[wNXM] MIP6 Collateral Onboarding Application for Wrapped Nexus Mutual Token
- Who is the interested party for this collateral application?
- Provide a brief high-level overview of the project, with a focus on the applying collateral token.
Nexus Mutual describes itself as a people powered alternative to insurance. Mutual members can take out coverage on a smart contract in order to protect against technical risks, or stake NXM on a smart contract in order to underwrite some of the risk of coverage in exchange for earnings. The NXM token is used both to stake on cover (which allows more customers to purchase cover and at a lower price) as well as to adjudicate claims.
Nexus requires KYC for membership in the mutual, and NXM tokens are subject to a whitelist which restricts their free transfer. However, a wrapper contract (wNXM) without whitelisting functionality has been created to allow non-members to own NXM tokens. wNXM can be freely used on decentralized apps and transferred between users, and any Nexus member can redeem wNXM for NXM through the contract.
NXM has a unique token model based on a bonding curve that controls issuance of NXM tokens based on the financial health of the mutual. This helps ensure that Nexus has enough funds to cover outstanding cover written, without impacting capital efficiency by having too much money on hand.
NXM tokens are effectively partially backed by the Nexus Mutual capital pool, which is currently made up of ETH and some DAI. This may provide some level of price stability to the NXM token (and wNXM by extension) relative to an entirely unbacked token or one fully reliant on future cash flows.
- Provide a brief history of the project.
Nexus Mutual was started in 2017. The project continued developing the protocol and legal framework until it launched on main-net in May 2019. 6 weeks after launch the initial capital had been contributed and the protocol went fully operational allowing cover to be bought. More recently the project has seen material growth, increasing the capital in the mutual from around $5m to over $60m, off the back of DeFi growth and yield farming.
- Link the whitepaper, documentation portals, and source code for the system(s) that interact with the proposed collateral, and all relevant Ethereum addresses. If the system is complex, schematic(s) are especially appreciated.
Source Code: Nexus Mutual · GitHub
wNXM Code: GitHub - peppersec/wrappedNXM
NXM token contract: https://etherscan.io/token/0xd7c49cee7e9188cca6ad8ff264c1da2e69d4cf3b
wNXM token contract (this is the token that would interact with Maker): https://etherscan.io/token/0x0d438f3b5175bebc262bf23753c1e53d03432bde
- Link any available audits of the project. Both procedural and smart contract focused audits.
Solidified audit report: audits/Audit Report - Nexus Mutual [22.04.2019].pdf at master · solidified-platform/audits · GitHub
G0 Group audit report: Audits/G0Group-NexusMutual2020Jun.pdf at master · g0-group/Audits · GitHub
- Link to any active communities relating to your project.
Telegram: Telegram: Join Group Chat
- How is the applying collateral type currently used?
NXM is used for mutual members for risk assessment (underwriting) purposes. By staking NXM on a cover contract, members can earn some of the fees for issuing coverage and increase the maximum coverage limits.
If a claim is made, NXM holders vote to approve or deny the claim - Nexus is a discretionary mutual so there is NO OBLIGATION to pay claims, it is entirely dependent on NXM vote. NXM is also used to vote on governance proposals.
- Does one organization bear legal responsibility for the collateral? What jurisdiction does that organization reside in?
wNXM is a decentralized token, no organization bears legal responsibility for it.
NXM represents membership rights in Nexus Mutual Ltd, a company limited by guarantee in the UK. Nexus Mutual Ltd doesn’t bear legal responsibility for NXM, but NXM holders have legal rights as per the Articles of Association and Rules of Nexus Mutual Ltd.
- Where does exchange for the asset occur?
wNXM is traded primarily on decentralized exchanges such as Uniswap and Balancer. However, it was recently listed on Binance and is also listed on Huobi, so centralized exchange coverage seems to be increasing.
NXM can be bought and sold directly with Nexus Mutual via it’s bonding curve (only for members who have passed Nexus Mutual KYC).
- (Optional) Has your project obtained any legal opinions or memoranda regarding the regulatory standing of the token or an explanation of the same from the perspective of any jurisdiction? If so, those materials should be provided for community review.
I am not aware of any publicly available legal opinions addressing the project or token’s regulatory standing.
- (Optional) Describe whether there are any regulatory registrations for the token and provide related documentation (including an explanation of any past or existing interactions with any regulatory authorities, regardless of jurisdiction), if applicable.
None as far as I’m aware.
- (Optional) List any possible oracle data sources for the proposed Collateral type.
Centralized exchanges from (9) may offer price feeds.
The on-chain price feed for NXM as determined by the bonding curve formula may also be used. On the assumption that wNXM price should converge to NXM due to arbitrage opportunities the bonding curve price would provide a robust price feed for liquidation purposes.
- (Optional) List any parties interested in taking part in liquidations for the proposed Collateral type.
Disclosure: I hold wNXM