What is Nexus Mutual (NXM) | What is Nexus Mutual token | What is NXM token
What Is NXM (NXM)?
Launched in May 2019, Nexus Mutual is a decentralized insurance protocol built on Ethereum. It offers users the ability to take out covers on smart contracts through the usage of its native token NXM.
Nexus Mutual uses a risk-sharing pool that allows anyone to purchase on insurance cover or contribute their capital to the pool for future rewards. Nexus Mutual tries to disrupt the insurance industry by transitioning the power over the pooled resources to the individual people. Anyone is allowed to participate, as the mutual is owned by its members. Users can contribute Ethereum ( ETH) to the pool for NXM.
Who Are the Founders of NXM?
NXM was founded by Hugh Karp. Before founding NXM, he worked as the CFO of Munich Re.
He has also worked as an actuary in life insurance at MLC & Nab Health.
What Makes NXM Unique?
Nexus Mutual is taking on the issue of smart contract vulnerability and provides users with a level of protection that can help avoid losses.
Nexus Mutual’s first product were smart contract covers that provided protection for value storing contracts. In order for the project to start processing claims, it needed to reach a pool of 12,000 ETH, which was achieved two months after the launch.
The NXM token represents the membership rights in Nexus Mutual, along with the ability to participate within the ecosystem through claim and risk assessments and governance. The token leverages a bonding curve to determine the price, which is driven by how much capital the Mutual has and how much capital it needs to meet all of the claims with a certain probability.
Users can stake NXM to vote on claim assessments and on whether or not a certain claim needs to be paid out. The members who decide to vote in accordance with the consensus are rewarded with NXM, whereas the ones that vote against it have their tokens locked for a period of time.
Members fulfill several roles, one of which is that of assessing the risk of each smart contract. Whenever a claim is filed, they are responsible for voting on the legitimacy of that claim and on whether the payout can be made or not.
Members can also use their tokens to vote on smart contracts based on how secure they think each particular contract is. The more NXM is staked on a smart contract, the cheaper it becomes to purchase cover for it; the large amount at stake is an indicator that the contract is considered safe by many members.
What Does Nexus Mutual Do?
As the project’s name implies, Nexus Mutual is a mutual like any other. An insurance mutual is a firm that is entirely owned by its policyholders. PEMCO and Mutual of Omaha are traditional examples of an insurance mutual.
Any profits these businesses make are recycled back into the company or distributed to policyholders as dividends. This model differs from how an insurance company, like Allianz, works. Profits made in the latter model are distributed to shareholders, regardless if they are policyholders or not.
There are advantages and disadvantages to both, and Nexus Mutual incorporates features of each. But due to how nascent the project is, the current applications are limited. So far, though, these few applications have been compelling and worth our attention.
For starters, Nexus Mutual does not protect users from earthquakes, car damage, or long-term disability. Instead, it’s focused on a crypto-only use case: Smart contract failure.
As veterans and newcomers have seen time and again, the world of digital assets is fraught with vulnerabilities. This could be in the form of exchanges being cracked, a token wallet malfunctioning, or even fat-finger errors. These days a common concern, especially in the decentralized finance (DeFi) space, is that of smart contract vulnerabilities.
Even smart contracts that have been audited by notable third-parties have fallen victim to some complex attack. And in many cases, it’s the users, as well as project founders, who suffer lost funds.
Nexus Mutual is taking on this particular vulnerability. According to the project’s GitBook, so-called “ Smart Contract Cover“ would provide users an extra level of safety for events like the DAO hack in 2016. The definition is quite firm about which events would trigger a payout, too.
A payout isn’t triggered by a phishing attack or problems created by network congestion, for instance. Likewise, oracles, miners, and entities external to the smart contract are not covered.
That’s why users should review the conditions of the coverage they are purchasing.
But, as we’ll see below, the members of the mutual have the final word on whether a payout should be triggered or not.
How to Buy Smart Contract Cover
In broad strokes, Nexus Mutual allows members of its community to buy cover against a particular risk. It’s an enticing proposition, but how does it work?
Go to the Nexus Mutual site and click on “Buy Cover” from the home page. Then you need to decide which protocol you want coverage for. The range is broad and includes all the major DeFi protocols from 1inch.exchange, yEarn Finance, Opyn, and many others.
_Source: _Nexus Mutual
From there, you then need to decide how much coverage you want and for how long. After you complete this step, and you are not already a member, you will be asked to join the mutual.
Joining Nexus Mutual entails paying 0.002 ETH and filling out standard KYC/AML processes. Though it is a DeFi-centric protocol, Nexus Mutual is a legally registered company based in the United Kingdom.
Being a member also means that you are an NXM token holder. Members are responsible for arbitrating governance proposals, as well as claims and risk assessments.
Let’s take a closer look at the role of Nexus Mutual members.
How Does the NXM Token Work?
The NXM token represents governance rights and affords members the ability to participate in claims and risk assessment. Hodlers of the NXM token operates Nexus Mutual. Members can’t vote until they stake NXM tokens. And earning NXM tokens incentivizes them to participate. Again, only those who vote on the winning side earn new tokens with rewards flowing in proportion to the size of the payout
NXM tokens gain value when Nexus Mutual’s insurance obligations are thoroughly covered. But prices drop as users purchase more cover. This incentivizes more investors to join.
To get more technical, Nexus Mutual leverages a bonding curve to determine NXM’s price. The amount of capital locked in the protocol and capital requirements needed to meet potential outstanding claim demands determines the price.
That’s a long way of saying that the more capital that’s locked in the Nexus Mutual protocol, the higher the price of NXM will be. Also, members may share in any excess capital. NXM tokens can be redeemed for ETH directly from the Nexus platform. And there are no immediate plans to list NXM on an exchange.
The NXM token can only be purchased through the Nexus Mutual platform. It is not for sale on Uniswap, Binance, or any other trading platform.
The token economics for this cryptocurrency are designed so that all value created is a function of the health of the platform. Though the token’s price is technically market-driven, the formula is slightly more complicated than simple supply and demand. This is the equation:
_Source: _Nexus Mutual Token Model
The MCR is the level that defines whether all claims on Nexus Mutual can be fulfilled or not. The higher this value, the higher the probability that all claims can be paid. So, the more funds that are on the platform, the more expensive the token will be.
And as every token holder is also a member of the platform, individual members benefit from the success of the whole. As the platform becomes richer, so too do all of its members.
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How and Where to Buy Nexus Mutual (NXM)?
NXM has been listed on a number of crypto exchanges, unlike other main cryptocurrencies, it cannot be directly purchased with fiats money. However, You can still easily buy this coin by first buying Bitcoin, ETH, USDT from any large exchanges and then transfer to the exchange that offers to trade this coin, in this guide article we will walk you through in detail the steps to buy NXM
You will have to first buy one of the major cryptocurrencies, usually either Bitcoin (BTC), Ethereum (ETH), Tether (USDT)…
We will use Binance Exchange here as it is one of the largest crypto exchanges that accept fiat deposits.
Binance is a popular cryptocurrency exchange which was started in China but then moved their headquarters to the crypto-friendly Island of Malta in the EU. Binance is popular for its crypto to crypto exchange services. Binance exploded onto the scene in the mania of 2017 and has since gone on to become the top crypto exchange in the world.
Once you finished the KYC process. You will be asked to add a payment method. Here you can either choose to provide a credit/debit card or use a bank transfer, and buy one of the major cryptocurrencies, usually either Bitcoin (BTC), Ethereum (ETH), Tether (USDT)
Step by Step Guide : What is Binance | How to Create an account on Binance (Updated 2021)
Next step - Transfer your cryptos to an Altcoin Exchange
Since NXM is an altcoin we need to transfer our coins to an exchange that NXM can be traded. Below is a list of exchanges that offers to trade NXM in various market pairs, head to their websites and register for an account.
Once finished you will then need to make a BTC/ETH/USDT deposit to the exchange from Binance depending on the available market pairs. After the deposit is confirmed you may then purchase NXM from the exchange.
Exchange: Nexus Mutual Exchange
Apart from the exchange(s) above, there are a few popular crypto exchanges where they have decent daily trading volumes and a huge user base. This will ensure you will be able to sell your coins at any time and the fees will usually be lower. It is suggested that you also register on these exchanges since once NXM gets listed there it will attract a large amount of trading volumes from the users there, that means you will be having some great trading opportunities!
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