DeFi TVL (Total Value Locked, similar to AUM) for applications on Ethereum have reached new all-time highs of $4.6B USD and more importantly, 4.5M ETH. While the champagne is flowing, those of us who have been around for the highs and lows of crypto know better than to not think about the risk. The #1 risk in using DeFi applications is a smart contract bug that leads to a total loss of funds. Thankfully, while DeFi TVL has grown by over 80% the last month, one of the most successful DeFi projects has been the leading “DeFi insurance” provider, Nexus Mutual. Nexus, a people-powered alternative to insurance built with smart contracts on Ethereum, offers a product called Smart Contract cover, which allows mutual members to pay a premium (1.3% to 20% APR depending on the DeFi app) to ensure a payout in ETH or DAI if a smart contract bug is ever discovered.
Think back to 2016 and imagine if this had existed during the DAO Hack which lost 3.6M ETH or $1.4B ETH based on today’s ETH price near $400!
Nexus has grown remarkably from ~7,000 ETH a year ago to over 86,000 ETH in the mutual capital pool, which is up over 4X in just the last 30 days. Nexus also boasts a new all-time high of $18M USD in active cover.
For the new and advanced DeFi investor, buying Smart Contract Cover from Nexus Mutual is as easy as quoting and buying car insurance–actually easier. Nexus provides protection for nearly all major DeFi apps including Compound, Maker, Synthetix, Aave, dYdX, Curve, Balancer, Uniswap, and more.
Here’s how to buy Nexus Smart Contract Cover:
- Go to app.nexusmutual.io/cover
- Click Buy Cover
- Search or choose a DeFi app to buy cover for
- Specify how much ETH or DAI you’d like if a bug is discovered
- Choose how many days of coverage (min of 30 days)
- Click Get Quote
- Choose whether to buy cover in ETH or NXM (the native token of Nexus)
- Buy Cover*
*Nexus Mutual is regulated in the UK and as of today, requires members submit to a KYC process. They will spin out into a DAO in the future and hope to eliminate KYC. For now, it’s a necessary compromise to provide the world’s 1st and only Smart Contract Cover.
If you’d like more help through this process, watch my Nexus Mutual tutorial on YouTube to walk through buying Smart Contract Cover.
Owning a Part of the Mutual and Staking with the NXM Token
Alternatively, one can own a part of Nexus by buying the NXM token at nexusmutual.io if they submit to the Nexus KYC. Once one buys NXM with ETH, a mutual member can stake NXM against DeFi app smart contracts to offer Smart Contract Cover, and in turn earn a proportion of the 50% of cover premiums, depending on how much NXM is staked. Staking NXM can also result in a loss of the staker funds if a smart contract bug is discovered and mutual members make a claim, resulting in burning of NXM by stakers which pays out ETH to those who were holding Nexus Smart Contract Cover. You can learn more about Nexus Mutual staking NXM and how to earn premiums at app.nexusmutual.io/staking.
It’s worth noting that Nexus Mutual has so much more room to grow, as it’s protecting 0.39% of the Total Value Locked (TVL) in the $4.6B DeFi market. This is where the NXM token becomes an innovative tool to capitalize the mutual, align incentives of the mutual backers and mutual…
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.
