“DeFi is developing faster than you can say ‘protect me from the risks in DeFi’,” said Kayleigh Petrie, Director of Engagement at Nexus Mutual, an Ethereum based insurance protocol.
Given the sector’s high risk, high gain motto, it makes sense the need for insurance coverage is growing in line with the sector, which has yet again over $9 billion of total value locked, as per DeFi Pulse.
Nexus Mutual contributes nearly $80 million of deposits to 3% of TVL in DeFi with the active cover up to $235,241,926 (635,531 ETH).
Active cover has grown around 10x in the past month🚀 pic.twitter.com/XRw1MEJCFD
— Nexus Mutual 🐢 (@NexusMutual) September 17, 2020
In light of this, the team of Nexus Mutual is working on increasing the capacity and scaling the capital. Just this week, they have made a new milestone in the scaling process with MCR – minimum capital requirement.
This means the amount of funds the project requires to operate (reserves) is now driven by cover amounts and not the capital floor, “this implies that token price is directly linked to adoption.”
With a market cap of $372 million, NXM is trading at around $50, as per CoinGecko.
The token that has been only available to members of Nexus Mutual requiring KYC verification has already been roped in by the DeFi blue-chip yEarn, which allows people to earn it through yInsure, which is non-KYC insurance underwritten by Nexus Mutual.
The protocol has sold nearly $250 million in cover, and much of this “enormous demand” has been because of the new entrants in the market, including wNXM (wrapped NXM) and yinsure (yNFT where cover is converted into an NFT).
If you are buying insurance cover to farm, please buy it in small amounts so you can at least resell it to users that actually want cover after the farming ends on https://t.co/g9IivYWiYI
No one is going to buy your $5m 365 days cover.
Please support the secondary market
— Andre Cronje (@AndreCronjeTech) September 14, 2020
SAFE is another project which involves staking wNXM and yNFTs to earn SAFE tokens that are behind this demand. The project remained in the limelight this week for being a “sh*tshow” only to be relaunched as a COVER protocol.
As happens in the DeFi market, the launch of a new protocol sees heightened demand, and the same was the case for yieldfarming.insure (SAFE). As a result, the token’s price surged to a new high only to dump soon after as people sold their positions, which also affected the price of NXM.
But now that the project is relaunched, and the SAFE tokens are to be migrated to the new protocol after November 1st, things seem to be coming on track. The token today hit a new ATH at over $800, and NXM is also seeing movement.