Protecting one’s cryptocurrency assets requires a very different approach. Attaining a degree of insurance is often difficult, if not impossible. Nexus Mutual may offer a solution, although it may only be a stepping stone to more versatile offerings.
The Nexus Mutual Vision
It is commendable to see projects acknowledge the demand for insurance in the cryptocurrency space. Most people may think they don’t need extra protection when their funds are at stake. Reality has taught many different lessons in this regard. More often than not, a loss of funds occurs due to technical failures, primarily where security is concerned.
For Nexus Mutual, smart contracts are a key point of focus. Not entirely surprising, given the number of recently launched projects with unaudited contracts.
On social media, many people claim how a contract can only be as secure as the one who audited it. An interesting point of view, but that doesn’t mean no audits should occur at all. These contracts control millions, and sometimes billions in user funds. The last one can expect is to have the code reviewed before it is made accessible.
Nexus Mutual provides a blockchain-based solution to introduce shared risk. The more people who obtain insurance, the more the risk is shared among participants without using a centralized insurance company. Leveraging this “smart contract cover” is a great step forward for cryptocurrency enthusiasts worldwide.
Alternative Risk Sharing Explained
Some people may wonder how insurance can be achieved without a centralized provider. In theory, that is impossible. However, there is an option to achieve an alternative risk sharing solution. Mutual coverage is a valid replacement for traditional insurance, especially in the highly competitive cryptocurrency industry.
More importantly, this approach gives Nexus Mutual a few interesting options for the future. Being able to introduce crypto wallet coverage, for example, is one option to look forward to. Ultimately, the team aims to provide standard products as well. Whether that will be possible, relies heavily on successes achieved in the cryptocurrency space.
Building a Strong Community
Without middlemen involved, the decision-making process has to be done very differently. Nexus Mutual is a community-driven project where members decide which claims are valid. Member decisions are recorded and enforced by Ethereum smart contracts. All members joining the mutual become a legal member of a UK company.
To build this community, Nexus Mutual uses token-drive economic incentives. Its native NXM token provides membership, as well as several benefits. Tokens owned can be used to purchase cover and partake in claims assessment, underwriting, and governance. Clearly a utility token, rather than just a speculative asset.
Current Participants and Partners
A venture on this scale will not succeed without the right participants and partners. Nexus Mutual checks a lot of the right boxes from day one. Core participants include Blockchain Capital – one of the companies exploring the STO space – as well as Semantic Ventures, Kenetic, 1kx, and so forth.
Combined with partners like Solidified, Incentivai, and London Crypto Services, big things await on the horizon. Tackling the insurance space – albeit in a different way – is never an easy challenge. It is an industry that will benefit from blockchain technology in many different ways. Finding the right approach may hinge on building community-driven tokenomics.