We are excited to announce that Nexus Mutual has launched. We are a fully digital discretionary mutual running on the public Ethereum blockchain. Our first product is Smart Contract Cover.
We are operating as a ‘Digital Cooperative’ which means we have linked a combination of smart contract code (blockchain software enabling the scalable coordination of disparate individuals) to our own legal entity in the UK. We are decentralised, so members have control and can vote to replace board members at any time. We enable members to share risk directly with each other and all member funds are held in smart contracts. But we also have the reassurance of being a legal entity and fully comply with all regulations. (Read more about that here.)
Smart Contract Cover
With our first product, Smart Contract Cover, our members will be able to protect themselves against smart contracts bugs including on the key Decentralised Finance smart contracts. This is the first product of its kind and will protect our users from losing their funds, while also allowing developers to deploy contracts with greater confidence.
One of the challenges Ethereum faces is the ability to trust smart contracts. Since mid-2016 there have been three high profile ‘hacks’ of Ethereum smart contracts resulting in the loss of large volumes of funds against the intention of the code. Blockchain gives us confidence that smart contracts will operate as coded but regular users can’t always be confident the code will operate as intended. We believe that the Ethereum community will benefit from another safety net.
To address this need we have developed Smart Contract Cover, a product that is designed to pay-out claims if there is ‘unintended code usage that results in a material financial loss’. Members will join Nexus Mutual and once they collectively contribute approximately $3m worth of Ether, members can purchase smart contract cover. Tokens will be generated when a member contributes either funds or expertise to the mutual. The initial board members will provide qualified technical guidance to the members of the mutual as well as enact emergency functions should they be required. (For full details on how it will work, read our post.)
Ultimately, our goal is to launch a mutual risk sharing entity run entirely on the public chain that allows the Ethereum community to share a critical risk with each other. Long term we hope to expand to more towards standard products, like earthquake cover, where traditional insurance providers are often unable to access underserved markets.