covers and paid $14.5M in premiums to its members.
These figures alone not only show that there is a real world use case for Nexus Mutual but also point to the growing demand of the platform’s cover within the blockchain industry.
The ecosystem’s performance late last year saw the platform shift from a supply side capital strained, to having some meaningful capital that can be put to work to expand service provision.
What are we looking forward to seeing in the Nexus Mutual ecosystem?
Nexus Mutual’s aggressive roadmap: The Big 30 List is focused on stimulating the demand for their insurance covers and scaling the mutual. The decentralised platform aims to sell about $500 million worth of cover spread across at least 30 protocols. (Update: as of today, Nexus Mutual managed to sell over $872M in active covers, smashing its goal for 2021).
The team is aiming to achieve this target by covering 30 risks that can attract demand in the $20–50 million range. Once this is achieved the mutual can grow organically and hit an exponential expansion trend.
The Nexus team has also recently expanded into covering custodians such as exchanges and lenders. They plan to expand their service provision on these platforms with a target of 10–15 custody providers in 2021.
Nexus Mutual is also focused on making NXM the preferred underwriter for DeFi platforms in 2021. They aim to offer smart contract covers on the top 10–12 DeFi platforms through collaborations and attractive products that encourage key players to build insurance products on Nexus Mutual.
Additionally, following the launch of ETH 2.0, Nexus Mutual is launching a staked risk coverage in 2021. This product will enable them to cover stacked risks and tokenized ETH2.0 stacking.
We’re looking forward to working with the team at Nexus Mutual’s and supporting this endeavour alongside our colleagues who participated in this round of contribution.
Onward and upward!
The information above is provided for informational purposes only and shall not be construed as investment advice or as requests to engage in investment operations. Neither should it be construed as recommendations or advice on legal or regulatory aspects.
