DeFi Insurer Nexus Mutual Maxed Out by Yield-Farming Boom

DeFi Insurer Nexus Mutual Maxed Out by Yield-Farming Boom 1

Nexus Mutual is maxed out covering the risks associated with decentralized finance (DeFi) platforms.

“Our product has honestly seen massive interest since yield farming kicked off,” Nexus Mutual founder Hugh Karp told CoinDesk in an email. “With potential yields being so lucrative many users are looking to protect themselves against the risk of smart contract failure.”

Nexus Mutual provides a way to hedge against the risk posed by smart contracts, with policies that pay out against a failure in the underlying software of a DeFi product within a given time frame. 

“In particular, there is big demand coming from hedge funds and more professional investors for our product, they want multi-millions of cover. As a result, we’ve hit our current capacity limits on the key yield-farming protocols such as Compound, Balancer and Curve,” Karp told CoinDesk.

On Nexus Mutual Tracker, a data site made by 1confirmation partner Richard Chen, Curve is at the top, with active per contract sitting at $695,000. Compound and Balancer are a close second and third, respectively, with $651,000 and $619,000 of cover.

Those are the most well-covered contracts on Nexus now, but Balancer is only slightly ahead of payments system Flexa.

Nexus is run as a mutual company by holders of the NXM token. They have set limits of $630,000 in coverage on each protocol. That amount is based on how much is on hand to pay out claims. The token is designed to recruit more capital when it’s needed, however, so they may be able to take on more policies soon. 

Nexus currently has $5 million on hand to cover claims, up $1 million since earlier this month. It’s worth noting that there’s no need for users of Nexus to show a loss to use Nexus. They only need to take out a policy that the smart contract might break or be exploited to get paid out. 

This is similar to Opyn, which allows users to take out short positions against various tokens dramatically losing value, whether they hold the token or not.  

Karp wrote, “Yield farming is certainly attractive due to the outsized returns, but it does come with increased risk; leverage and smart contract risk can be dangerous, so be careful out there.”

Disclosure

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

About the author

E-Crypto News was developed to assist all cryptocurrency investors in developing profitable cryptocurrency portfolios through the provision of timely and much-needed information. Investments in cryptocurrency require a level of detail, sensitivity, and accuracy that isn’t required in any other market and as such, we’ve developed our databases to help fill in information gaps.

Related Posts

E-Crypto News Executive Interviews



Automated trading with HaasBot Crypto Trading Bots

Crypto Scams

Millions in Cryptocurrency Stolen by Scammers in the Last Month According to Tenable Research
November 24, 2021
Behind The Scenes: How this Crypto Community Responded to + $50m Hack
October 18, 2021
Crypto Scams
Crypto Scams Still Persistent In 2021, SEC Warns About Red Flags To Watch
September 9, 2021
Poly Network
Here’s How Hackers Stole Over $600 million in the Poly Network Attack
August 12, 2021
The World’s Most Infamous Crypto Hacks and Scams
July 31, 2021

Blockchain/Cryptocurrency Questions and Answers

Crypto casinos
How Does Bitcoin Casino Work + 2021 Beginner’s Guide
November 8, 2021
Cryptocurrency
How to Buy and Sell Cryptocurrency
November 8, 2021
What Are Bitcoin Futures And How Will They Work In 2022?
November 4, 2021
Ethereum
The Unconventional Guide to Ethereum
October 28, 2021
ICo Presale
The Science Behind ICO Presales…
October 14, 2021


CryptoCurrencyUSDChange 1hChange 24hChange 7d
--- --- --- ---
--- --- --- ---
--- --- --- ---
Tether0.9986 0.03 % 0.08 % 0.23 %
--- --- --- ---
--- --- --- ---
--- --- --- ---
USD Coin1.000 0.14 % 0.20 % 0.17 %
Polkadot30.87 2.19 % 17.29 % 10.73 %
Dogecoin0.2215 0.68 % 1.42 % 7.23 %

bitcoin
Bitcoin (BTC) $ 54,818.00
ethereum
Ethereum (ETH) $ 4,114.36
binance-coin
Binance Coin (BNB) $ 590.89
tether
Tether (USDT) $ 0.999994
solana
Solana (SOL) $ 189.00
cardano
Cardano (ADA) $ 1.48
xrp
XRP (XRP) $ 0.924848
usd-coin
USD Coin (USDC) $ 0.999742
polkadot
Polkadot (DOT) $ 33.67
dogecoin
Dogecoin (DOGE) $ 0.199244