Frequently Asked Questions About Nexus Mutual

Nexus Mutual is a decentralized risk-sharing protocol built on Ethereum that functions as an alternative to conventional insurance for the crypto world. Rather than depending on a centralized insurer, Nexus Mutual lets its members pool capital together and collectively determine cover pricing, claims outcomes, and governance direction.

Here is how the process works from start to finish:

• Members acquire NXM tokens to join the mutual and take part in governance.
• Stakers deposit NXM into staking pools to support specific protocols and earn yield.
• Cover buyers choose a protocol or asset they wish to protect and pay an annual premium.
• If a covered incident occurs — such as a smart contract exploit or oracle failure — the cover holder may file a claim.
• Claims assessors (NXM holders) vote to approve or reject the claim.
• Approved claims are paid from the capital pool in ETH or DAI.

Since 2019, Nexus Mutual has paid out millions in claims, shielding DeFi users from real losses across protocols including Compound, Yearn, and many others.

Getting cover on Nexus Mutual is a simple process. Follow these steps to start protecting your assets:

• Connect your wallet: Use MetaMask or any compatible Ethereum wallet to link to the Nexus Mutual app on the main site.
• Become a member: You must hold at least one NXM token to access cover. You can obtain NXM through the swap interface.
• Browse listings: Explore the cover marketplace with 184+ listings across Single Protocol Cover, Multi Protocol Cover, Crypto Cover, and Nexus Mutual Cover products.
• Select your cover: Pick the protocol or asset you want to protect (e.g., Aave v3, Uniswap v3, Pendle, Hyperliquid, etc.).
• Set your cover amount and period: Specify how much ETH or USD equivalent you want covered and for how many days.
• Pay the premium: Annual fees typically range from 0.12% to 13%+ depending on the risk profile of the covered protocol.
• Receive your NFT cover certificate: Your cover is issued as an NFT representing your coverage terms.

Cover on Nexus Mutual is available for a minimum of 28 days and can be purchased using ETH, DAI, or USDC depending on the product.

Nexus Mutual currently offers four primary cover product categories, each designed to address distinct types of risk within the crypto ecosystem:

• Single Protocol Cover: Guards against smart contract vulnerabilities, oracle manipulation, and governance attacks on a specific protocol like Aave v3, Uniswap v3, Curve, Lido, GMX, and many more.
• Multi Protocol Cover: Bundles coverage across several protocols into one policy, such as Beefy, Ether.fi, Derive (formerly Lyra), or Blue Chip Morpho Vaults & Markets. Ideal for users with funds spread across multiple DeFi platforms.
• Crypto Cover: Covers specific crypto assets against depeg events, custodian insolvency, or other asset-level failures. Examples include WBTC Depeg, Tether USDT Depeg, Ethena USDe Depeg, Coinbase Custody, Binance Custody, and Bybit Custody.
• Nexus Mutual Cover (Nexus Mutual branded): Curated cover products such as Elite Cover, Essential Cover, Entry Cover, Brava Conservative Cover, and Brava Advanced Cover that combine multiple risk layers into one streamlined package.

All covers are governed by specific cover wording documents that define exactly which events are covered and what conditions must be satisfied to file a successful claim. Always review the cover wording before making a purchase.

NXM is the native membership token of Nexus Mutual. It serves several vital roles within the ecosystem:

• Membership: You must hold NXM to access the Nexus Mutual app and purchase cover products.
• Staking: NXM can be staked into protocol-specific staking pools to support cover capacity. Stakers earn rewards proportional to premiums generated.
• Claims Assessment: NXM holders can serve as claims assessors, casting votes on whether submitted claims should be approved or rejected. Assessors earn rewards for participating but risk losing stake for dishonest voting.
• Governance: NXM grants holders voting rights in Nexus Mutual governance, enabling them to weigh in on protocol parameters, cover wording changes, capital allocation, and more.
• Bonding Curve: The price of NXM is determined algorithmically by a bonding curve tied to the size of the mutual's capital pool. Members may redeem NXM for ETH through the bonding curve under certain conditions.

There is also wNXM (wrapped NXM) — an ERC-20 version of NXM that can be traded on secondary markets like Uniswap or acquired on centralized exchanges by non-members. However, wNXM does not carry governance or staking rights on its own.

Staking NXM on Nexus Mutual lets you earn a portion of the premiums paid by cover buyers. Here is how to begin:

• Browse staking pools: Head to the Stake section and explore available protocol staking pools. Each pool is tied to specific cover products.
• Assess risk and APY: Consider each pool's risk level, current capacity, and historical performance before committing.
• Stake NXM: Deposit NXM into one or more pools. You can stake across multiple pools to spread your exposure.
• Earn rewards: Rewards are distributed from premiums paid by cover buyers. Higher-risk or higher-demand protocols generally offer better yields.
• Create your own staking pool: Experienced participants can establish and manage custom staking pools, setting their own commission and choosing which covers they back.

Important: staking NXM carries inherent risk. If a covered protocol experiences a valid claim, stakers in that pool may have a portion of their NXM burned to satisfy the payout. This is the fundamental risk-reward trade-off of the Nexus Mutual model — stakers act as the underwriters.

You can also delegate NXM to established pool managers who actively oversee risk on your behalf, letting you earn rewards with a hands-off approach.

Unlike most tokens with market-driven prices, NXM uses a bonding curve mechanism to set its value algorithmically. The bonding curve price of NXM is directly linked to the size of Nexus Mutual's capital pool (MCR — Minimum Capital Requirement).

• As more ETH enters the capital pool (from cover purchases or member buy-ins), the NXM price rises.
• As ETH exits the pool (via redemptions or claim payouts), the NXM price falls.
• The formula ensures NXM is always backed by a defined amount of capital — creating intrinsic value anchored to the protocol's financial health.

Members can purchase NXM at the bonding curve price directly through the Nexus Mutual app by sending ETH. They may also redeem NXM for ETH through the bonding curve, subject to certain conditions:

• The capital pool must exceed 100% MCR coverage ratio for redemptions to be permitted.
• Large redemptions may be restricted if they would push the pool below the MCR threshold.
• There is a 30-day lockup for newly acquired NXM before it can be redeemed.

This bonding curve mechanism is a core innovation of Nexus Mutual, establishing a sustainable capital model where NXM value is tied to the actual risk-bearing capacity of the mutual rather than pure market speculation.

If you have suffered a loss covered under your Nexus Mutual policy, you can submit a claim by following these steps:

• Go to Your Covers: Navigate to the "Your Covers" section in the Nexus Mutual app and locate the relevant cover NFT.
• Initiate a claim: Click "Submit a Claim" and provide evidence of your loss. This typically includes transaction hashes, on-chain proof of the incident, and a written account of what occurred.
• Pay the claim submission fee: A small ETH deposit is required to submit a claim, which is returned if the claim is approved.
• Await assessment: Claims are reviewed by the Nexus Mutual claims assessment committee — NXM holders who have staked their tokens to evaluate claims honestly.
• Voting period: Assessors are given a set period (typically 3 days for the initial round) to cast their votes in favor of or against your claim.
• Outcome: If the majority votes to approve, you receive your payout in ETH or DAI. If rejected, you can appeal or escalate to a second round of voting.

The key to a successful claim is supplying clear, verifiable evidence that directly connects the loss to a covered event as defined in the cover wording. Nexus Mutual has a strong history of paying out valid claims — with over $18 million disbursed to date across numerous incidents including hacks on Yearn Finance, Compound, and other major protocols.

Nexus Mutual cover has a defined scope. Understanding what is NOT covered is just as important as knowing what is. Common exclusions include:

• Rug pulls and exit scams: If a protocol team deliberately abandons the project and takes user funds, this is generally not covered unless the specific cover wording explicitly includes it.
• Front-end attacks: Phishing websites or DNS hijacking leading to losses on a cloned interface are typically excluded from smart contract cover.
• Private key compromise: If your own wallet is compromised due to a leaked private key or seed phrase, Nexus Mutual does not cover this — it is not a protocol-level failure.
• Market price losses: Normal market volatility and token price declines are not covered. Nexus Mutual is not investment insurance.
• Economic design failures: Events that some consider "working as designed" — such as flash loan attacks that technically exploit legitimate functions — may be contested. Cover wording specifies exactly what qualifies.
• Events outside the cover period: Losses from events that occurred before your cover started or after it expired are not eligible.
• Uncovered protocols: If the specific contract or version you were using is not explicitly listed in the cover, you may not be protected.

Always read the complete cover wording for your specific product before purchasing. Nexus Mutual provides detailed cover wording documents for each listing so you know precisely what is and is not included in your coverage.

Nexus Mutual operates as a decentralized autonomous organization where NXM holders govern the protocol. Core governance functions include:

• Protocol parameters: Members vote on changes to cover pricing formulas, staking mechanics, MCR adjustments, and other protocol variables.
• Cover wording: New cover products and amendments to existing cover wordings are approved through governance votes.
• Advisory Board: Nexus Mutual has an elected Advisory Board of 5 members who can exercise emergency powers in critical situations. Board members are chosen by NXM token holders and serve defined terms.
• Capital pool management: Significant decisions about how the capital pool is deployed or managed require governance approval.
• Improvement proposals: Any member may submit a governance proposal. If it achieves quorum and majority approval, it is implemented.

Governance voting on Nexus Mutual is conducted on-chain using NXM tokens, ensuring that those with the greatest economic stake in the protocol's health have the most influence over its future. This aligns incentives and creates a self-regulating system where poor decisions hurt the very voters who made them.

You can view all current and past governance proposals in the Governance section of the Nexus Mutual app, as well as on the community forum at forum.nexusmutual.io.

Nexus Mutual has been operating since 2019 and places security at the heart of its design. Key security measures include:

• Multiple professional audits: Nexus Mutual smart contracts have been reviewed by several leading security firms including Solidified, G0 Group, and others. Audit reports are publicly available.
• Bug bounty program: An active bug bounty program incentivizes white-hat security researchers to responsibly disclose vulnerabilities in exchange for rewards.
• Time-locks and multi-sig: Critical protocol upgrades require multi-signature approval and are subject to time-lock delays, giving the community time to scrutinize changes before they take effect.
• Advisory Board emergency powers: The elected Advisory Board can pause certain functions during emergencies to safeguard the capital pool.
• Capital adequacy ratio: The MCR system ensures the protocol maintains a minimum ratio of assets to liabilities at all times, providing a financial safety buffer.
• Skin-in-the-game: NXM stakers who underwrite cover have their own capital at risk, creating powerful incentives to select safe protocols and price risk accurately.

Since 2019, Nexus Mutual itself has not suffered any smart contract exploit, and the capital pool has remained solvent through multiple bear markets and DeFi crisis events. However, as with all DeFi protocols, users should conduct their own due diligence and recognize that no system is entirely risk-free.

Cover pricing on Nexus Mutual is dynamic and market-driven, set by the stakers who underwrite each pool. Prices vary considerably based on the risk profile of each protocol:

• Low-risk, well-audited protocols: Annual fees as low as 0.12% to 0.55% (e.g., Safe multisig cover starts at ~0.12%)
• Mid-risk DeFi protocols: Annual fees typically in the 1% to 4% range (e.g., Aave v3 at ~1.88%, Uniswap v3 at ~0.28%)
• Higher-risk or newer protocols: Annual fees from 4% to 8.9%+ (e.g., Hyperliquid at ~6%, Aevo at ~8.89%)
• Custody cover: Exchange custody cover ranges from ~1.95% to 8.9% depending on the exchange's risk rating
• Depeg cover: Stablecoin depeg products range from ~0.48% to 8%+ depending on the stability mechanism

The cover fee displayed in the Nexus Mutual app shows both the minimum and maximum price range — the actual price depends on how much cover capacity is currently available in the pool. Fees are paid upfront for the entire cover period and are non-refundable (except in cases of cover cancellation under specific conditions).

As a rough guide, covering $10,000 of Aave v3 assets for 90 days would cost approximately $47 — less than 0.5% of your protected value for three months of peace of mind.

Yes! Nexus Mutual has expanded well beyond Ethereum mainnet. Coverage is available for protocols deployed on numerous networks including:

• Ethereum mainnet — the primary network with the broadest protocol coverage
• Arbitrum — supported for protocols like GMX v2, Camelot, Ramses Exchange, and others
• Optimism — covered protocols include Velodrome, Exactly, and others
• Base — Aerodrome, Moonwell, and a growing selection of Base ecosystem protocols
• Polygon — various DeFi protocols on Polygon
• BNB Chain — select protocols including PancakeSwap and Venus
• Sonic — expanding coverage for Sonic ecosystem protocols
• Hyperliquid — specialized cover for the Hyperliquid perpetuals platform

The Nexus Mutual cover NFT is held on Ethereum, but the covered assets and protocols can reside on any supported chain. This means you can protect your DeFi positions across the multi-chain ecosystem from a single Nexus Mutual membership. The cover wording for each product specifies exactly which contract addresses and chains fall within the scope of coverage.

As new chains and protocols emerge, Nexus Mutual community members can propose adding fresh cover listings through the governance process.

Nexus Mutual is a mutual — not an insurance company — and is structured under UK company law as a discretionary mutual. To become a full member of Nexus Mutual and access all features (including purchasing cover, staking, and governance), you must complete a brief membership process:

• Membership application: You submit a membership request through the Nexus Mutual app.
• ETH contribution: A small membership fee in ETH is required (historically 0.002 ETH, subject to change).
• Identity verification: Nexus Mutual requires members to verify their identity (KYC) to comply with legal obligations as a UK-registered entity. This is handled through a third-party verification partner.

Importantly, Nexus Mutual does not store sensitive documents in a centralized manner that could be compromised. The KYC process is designed to remain minimal while satisfying applicable regulations.

For those who prefer to skip KYC, wNXM (wrapped NXM) is available on secondary markets and does not require membership. However, wNXM holders cannot directly purchase cover or participate in governance — they can only hold the token as a speculative asset.

Some cover products are also accessible through partner interfaces (like Armor.fi, OpenCover, etc.) which may have different onboarding requirements — though the underlying cover is still issued by Nexus Mutual.

Nexus Mutual is compatible with all major Web3 wallets that support Ethereum mainnet. The following wallets work seamlessly with the Nexus Mutual app:

• MetaMask — the most widely used Ethereum browser extension wallet
• WalletConnect — compatible with 200+ mobile wallets including Rainbow, Trust Wallet, and Argent
• Coinbase Wallet — Coinbase's self-custody wallet app and browser extension
• Ledger + MetaMask — hardware wallet users can connect via MetaMask for enhanced security
• Trezor + MetaMask — Trezor hardware wallets also work through MetaMask integration
• Safe (Gnosis Safe) — multi-sig wallets via WalletConnect are supported for institutional and DAO users

For optimal security, Nexus Mutual recommends using a hardware wallet when holding significant amounts of NXM or engaging in high-value transactions. The Nexus Mutual cover NFTs and NXM tokens are standard ERC-20 and ERC-721 tokens compatible with any wallet that supports these standards.

The Nexus Mutual app uses RainbowKit for wallet connections, delivering a smooth experience across all supported wallet types. Simply click "Connect your wallet" and select your preferred option.

Nexus Mutual has a thriving community and extensive resources to help you get the most from the protocol:

• Official documentation: docs.nexusmutual.io contains thorough technical documentation, protocol explanations, and guides for cover buyers, stakers, and developers.
• Community forum: The Nexus Mutual governance forum at forum.nexusmutual.io is where members discuss proposals, share analysis, and engage with the core team.
• Discord: The official Nexus Mutual Discord (discord.gg/aQjkzW5) is the main real-time community hub where you can ask questions, report issues, and connect with other members.
• Twitter / X: Follow @NexusMutual for protocol updates, incident alerts, and community announcements.
• GitHub: All Nexus Mutual smart contracts and frontend code are open source at github.com/NexusMutual.
• Dune Analytics: On-chain data dashboards track key Nexus Mutual metrics including capital pool size, cover volume, NXM price, and claims history.
• Support chat: The Nexus Mutual app features a live chat widget for direct support queries.

The Nexus Mutual team also publishes regular blog posts and monthly stats updates to keep the community informed about protocol health, new cover listings, and governance decisions. For media inquiries and business partnerships, you can reach the team through the Contact page at nexusmutual.io/contact.

Nexus Mutual positions itself as an "alternative to insurance" rather than insurance itself. Here is a side-by-side look at Nexus Mutual versus traditional insurance:

• Decentralized vs. Centralized: Traditional insurers are centralized companies with shareholders and executives steering decisions. Nexus Mutual is governed by its NXM-holding members who share both risks and rewards.