Custody cover is now live!
Users of centralised exchanges and custodians — who are responsible for the safekeeping of their users’ private keys to cryptocurrency assets — will now be able to purchase custody cover from Nexus Mutual.
Custody cover will protect users who put funds into an organisation which is responsible for the safekeeping of private keys to cryptocurrency assets on behalf of their users. Users will be covered in the event that either;
- the custodian gets hacked and the user loses more than 10% of their funds, or
- withdrawals from the custodian are halted for more than 90 days.
We’re building Nexus Mutual for the long term which means that Smart Contract Cover isn’t the aim, but just the beginning. It was our first product; a proof of concept to serve our crypto-native community who had no other option to protect themselves against the risks in DeFi. Since launch we have worked with the Nexus community to iterate the mechanics and fundamentals of the platform so that we have a solid foundation from which to design and release new, more flexible and comprehensive products to the market.
We are excited to bring our second product, custody cover, to the market because it’s our first product to provide protection outside of the DeFi space. We’re focussed on the longevity of Nexus Mutual and want to become a marketplace which covers diverse risks both in and outside of the crypto space. We want to use the benefits of blockchain to protect all underserved communities and this is our first step in that direction.
We do not see this as a step away from DeFi and the associated inherent risks, but as a building block for the wider ecosystem. Custody cover will help protect newcomers and by providing custody cover and protection for those entering the space space we hope to encourage more widespread adoption and support DeFi onboarding.
To begin with the following custodians will be listed on Nexus for their users to purchase cover:
All six of the custodian contracts are live that members can stake to enable cover purchases. With some staking happening already there is now cover available for members to purchase.
Stakers gain rewards for staking as with smart contract cover. 50% of each cover purchased is divided proportionally between the stakers. Stakers will therefore receive rewards on all custody covers purchased on that contract after they stake. Burning happens in the same way too; if there is a successful claim then all stakers will be burned proportionally.
Nexus is a community based mutual and therefore will always rely on a member’s vote to decide on claims. But the cover wording document acts as a guide for voting members.