Links

Risk Assessment

How are Risk Assessors involved?

Risk Assessors are likely those members with code audit expertise or capital providers relying on auditors' judgement.
Risk Assessors can stake value in the form of NXM, thereby vouching for the security of the protocol/custodian and dropping the price of cover. NXM can be unstaked at any time subject to a 30-day withdrawal period.
When cover is subsequently sold on a protocol or custodian, Risk Assessors earn proportional rewards in NXM equivalent to 50% of the cover premium.
If a claim is accepted and a payout occurs, Risk Assessors staked against the protocol/custodian will have their staked NXM burnt on a proportional basis to facilitate the payout of the cover amount. This may result in a Risk Assessor having some or all of their NXM staked against the protocol/custodian burnt to provide capital for the payout of the claim.
For more detailed information, see the Risk Assessment section.

What are the risks of staking NXM as a Risk Assessor?

Any member that participates in Risk Assessment can have some or all of their staked NXM burnt to facilitate a successful claim payout.
For more detailed information, see the Risks section.

How are Risk Assessors rewarded for staking NXM?

While members take on risk when they participate as Risk Assessors, there is an economic incentive in place to offset those risks with NXM rewards.
Rewards are generated for Risk Assessors when any member purchases cover on the staked protocol, custodian, or cover product. Staking by itself does not generate rewards, a cover purchase is also required.
For more detailed information, see the Risk Assessment section.

How do I evaluate risk on protocols, custodians, and cover products?

Members can assess risk using any input, tools, or resources they see fit. Members who want to consult a variety of resources that cater to the risks covered by Nexus Mutual can see both Risk Assessment Resources and Community Risk Analysis Papers.

Why are Risk Assessors able to stake with 20x leverage?

Nexus Mutual employs capital efficiency to create more available cover with staked NXM. Funds are held in the capital pool with NXM as the representation of membership, and NXM can act as capital to back cover. This allows Risk Assessors to stake against protocols, custodians, and cover products with leverage.
For more detailed information, see the Capital Efficiency section.

Why is the cover policy I want to purchase so expensive?

When a protocol, custodian, or cover product is first listed, the annual cost can be prohibitive for members who want to buy cover. Risk Assessors play an important role in bringing down the cost of cover for members who want to protect deployed assets.
As Risk Assessors stake more NXM against a protocol, custodian, and/or cover product, the cost of cover is reduced.
For more detailed information, see the Risk Assessment, Pricing and Capacity section.

What is Shield Mining?

When protocols, custodians, or Yield Token Cover products are first listed on Nexus, the cover premiums can be prohibitively high due to a lack of staked NXM.
Protocols or custodians who want to bootstrap NXM staking against their platform can launch a Shield Mining campaign that provides additional rewards in the form of governance tokens, NXM, or wETH (etc.) to further incentivise Risk Assessors to stake against their platform.
This brings the cost of cover down and enables users of that platform to purchase cover for their deployed assets.
For more detailed information, see the Shield Mining section.