Understanding staking with Nexus Mutual

Since launch, Nexus Mutual has grown to write $9.6m of cover, welcomed 899 members and has protected its members by paying its first claims. Our community has given us regular feedback and suggestions and one thing that was raised was the limitations of our staking system. So we’ve designed a new staking system called pooled staking which will mean a few things:

• Decreasing the knowledge barrier to staking with Nexus.
• A simpler, easier to understand system to encourage more input from our members.
• Increased rewards for Risk Assessors.
• More even distribution of rewards for Risk Assessors.
• Removing the queue system.
• Decreasing lock-up periods.

Introducing pooled staking has been our biggest upgrade since launch. We’ve put a huge amount of time and work into this part of our system because it is integral to the future of Nexus. Staking with Nexus underpins the whole system; it is an active staking system which determines how much cover can be written on any smart contract. This means that without staking, Nexus wouldn’t be able to write cover.

Using Nexus Mutual to stake on a smart contract system is a way of demonstrating you think a contract is safe. Any member can become a risk assessor by staking their NXM (Nexus native tokens) on a contract to earn rewards. If there is an accepted claim on that contract, the risk assessor’s stake can be burned. There must be some staking by risk assessors to enable cover purchases on any new smart contract or smart contract system.

Here’s how staking with Nexus Mutual works:

• Risk assessors determine that they think a smart contract is secure.
• Risk assessor stakes NXM (Nexus native token) on that smart contract.
• Cover is now available for members to purchase.
• Member purchases cover on that smart contract and is protected in the event of a hack.
• Risk assessor gains rewards based on the cover purchased.
• If a hack takes place and successful claims are made, the risk assessor’s stake gets burned (which then goes towards paying out claims).

Here’s why the new changes are better for the community:

• Risk assessors can use their deposited NXM to stake against multiple smart contracts at once.
• Risk assessors are encouraged to stake more as the rewards are more evenly distributed.
• Risk assessors’ rewards have been increased (by community vote) from 20% to 50% of the cover price.
• Decreasing the lock-up periods means that there are fewer barriers to staking.
• More staking means more cover can be written on a specific smart contract system which means we can provide more protection for our members.

Here’s how the new pooled staking system works:

• Deposit NXM
  Members deposit NXM (Nexus Mutual native token) from their account into the risk assessment section of our app.
• Stake those NXM to smart contracts you think are secure
  Stake those NXM against any smart contract system that you deem secure. This will enable smart contract cover to be purchased on that system. You can stake 10 times the amount you deposit in NXM over several contracts.
• Earn rewards
  Proportional rewards system means members will earn rewards for every smart contract system they stake against.
• Deposit could be burned
  If a sucessful claim is made against a smart contract that you have staked on, your stake will be burned.

Here’s an example:

• Deposit 100 NXM into the risk assessment section of Nexus Mutual app.
• Stake (up to) 1000 NXM against as many smart contracts as you want.
• Max stake per contract is 100 NXM, the same amount as the initial deposit.
• Earn rewards on every smart contract you have staked against.
• If a claim is made on a smart contract that you have staked against your stake will be burned.

Here are the parameters of the new system

• Max staking per contract = initial deposit
• Min staking per contract = 20 NXM
• Max total of all staking = up to 10x your initial deposit
• Unstake lock up period = 90 days