Insurance alternative Nexus Mutual follows DeFi activity on Polkadot, Cosmos, Binance Smart Chain

Nexus Mutual, a community-backed alternative to traditional insurance that uses a high-yield pool of funds tied to a blockchain to pay for claims, is expanding its coverage beyond Ethereum, the original decentralized finance (DeFi) location.

Nexus will be announced on Monday and will meet the growing demand from DeFi with “Protocol Cover”. This means that the decentralized reciprocity will now cover breakdowns in other popular smart contract networks like Polkadot, Cosmos and Binance Smart Chain (BSC).

Nexus is expanding its repertoire of insurable events beyond smart contract hacks to include attacks on oracles, the critical data feeds that trigger contracts, and things like governance errors, the company said.

Overall, the Nexus expansion is an interesting sign of DeFi’s growth – both on Ethereum and on competing networks.

The Nexus expansion plan is blockchain-independent, so to speak, but lists certain projects. For example, SushiSwap runs on some blockchains and these instances are all covered by reciprocity.

“We will add certain protocols as they become available,” said Hugh Karp, CEO of Nexus, in an interview. “Some of them are already running in multiple chains, so we will be upgrading to cover that when a project is running on Polkadot, Cosmos or Binance Smart Chain.”

Nexus uses the UK legal framework of a discretionary mutual company where members have no contractual obligations to pay claims. Instead, a pool of NXM token holders on the Ethereum blockchain wager assets against the likelihood of insurance claims and earn rewards or make payments if a claim is approved.

“The DeFi area has expanded massively and created new risks. We have updated the product to expand coverage for everyone,” said Karp. “Compared to the regular insurance industry, DeFi has these fast feedback loops and cycles where everyone learns from experimentation and then adapts very quickly. It’s incredibly powerful. “

Growth at Nexus has followed the explosion in the DeFi space for the past 12 months or so. The mutual’s active coverage is currently approximately $ 700 million, while the stake pool size (which fluctuates with the price of NXM) is approximately $ 1 billion.

“I think a lot of institutional capital is starting to invade or at least explore space. These [insurance alternative] is one of those key boxes, ”said Karp. “We’re getting a lot of interest from this side of things.”

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