Nexus V2

Week 1

Overview of Benefits for Members and Dynamic Pricing Model

Nexus V2: Cover Policy Improvements

Cover Policies as NFTs

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When you buy a cover policy, it will be represented by an editable NFT.

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Anyone can custody the NFT but only members can file a claim for an NFT policy.

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Members will have the ability to resell a cover policy if they are no longer utilizing that cover policy.

Why an NFT model?

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Tokenizing cover policies as NFTs allows for wider distribution within the syndicate network.

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NFTs can be held in non-member contracts (i.e., point of sale integration contracts) but can only be claimed by members during the claims filing process.

Nexus V2: Cover Policy Improvements

Editable Cover Policies

• Members can increase or decrease the duration of their cover policy; or
• Members can increase of decrease the total covered amount
• Editing a cover is less gas intensive than buying a new policy

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The functionality for partial claim payouts will be enabled in V2!

There is an inverse relationship between cover duration and total covered amount when editing cover policies.

Nexus V2: New Pricing Model

Dynamic Pricing

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• New minimum price: 1%

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• On-chain pricing will allow for composability.

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• Pricing determined by syndicate operators.

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Utilization-based Pricing

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Platforms/products can achieve low NXM staking, low pricing if utilization remains low for long enough.

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Pricing will shift upwards when demand is high.

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Pricing model will better control supply, demand

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Nexus V2: Dynamic Pricing

Managing Capacity + Capital

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When demand is high, prices will rise to better manage supply given higher demand.

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Higher prices will attract more staked NXM, which will help bring down the cost of cover.

Managing Exposure to Risk

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Dynamic pricing model will also help the mutual minimize exposure to any one risk by increasing pricing when demand for any one protocol is high.

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Increases in price will limit demand, while adding greater cashflow into the capital pool.

Nexus V2

Week 2

The Syndicate Network

& Delegated Staking

Nexus V2: Syndicate Network

Nexus Mutual will become an infrastructure layer for subject matter experts to build on

• Syndicates manage capital (i.e., staked NXM)
• Syndicate operators set pricing for platforms/products
• Expand distribution
• Structure better aligns economic incentives

Nexus V2: Syndicate Network

The Syndicate Advantage

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• Those who are smart contract, risk experts can manage staked NXM
• Opens up Risk Assessment to more participants; more inclusive
• Syndicate operators can direct NXM where it is needed most, while socializing gas costs
• Expansion of distribution leads to greater rewards in Risk Assessment

Economic Incentives: Syndicates, Integrations

• Experts can use existing skills to increase cash flow
• Syndicate operators earn portion of premiums (i.e., fees) for managing staked NXM
• Platforms that provide point-of-sale integrations earn commission on cover sales
• Dynamic pricing creates incentives for syndicates to shift NXM stakes to match supply with demand

Nexus V2: Delegated Staking

Members who want to earn yield on NXM but do not have expertise in assessing risk can delegate NXM to a syndicate (or syndicates).

• Choose syndicate w/ a suitable risk profile
• Earn passive yield
• Socialize gas costs, open up Risk Assessment to more members
• Review syndicate APYs when choosing which one to delegate to

Nexus V2: Delegated Staking

Reward Distribution

• Risk Assessment rewards streamed over the lifetime of a cover policy
• Fairer distribution, reduces risk for delegated stakes exposed to large cover buys that occurred before NXM was delegated
• Allows for members to review APY before delegating
• Improved view of risk/reward for Risk Assessors

Nexus V2: Shield Mining + Syndicates

Targeted Shield Mining

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Syndicate operators can conduct Shield Mining Campaigns to attract delegated NXM to their syndicate.

• Delegated stakes will earn proportional share of rewards w/o having to manually claim
• Chance for greater Shield Mining rewards for syndicates w/ smaller allocation of delegated NXM

Benefits for Syndicate Operators

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Shield Mining rewards can be distributed among multiple syndicates, or just one.

• Attract more NXM stakes, allocate to the platforms/products where demand is greatest
• Not limited to bootstrapping NXM liquidity for just one platform/product
• Distribute gov. tokens to members who create open capacity, allow supply to meet demand, and contribute to greater commissions for direct integrations

Nexus V2

Week 3

Syndicate Types, Advanced Features,

& Competitive Advantage

Nexus V2: Syndicate Types

Basic Syndicate

• Manages delegated NXM
• Determines staking allocation + weight
• Sets pricing

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Distributor Syndicate

• Operates like a basic syndicate does, plus…
• Resells cover through separate frontend
• Can use custom branding separate from the mutual

Protocol-Run Syndicate

• Operates like a basic + distributor syndicate does, plus…
• Provides coverage to users directly through a frontend integration
• Can align incentives between Risk Assessors and governance token holders within their protocol

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Nexus V2: Basic Syndicate

Risk Experts, Managing Members’ NXM

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Anyone can create, operate a syndicate, but best suited for subject matter experts:

• Smart contract auditors
• Risk analysts in DeFi
• Immunefi
• DeFi Safety
• Prime Rating
• Rekt
• Protocol teams
• Risk experts from other areas
• Liability
• Catastrophic risk

Benefits of Operating Basic Syndicate

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• Earning management fees
• Portion of premiums earned from cover sales
• Turning risk analysis skills into revenue stream
• Expanding reputation for risk expertise in DeFi, CeFi
• Provide staking methodology for members
• Ability to Expand
• Distributor syndicate, referral links

Nexus V2: Distribution Syndicate

Manage NXM, Expand Distribution

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Distributor syndicates operate link an advanced Armor Fi or Bright Union platform.

• Manage staked NXM
• Provide users with the ability to purchase cover directly from your syndicate
• Create separate brand identify from the mutual
• Increase flexibility, functionality

Benefits of Operating Distributor Syndicate

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• Earn both management fees AND commission on cover sales through your frontend
• Set pricing in your syndicate
• Determine commission structure
• Direct users to buy directly from your syndicate, capture more revenue
• Attract more NXM to your syndicate when demand for cover is high

Nexus V2: Protocol-Run Syndicate

Create Capacity for Platforms Utilized by Your Protocol

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If you’re a protocol built on top of other DeFi protocols, your team has already done risk analysis on the underlying protocols

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By running a syndicate, attracting NXM, and staking against underlying protocols, you can offer cover to your users at the point of sale.

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Benefits of Operating a Protocol-Run Syndicate

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• Earn management fees and commission on cover sold through a frontend integration
• Set cover pricing
• Determine commission structure
• Provide cover for a defined distribution channel among protocol users
• Capture more risk averse users, TradFi converts
• Expand reputation as security experts in DeFi
• Utilize when forming partnerships

Nexus V2: Advanced Features of Syndicates

Offering New Cover Products

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Syndicates can be built to offer cover products that do not yet exist

• Reinsurance Coverage
• E&O Coverage
• D&O Coverage
• Earthquake Risk
• Wildfire Risk

Issuing a Token for Your Syndicate

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Syndicates can create, issue a token to represent staked positions.

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Making it easier to trade in and out of staked positions.

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Can be used to bootstrap capital within a syndicate.

Nexus V2: Competitive Advantage

Greater Incentives to Work With Nexus

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• Flexibility, freedom to create your own operational model

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• Strong economic incentives

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• Largest capital pool of any decentralized coverage provider

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Collaboration Over Competition

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The mutual has a proven track record of paying out claims; a capital pool with unmatched liquidity; and the trust of institutional clients.

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More incentives to build on top of Nexus Mutual than starting from scratch.

• Bootstrapping capital is the most difficult aspect of operating a DeFi coverage protocol

Nexus V2

Week 4

The Nexus V2 Ecosystem

“The whole is greater than the sum of its parts”

Nexus V2: Cover Buyers

Nexus V2 Expands Distribution, Serves as Catalyst for More Sales

• Increase in cover sales drives capital pool growth
• Increase depth of coverage over time
• Syndicate network represents competitive pricing, greater offerings
• Creation of new cover products
• Dynamic pricing signals where supply should meet demand
• Low utilization, low pricing can be achieved

Value for Members Buying Cover

• Flexible cover policies
• Editable policies
• Partial claims
• Ability to resell
• Cover buys can be automated
• On-chain market for risk represents more choices, offerings
• Ability to diversify offerings
• Growth of capital pool, growth in ability to cover large sums
• Deep cover capacity + capital efficient model

Nexus V2: Risk Assessors

Syndicates + Delegated Staking

• Members can bring expertise to the mutual, build on top of infrastructure
• Increase risk management reputation
• Transparency builds trust
• Staking methodology, pricing as proxy for on-chain risk
• Syndicate operators manage delegated NXM, optimize risk vs. reward
• APY displayed for each syndicate
• Increased capital efficiency within Risk Assessment
• Added value for syndicate operators + Risk Assessors

Value for Members Acting as Risk Assessors

• Socialized gas costs reduce barriers to entry
• Better risk vs. reward
• Review syndicates, select best risk vs. reward
• Review APYs before delegating
• Time-based veModel for NXM
• NXM can be delegated for set timeframe
• Longer timeframe, greater boost
• Syndicates able to create tokens
• Functionality to trade of NXM stakes

Nexus V2: Syndicate Operators

Build on top of DeFi’s deepest capital pool, reach more users + new markets

• Freedom, flexibility to create/run your own syndicate
• Tap into a defined distribution channel
• Create new cover products to meet existing demand
• Crypto-native or traditional audiences
• Form strategic partnerships
• Benefit from the mutual’s reputation
• Most claims paid to date
• Trusted by institutions + retail
• Built by industry experts

Value for Syndicate Operators

• Turn expertise into additional revenue
• Management fees, commissions on sales through integrations
• Offer value to your users, bolster reputation
• Offer in-demand products
• Stablecoin depeg
• Reinsurance
• DAO-2-DAO strategic advantage
• Allocate NXM, increase capacity
• No need to bootstrap capital/reputation
• Nexus Mutual Advantage

Nexus V2: Individual Brokers

Syndicate network creates capacity, ability to sell more cover

• Several ways to sell cover in V2
• The mutual’s router contract
• Direct integrations
• Referral links
• Greater sales, greater management fees for syndicate operators
• Syndicates earn fees
• Risk Assessors earn on NXM
• Commission directed to method of sale
• Distribution expansion, increase of sales, capital pool growth
• Capital pool growth increases MCR%
• Dynamic MCR calculations, ability to underwrite more coverage

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Benefits for individual brokers

• Members who sell cover for syndicates through referral links earn commission
• ETH, DAI, NXM
• Work with syndicates to expand distribution
• Marketing
• Thought leadership
• Strategic partnerships
• Considerable incentives to onboard funds + institutions
• Help bring TradFi on-chain, receive ample rewards via commission

Nexus V2: Competition, Coordination, Diversified Offerings

Syndicate Network–the on-chain market for risk

• Nexus V2: creation of an ecosystem
• Syndicates can coordinate to offer ample coverage for particular products, expand offerings
• Freedom to define distribution channels
• Competitive pricing across product offerings
• An array of pricing options, set by those with risk expertise
• Further diversification
• On-chain, off-chain markets

When the market changes, Nexus adapts: syndicates + new cover products

• Growth beyond existing products
• As risk evolves, syndicates can respond
• Existing member requests
• Stablecoin depeg coverage
• Cross-chain bridge coverage
• Errors and omissions coverage (E&O)
• Directors and officers coverage (D&O)
• Disrupting real world markets
• Weather derivatives
• Wildfire coverage
• Earthquake coverage
• Cybersecurity coverage

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Nexus V2 Questions?

If you have any questions about Nexus V2, please feel free to contact me:

• BraveDeFi on Twitter (@bravedefi)
• BraveNewDeFi#0027 on Discord
• @BraveNewDeFi on Telegram