Types of Cover

Here are the ways you can protect your digital assets with Nexus.

Yield Token Cover—protects against yield-bearing token de-pegging. Protocol Cover—protects against a hack on a specific protocol. Custody Cover—protects against halted withdrawals and haircuts on your funds stored on centralised exchanges.

Differences Between Protocol Cover and Yield Token Cover

Below is a table that explains the differences between Protocol Cover and Yield Token Cover. You can review the individual sections to read about each cover product in greater detail.

Protocol Cover

Yield Token Cover

Covers 1 Smart Contract System

Covers Multiple Smart Contract Systems

Covers any deposits in the protocol

Initially limited to certain Yearn V2 Vaults & Curve Pools

When buying cover policy, members can

choose ETH or DAI payout denomination

Payout denomination is specific to

Yield Token Cover product

Proof of Loss is required when submitting

a claim

The interest-bearing token is swapped for the

claim payout, so the token itself functions

as Proof of Loss

Claims are voted on and evaluated on

a case-by-case basis during the Claims

Assessment process.

Claims go through group claims assessment

process where a full-member governance vote

is held to determine if de-peg is valid.

All de-peg events are voted on at once,

and the outcome is valid for all submitted

claims for that event.

If claim is successful, cover policy pays out 100% of loss.

If claim is successful, cover policy pays out 90% of swapped interest-bearing tokens.

Yield Token Cover

Overview

You have a yield-bearing token, e.g. yDAI, and you want to protect yourself against the yDAI de-pegging. If your yield-bearing token de-pegs in value by more than 10%, you may claim up to 90% of your loss by swapping your yield-bearing token for a claim payment when a claim is successful.

  • De-peg happens for more than four continuous hours.

  • Claims go through group claims assessment process where a full-member governance vote is held to determine if de-peg is valid.

  • Members who had cover live at the time of the de-peg can swap their yDAI tokens at a 90% return rate for the same underlying covered currency (in this example, USD/DAI).

  • Swap ratio is determined by the value of the token right before the de-pegging.

  • Members can choose to swap some or all of their yDAI for a 90% return rate.

  • After claim payout, cover period ends.

Cover Wording

You can read the full Yield Token Cover wording here.

Risks covered

De-peg—value of the token is determined by the value right before the hack happened.

See the various strategies used by Yearn in the yDAI, yUSDC, and ycrvstETH v2 vaults in: Feel the Yearn app Yearn Finance System app

Yield Token Cover protects against all defined risks within Yearn's strategies for the above interest-bearing tokens.

Yield Token Cover products

Protocol

Yield Token

Token Address

Purchase Cover in

Yearn

yDAI v2

0x19D3364A399d251E894aC732651be8B0E4e85001

DAI

Yearn

yUSDC v2

0x5f18C75AbDAe578b483E5F43f12a39cF75b973a9

DAI

Yearn

ycrvstETH v2

0xdCD90C7f6324cfa40d7169ef80b12031770B4325

ETH

Curve

3pool

0x6c3F90f043a72FA612cbac8115EE7e52BDe6E490

DAI

Curve

sETH

0xA3D87FffcE63B53E0d54fAa1cc983B7eB0b74A9c

ETH

Idle

IdleDAIYield

0x3fE7940616e5Bc47b0775a0dccf6237893353bB4

DAI

Idle

IdleUSDTYield

0xF34842d05A1c888Ca02769A633DF37177415C2f8

DAI

Claims process

If a de-pegging event happens:

Claims go through group claims assessment process where a full-member governance vote is held to determine if de-peg is valid (e.g., happened for four hours or more, set the block immediately prior to the hack and the redemption rate);

  1. Members who hold a Yield Token Cover policy at time of de-peg now have the opportunity to exchange their covered yield-bearing token with the mutual for 90% of the value in the underlying asset (e.g. yDAI:DAI).

  2. The yield-bearing tokens are held in the capital pool, and the mutual can liquidate them or redeem for the underlying token.

  3. Covered Members can swap as much of their yield-bearing token as they chose, with the maximum claim payment being the cover amount.

  4. After claim payout, cover period ends.

Rewards

When staking on Yield Token Cover, Risk Assessors (members who stake) receive NXM rewards when cover is purchased. Every time a cover is purchased after a Risk Assessor stakes, 50% of that cover price is proportionally distributed to all of the stakers on that protocol.

Rewards are processed weekly on Mondays.

Burning stakers

Fixed value of 20% of stakers’ deposit gets burned when successful claims swaps are made.

Protocol Cover

Overview

You interact with a protocol, e.g. Maker DAO, by depositing funds in. You want protection in case that particular protocol gets hacked in some way.

In addition to unintended use of code, members are now also covered in the event of flash loan oracle manipulations, Ethereum ecosystem and other chains including BSC and layer two components. So, if you have funds in a project and there is an incident that results in your digital assets being lost or stolen you will be covered with Protocol Cover.

Cover Wording

You can read the full Protocol Cover wording here.

Risks covered

  • Code being used in an unintended way

  • Economic design failure

  • Severe oracle failure

  • Governance Attacks

  • Protection for assets on Layer 2 solutions

  • Protection for non-Ethereum smart contracts

  • Protection for a protocol across multiple chains

Claims process

After a hack happens, members need to wait 72 hours for the cool-down period to expire. The cool-down period only applies to Protocol Cover policies.

  1. Members who hold a Protocol Cover policy at the time of the hack submit a claim with supporting evidence (i.e. proof of loss, etc.).

  2. Members acting as Claims Assessors determine if certain things about the hack are true, such as if you are able to demonstrate material loss as a result of the hack.

  3. If voting stakes of greater than 10x the cover amount have voted; or 72 hours have passed the vote closes.

  4. if the claim is successful, then the payment is made to the member who submitted the claim.

  5. If the claim is unsuccessful, then the claiming member has one more opportunity to submit a another claim.

Full details of the claims process, you can read the Claims Assessor Voting entry in the Claims Assessment section.

Rewards

When staking on a protocol, Risk Assessors (members who stake) receive NXM rewards when cover is purchased. Every time a cover is purchased after a Risk Assessor stakes, 50% of that cover price is proportionally distributed to all of the stakers on that protocol.

Rewards are processed weekly on Mondays.

Burning stakers

If there is a successfully paid claim, Risk Assessors on that risk have their stake burned on a proportional basis up to the claim amount (converted into NXM at the prevailing NXM price).

Custody Cover

Overview

You put funds into an organisation that is responsible for the safekeeping of private keys to cryptocurrency assets on behalf of their users. You want to protect against:

  • The custodian getting hacked, which results in the losing more than 10% of your funds; or

  • Withdrawals from the custodian are halted for more than 90 days.

Cover Wording

You can read the full Custody Cover wording here.

Claims Process

If your funds are lost due to a custodial hack or withdrawals are prevented for 90 days or more:

  1. Members who hold a Custodial Cover policy at the time of the loss or withdrawal prevention submit a claim with supporting evidence (i.e. proof of loss, etc.).

  2. Members acting as Claims Assessors determine if certain things about the custodial loss or withdrawal prevention are true, such as if you are able to demonstrate material loss as a result of the custodian losing your funds or preventing withdrawals.

  3. If voting stakes of greater than 10x the cover amount have voted; or 72 hours have passed the vote closes.

  4. if the claim is successful, then the payment is made to the member who submitted the claim.

  5. If the claim is unsuccessful, then the claiming member has one more opportunity to submit a another claim.

Full details of the claims process, you can read the Claims Assessor Voting entry in the Claims Assessment section.

Risks covered

  • The custodian getting hacked where the user loses more than 10% of their funds, or

  • Withdrawals from the custodian are halted for more than 90 days.

Rewards

When staking on a protocol, Risk Assessors (members who stake) receive NXM rewards when cover is purchased. Every time a cover is purchased after a Risk Assessor stakes, 50% of that cover price is proportionally distributed to all of the stakers on that protocol.

Rewards are processed weekly on Mondays.

Burning stakers

If there is a successfully paid claim, Risk Assessors on that risk have their stake burned on a proportional basis up to the claim amount (converted into NXM at the prevailing NXM price).