Previously, I’ve discussed smart contract bug insurance as a linchpin for DeFi adoption. DeFi insurance will enable more users to risk participating in new money legos with peace of mind knowing they have a new kind of DeFi “car insurance” to protect their assets but 2 major challenges have been holding back DeFi insurance, namely Nexus Mutual.
- Minimum coverage paid upfront for timeframes that don’t reflect the fast pace of DeFi to move funds instantly (ie 30 days on Nexus)
- Sign-up + KYC required to buy Nexus smart contract cover
When Cover Protocol launched in the fall of 2020, it was an exciting next step to test the demand for a KYC-less DeFi insurance product. With the introduction of Cover, we also saw a new opportunity for Cover to cover Nexus and Nexus to cover Cover–in other words the birth of reinsurance in DeFi! Unfortunately, if you fast forward to late December, Cover’s own smart contracts suffered another exploit related this time to infinite minting, which led to Cover’s token going to $0 (they’ve since relaunched a new token) and the Cover application dropping from nearly $100M in TVL to about $5M TVL at its lowest point.
While Cover suffered a major setback, it did prove that there’s market demand for KYC-less smart contract cover. When you return to Nexus as a reliable mutual for purchasing smart contract bug protection, it makes sense that Armor.Fi would be the next iteration to help grow this market for DeFi insurance.
Armor – A New DeFi Insurance Distributor
Armor is a decentralized brokerage for cover, underwritten by Nexus Mutual’s insurance. One can protect their investments against smart contract risks across popular protocols such as Uniswap, Sushiswap, AAVE, Maker, Compound, Curve, Synthetix, Yearn, RenVM, Balancer and more. Armor offers a massive improvement as the “distribution layer” on top of the underwriting layer by Nexus Mutual. Remember, Nexus Mutual has a capital pool of 162k ETH, which is enough to underwrite $2.04B in coverage even though Nexus currently has $315M of active cover! Nexus uses a model where every $1 deposited/staked equates to $10 of available cover so there’s a huge amount of capital to be utilized by new insurance distributors like Armor.
The ARMOR token incorporates a number of operational and governance functions at Armor, including governing on future upgrades and proposals for Armor’s protocol. ARMOR tokens can be acquired by farming during the initial token distribution event which is taking place right now or by participating in the vested liquidity and usage reward programs which includes incentives for staking wNXM, staking arNFTs, and by using the product to protect one’s deployed assets across various protocols. Also, one can buy ARMOR using a DEX aggregator which will source liquidity from SushiSwap or Uniswap, but as always, this is not a recommendation or endorsement to buy ARMOR.
If you’re simply interested in farming ARMOR rewards, you can skip this next bulleted section but here’s a quick rundown of all the different products available and those still coming to Armor.
- As noted earlier ARMOR is the governance token of the protocol, to vote on protocol updates, fee model constants, and claims assessment.
- ArNXM Yield Vault allows users to deposit their wNXM…
Hi! My name is Lark Davis!
I’m a cryptocurrency investor with years of experience and I’ve been making consistent profits in the crypto space.
I’m passionate about helping others do the same, so I run multiple educational channels on crypto investing.
