Nexus Mutual, a community-backed alternative to traditional insurance, where a profitable pool of funds tied to a blockchain pays for claims, is expanding its coverage beyond Ethereum, the original place of decentralized funding (DeFi).
As announced on Monday, Nexus is meeting DeFi’s growing demand with “Protocol Cover,” which means that decentralized reciprocity is now covering breakdowns in other popular smart contract networks such as 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 vital data feeds that trigger contracts, as well as things like governance failures, the company said.
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All in all, the Nexus expansion is an interesting sign of DeFi’s growth – both on Ethereum and on competing networks.
The Nexus expansion plan is, so to speak, blockchain agnostic, but lists certain projects. SushiSwap, for example, runs on some blockchains and these instances are all covered by reciprocity.
“We will add certain protocols as they emerge,” said Hugh Karp, CEO of Nexus, in an interview. “Some of them will already be running on multiple chains and so we will be upgrading so that we can start when a project is running on Polkadot or Cosmos or Binance Smart Chain.”
Nexus uses the UK legal framework of mutual discretion 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.
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“The DeFi area has expanded massively, creating new risks, and we’ve 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 very quickly from experiments and then adapts. It’s incredibly powerful. “
The story goes on
Growth at Nexus has followed the explosion in the DeFi space over the past 12 months or so. Active coverage provided by the mutual is currently around $ 700 million, while the size of the staking pool (which fluctuates with the price of NXM) is around $ 1 billion.
“I think a lot of institutional capital is starting to invade, or at least explore, space. this [insurance alternative] is one of those key boxes, ”said Karp. “We’re getting a lot of interest from this side of things.”