Nexus Mutual: A member-owned alternative to insurance

Quick Take

  • Nexus Mutual is a member-owned capital pool, providing the blockchain-based application user market with coverage against smart contract vulnerabilities.
  • The project token, NXM, uses a bonding curve in order to incentivize efficient capital provision to the pool based on the Minimum Capital Requirement at any given time.
  • Of all the decentralized protocols in production state, Nexus Mutual sits the closest to the ‘centralized’ end of the decentralized continuum, requiring members to pass through KYC process and heavily relying on a 5-person advisory board that has been granted near-unilateral power over various key facets of the system.

Smart contract security relies on a combination of professional security audits and bug bounties. While improvements in the former continue to abound, with particular emphasis on the application of Formal Verification, vulnerabilities remain a constant in every day smart contract development: Daniel Perez and Benjamin Livshits of Imperial College estimated the existence of over 21,270 vulnerable Ethereum smart contracts as of February 2019.