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Welcome to the Nexus Mutual Gitbook
Welcome
Overview: Start Here
FAQ
Glossary & Appendices
Audits and Security
Roadmap
Nexus How-To Guides
How to Participate
How to Buy Cover
How to File a Claim
How to Participate in Nexus Mutual Governance
Nexus Fundamentals
Understanding Nexus Mutual
Cover Pricing
Capacity Limits
Minimum Capital Requirement
Capital Model
Assets and Investment
Risk Assessment
Claims Assessment
Governance
NXM Token
Risks
Types of Cover
Nexus Financials
Risk Assessment
Risk Assessment
Risk Assessment Resources
Claims Assessment
Claims Assessment
Claims History
Nexus Hub
Overview
Mutant Marketing
Nexus Mutant Community
Nexus Treasury
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Community Risk Analysis Papers
wNXM and Nexus Wrapper: Community Run Programme
Communication Channels
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Technical Specifications
Proof of Loss
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NXM Token
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Shield Mining
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Risk Assessment

Overview

Risk Assessment is the process of a member staking NXM tokens against particular risks (protocols for Protocol Cover and custodians for Custody Cover) they think are secure. It allows any member to purchase cover at reduced prices and rewards the staking member with additional NXM tokens.

1. Deposit and Stake NXM Tokens

A member wishing to stake NXM tokens against a particular risk may use any tools that they wish to determine how likely a claim is to occur. The staking process simply provides a market-based signal by offering lower prices when more value is staked on the contract or custodian.
Deposit and Stake:
  1. 1.
    Choose how much NXM to deposit for staking purposes.
  2. 2.
    Stakes against specific risks (contracts or custodians).
  3. 3.
    You can stake your deposit up to 20 times provided each stake is less than or equal to your deposit.
Unstaking:
  • Deposited NXM Tokens are locked from redemption and transfer.
  • A Member wishing to release their stake must first request un-stake. This starts a 30-day unstake lock-time, at the end of which the stake will be released.
  • Stakes that are in the unstake lock-period continue to earn rewards and are exposed to potential punishments if there is a claim.
  • To withdraw your deposit you must unstake and wait for the lock-period to expire. Withdrawal can only be made if your maximum stake on any contract/custodian is less than your deposit AND your deposit is staked less than 20 times.
The price of cover on the chosen risk is reduced based on the number of NXM tokens staked at the time cover is purchased. For details on the calculations see the Pricing section.
Stake NXM tokens against a protocol, custodian, or yield token cover product.

2. Earn Rewards

Rewards are generated for Risk Assessors when any member purchases cover on the staked protocol or custodian. Staking by itself does not generate rewards, a cover purchase is also required.
When cover is purchased by a member, 50% of the Cover Price in newly minted NXM tokens is awarded to Risk Assessors on a proportional basis.
Earn rewards when others purchase cover.

3. Burnt Stakes

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). If the stake is not enough to cover the claim amount in full then all stakes are burned, in this case the mutual as a whole bears the remaining claim cost without any offset.
Stakes can be burned if a claim occurs.
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