HOW IT WORKS

NXM Token Model

Tokenised membership rights in Nexus Mutual.

KEY BENEFITS

The Tokenised Mutual Model

Membership rights will be represented by tokens. Tokens can be used to purchase cover as well as participate in claims assessment, risk assessment and governance. All funds raised from token purchases belong to members.

Capital Efficiency

Tokenisation of the mutual enables a scalable way to raise risk capital, with the model encouraging an inflow of funds only when required.

Aligned Incentives

With all members of the mutual benefiting from the platform's success, aligned incentives will foster a community spirit rather than the existing adversarial and unbalanced relationship between individual and institution.

Value and Performance

The token price is linked to the adoption and underlying performance of the mutual, rather than speculation.

Continuous Token Model

Nexus Mutual uses a Continuous Token Model. NXM price depends on how the mutual is performing financially.

NXM can be purchased and redeemed directly through the platform.

Token price rises when the mutual has adequate funds.

Minimum Capital Requirement (MCR)

The MCR is the level of funds required to be very confident all claims can be paid.

MCR will have a fixed minimum value that will be set at launch.

It is a major component of the token model, influencing price and redemption conditions.

NXM Price is Formula Driven

This is the full formula for calculating the token price in ETH.

SF is a Scaling Factor which will be calibrated at launch.

NXM Price and Capital Pool

The mutual has adequate funds when the amount of money it holds (known as the "Capital Pool") is greater than the MCR.

The ratio of funds held to funds required is known as MCR%, which directly impacts the token price.

Token price rises when the mutual has adequate funds

When the Capital Pool decreases, so does the token price.

For example, when a claim is paid, the Capital Pool shrinks but the MCR remains almost unchanged, meaning the MCR% decreases, lowering the token price.

If funds are low, the token price lowers to re-capitalise the fund.

If cover is purchased, the size of the Capital Pool increases.

The MCR also increases, but in nearly all cases by less than the Capital Pool. Therefore MCR% increases, raising the token price.

As more cover is purchased, and the fund grows, the token price increases.

Purchasing NXM

Purchasing NXM tokens increases the token price.

The token price increases as new tokens are minted.

While most of the short term price movements will be driven by MCR% changes, the minting of new tokens will be a long-term driver of the price, reflecting platform adoption.

Spare NXM

NXM can be redeemed for Ether from the mutual.

NXM can only be transferred to other Nexus Mutual members.

Redemption restrictions:

  • Capital Pool needs to be above the MCR.
  • Redemptions are capped per transaction.
  • Capital Pool must have enough liquidity in Ether.
  • Redemption price is 2.5% below purchase price.

NXM Token Uses

Only Nexus Mutual members can purchase, hold and use NXM.

Purchase Cover

  • 90% of NXM used to purchase cover is burned.
  • 10% is retained by the Member and can be used as a deposit when submitting claims.

Governance

  • NXM is the voting weight in governance.
  • Participating in voting earns NXM.
  • Voting locks tokens from redemption & transfer for a period of time.

Claims Assessment

  • NXM can be staked to vote on claims.
  • Voting with the consensus earns NXM.
  • Voting against the consensus locks the stake for longer time periods.
  • Vote fraudulently and the stake will be burned.

Risk Assessment

  • NXM can be staked against any smart contract to lower the price of cover.
  • When cover is purchased the staker earns NXM.
  • Should a valid claim occur within 250 days some stake is burned.

Be first

Stay tuned for the latest development updates. Sign up to our newsletter.

Membership of the mutual will be represented by “NXM” tokens. By signing up, you’ll be the first to know when we launch.