Nexus Mutual Launch — How our digital cooperative works

Hugh Karp
Hugh Karp
May 22, 2019 · 5 min read

Update: Smart contracts are live on main-net. You can join the mutual as a member, buy NXM tokens and stake as part of Risk Assessment. Cover will fully activate once members have collectively contributed 12,000 ETH.

  1. Sign-up as a member (KYC + 0.002 ETH fee)
  2. Buy NXM by contributing ETH to the DAO

NXM token holders own the surplus generated from cover purchases.

Very soon we’ll be deploying our smart contracts to the Ethereum main-net and you will be able to join Nexus Mutual as a Member. Here is a quick run-down of the way it will work.

Becoming a Member

Before interacting with the Nexus Mutual platform either to purchase NXM tokens, buy cover or participate in other staking activities you will need to join Nexus Mutual as a Member. This involves:

  • paying a small membership fee of 0.002 ETH;
  • undergoing a KYC (know your customer) process; and
  • Agreeing to the way Nexus Mutual Ltd, a real UK based company, operates. See the full Articles of Association and Rules of the company for details.

Signing up is a simple process, you can do it independently or as an integrated part of purchasing Smart Contract Cover (after the ‘Initial Phase’ has been completed — see below).

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Unfortunately we cannot accept Members from all jurisdictions due to various laws and regulations. We recognise this is not ideal but we believe the chances of Nexus Mutual disrupting the age old insurance industry are maximised by fully complying with all regulations. We will be working hard to reduce this list in the future.

Initial Phase

When Nexus Mutual is first launched there will be no funds held in the Capital Pool which is the shared pool of Members’ funds. As capital is required to ensure any claims can be paid, cover will not be available for purchase until approximately 3m USD in ETH - the Minimum Capital Requirement — has been collectively contributed by Members.

Importantly, all contributions to the capital pool are owned by Members and do not go to the founding team, they remain in the mutual and are held by the Mutual’s smart contracts.

To contribute you first need to sign up as a Member and then you will be able to purchase NXM Tokens in exchange for ETH. NXM Tokens will be immediately available in your wallet.

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Risk Assessment will be fully operational in the Initial Phase, which means you can stake NXM Tokens against smart contracts you believe are secure and be the first in line to earn rewards once cover purchases go live. For all of those that have indicated interest in staking against some of the key #defi smart contracts, the initial phase will be the best opportunity to do so. Do read the Smart Contract Cover wording document if you wish to stake.

Token Model

A description of the token model can be found on our website or for full details see our docs pages. Key points are as follows:

  • Nexus Mutual uses a bonding curve to calibrate capital sufficiency and token price. So the earlier NXM Tokens are purchased in the Initial Phase, the lower the token price will be;
  • tokens can be redeemed if the capital pool has sufficient funds (see here for all restrictions that apply);
  • the token price is higher when the mutual is adequately funded and lower when it is less well funded;
  • the long-term token price is expected to be driven by the capital needs of the mutual, which is driven by the amount of cover purchased; and
  • tokens can only be transferred to other Members.
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Purchasing Smart Contract Cover

Purchasing Smart Contract Cover will go live immediately after the Initial Phase has ended. Once this happens any Member can purchase cover with NXM Tokens directly or by simply using ETH or DAI. To generate a quote for cover you need to provide:

  • the smart contract address you want cover against;
  • the amount of cover you want in ETH or DAI (Cover Amount); and
  • the period of time you want cover for (Cover Period).

A quote will be generated in your purchase currency and you can proceed to purchase if you wish. If you aren’t already a Member you will be asked to sign up at this point.

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If you purchased NXM Tokens in the initial phase, you will be able to use them to buy cover once the Minimum Capital Requirement has been raised. As the NXM Token price will be higher after the Minimum Capital Requirement is reached you would effectively be purchasing cover at a discount.

Initial Token Allocation

Initially, 3,000,000 NXM Tokens will be generated and allocated to the initial contributors, the team as well as our Foundation (Collective Risk Services).

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The chart represents the initial allocation only (similar in concept to a pre-mine), as the token model is continuous, tokens will start being generated and/or destroyed according to the following activities:

  • Generated when contributions are made to the capital pool;
  • destroyed when cover is purchased;
  • destroyed when NXM tokens are redeemed for ETH;
  • generated as rewards for Risk Assessment, Claims Assessment and Governance; and
  • destroyed as punishment for Risk Assessment and Claims Assessment.

Importantly, NXM tokens are only generated when a Member contributes either funds or expertise to the mutual.

Craving more details?

All aspects of Nexus Mutual are described in detail in our docs. It’s honestly the best place to dive in if you’re looking to understand further.

Join our Discord to get be the first to know when we launch.

Note: the initial NXM allocation split may be slightly different to the chart above. The split depends on the ETH price just prior to launch, which at the time of publication wasn’t available. The total initial allocation of 3m tokens is fixed, only the split can change. This chart will be updated when final values are known.

Nexus Mutual

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