Frequently Asked Questions About NexusMutual

NexusMutual is a decentralized risk-sharing protocol built on Ethereum that serves as an alternative to traditional insurance for the crypto space. Rather than relying on a centralized insurer, NexusMutual enables its members to pool capital together and collectively decide on cover pricing, claims, and governance.

Here is how it works step by step:

• Members purchase NXM tokens to join the mutual and participate in governance.
• Stakers deposit NXM into staking pools to back specific protocols and earn rewards.
• Cover buyers select a protocol or asset they want to protect and pay an annual fee.
• If a covered event occurs — such as a smart contract bug or oracle failure — the cover holder can file a claim.
• Claims assessors (NXM holders) vote on whether to approve or deny the claim.
• Approved claims are paid out from the capital pool in ETH or DAI.

Since 2019, NexusMutual has paid out millions in claims, protecting DeFi users from real-world losses across protocols like Compound, Yearn, and others.

Purchasing cover on NexusMutual is straightforward. Follow these steps to get protected:

• Connect your wallet: Use MetaMask or any compatible Ethereum wallet to connect to the NexusMutual app at the main site.
• Become a member: You must hold at least one NXM token to access cover. You can acquire NXM through the swap interface.
• Browse listings: Explore the cover marketplace with 184+ listings across Single Protocol Cover, Multi Protocol Cover, Crypto Cover, and Nexus Mutual Cover products.
• Select your cover: Choose the protocol or asset you want to protect (e.g., Aave v3, Uniswap v3, Pendle, Hyperliquid, etc.).
• Choose cover amount and period: Specify how much ETH or USD equivalent you want covered and for how many days.
• Pay the fee: Annual fees typically range from 0.12% to 13%+ depending on the risk profile of the covered protocol.
• Receive your NFT cover certificate: Your cover is minted as an NFT representing your coverage terms.

Cover on NexusMutual is available for a minimum of 28 days and can be purchased in ETH, DAI, or USDC depending on the product.

NexusMutual currently offers four main cover product categories, each designed to address different types of risk in the crypto ecosystem:

• Single Protocol Cover: Protects against smart contract vulnerabilities, oracle manipulation, and governance attacks on a specific protocol like Aave v3, Uniswap v3, Curve, Lido, GMX, and many more.
• Multi Protocol Cover: Bundles coverage across multiple protocols into one policy, such as Beefy, Ether.fi, Derive (formerly Lyra), or Blue Chip Morpho Vaults & Markets. Ideal for users with funds spread across several DeFi platforms.
• Crypto Cover: Covers specific crypto assets against depeg events, custodian insolvency, or other asset-level failures. Examples include WBTC Depeg, Tether USDT Depeg, Ethena USDe Depeg, Coinbase Custody, Binance Custody, and Bybit Custody.
• Nexus Mutual Cover (NexusMutual branded): Curated cover products such as Elite Cover, Essential Cover, Entry Cover, Brava Conservative Cover, and Brava Advanced Cover that bundle multiple risk layers into one simplified package.

All covers are governed by specific cover wording documents that define exactly what events are covered and what conditions must be met to file a successful claim. Always read the cover wording before purchasing.

NXM is the native membership token of NexusMutual. It serves several critical functions within the ecosystem:

• Membership: You must hold NXM to access the NexusMutual app and purchase cover products.
• Staking: NXM can be staked into protocol-specific staking pools to back cover capacity. Stakers earn rewards proportional to the premiums generated.
• Claims Assessment: NXM holders can participate as claims assessors, voting on whether submitted claims should be approved or denied. Assessors earn rewards for participating but risk losing stake for dishonest voting.
• Governance: NXM gives holders voting rights in NexusMutual governance, allowing them to vote on protocol parameters, cover wording changes, capital allocation, and more.
• Bonding Curve: The price of NXM is determined algorithmically by a bonding curve linked to the size of the mutual's capital pool. Members can redeem NXM for ETH through the bonding curve under certain conditions.

There is also wNXM (wrapped NXM) — an ERC-20 version of NXM that can be traded on secondary markets like Uniswap or purchased on centralized exchanges by non-members. However, wNXM does not carry governance or staking rights on its own.

Staking NXM on NexusMutual allows you to earn a share of the premiums paid by cover buyers. Here is how to get started:

• Browse staking pools: Navigate to the Stake section and explore available protocol staking pools. Each pool corresponds to specific cover products.
• Evaluate risk and APY: Consider each pool's risk level, current capacity, and historical performance before staking.
• Stake NXM: Deposit NXM into one or more pools. You can stake across multiple pools to diversify exposure.
• Earn rewards: Rewards are distributed from premiums paid by cover buyers. Higher-risk or higher-demand protocols typically offer better yields.
• Create your own staking pool: Experienced participants can create and manage custom staking pools, setting their own commission and managing which covers they back.

Important: staking NXM carries risk. If a covered protocol suffers a valid claim, stakers in that pool may have a portion of their NXM burned to pay out the claim. This is the fundamental risk-reward trade-off of the NexusMutual model — stakers are the underwriters.

You can also delegate NXM to existing pool managers who actively manage risk on your behalf, earning rewards with a hands-off approach.

Unlike typical tokens with market-determined prices, NXM uses a bonding curve mechanism to set its price algorithmically. The bonding curve price of NXM is directly tied to the size of NexusMutual's capital pool (MCR — Minimum Capital Requirement).

• As more ETH flows into the capital pool (from cover purchases or member buy-ins), the NXM price increases.
• As ETH leaves the pool (through redemptions or claim payouts), the NXM price decreases.
• The formula ensures NXM is always backed by a defined amount of capital — creating intrinsic value tied to the protocol's financial health.

Members can buy NXM at the bonding curve price directly through the NexusMutual app by sending ETH. They can also redeem NXM for ETH through the bonding curve, subject to certain conditions:

• The capital pool must be above 100% MCR coverage ratio for redemptions to be available.
• Large redemptions may be limited if they would push the pool below the MCR threshold.
• There is a 30-day lockup for newly acquired NXM before it can be redeemed.

This bonding curve mechanism is a core innovation of NexusMutual, creating a sustainable capital model where NXM value is tied to the actual risk-bearing capacity of the mutual rather than pure market speculation.

If you have experienced a loss covered by your NexusMutual policy, you can submit a claim by following these steps:

• Go to Your Covers: Navigate to the "Your Covers" section in the NexusMutual app and find the relevant cover NFT.
• Initiate a claim: Click "Submit a Claim" and provide evidence of your loss. This typically includes transaction hashes, on-chain proof of the incident, and a written description.
• Pay the claim submission fee: A small ETH deposit is required to submit a claim, which is refunded if the claim is approved.
• Wait for assessment: Claims are reviewed by the NexusMutual claims assessment committee — NXM holders who have staked their tokens to assess claims honestly.
• Voting period: Assessors have a defined period (typically 3 days for the first round) to vote yes or no on your claim.
• Outcome: If the majority votes to approve, you receive your payout in ETH or DAI. If denied, you can appeal or escalate to a second round of voting.

The key to a successful claim is providing clear, verifiable evidence that links the loss directly to a covered event as defined in the cover wording. NexusMutual has a strong track record of paying out valid claims — with over $18 million paid to date across dozens of incidents including hacks on Yearn Finance, Compound, and other major protocols.

NexusMutual cover has defined scope. Understanding what is NOT covered is just as important as knowing what is. Common exclusions include:

• Rug pulls and exit scams: If a protocol team deliberately abandons the project and takes user funds, this is generally not covered unless the specific cover wording includes it.
• Front-end attacks: Phishing websites or DNS hijacking that leads to losses on a cloned interface are usually excluded from smart contract cover.
• Private key compromise: If your own wallet is compromised due to a leaked private key or seed phrase, NexusMutual does not cover this — it is not a protocol-level failure.
• Market price losses: Normal market volatility and token price declines are not covered. NexusMutual is not investment insurance.
• Economic design failures: Events that some argue are "working as designed" — such as flash loan attacks that technically exploit legitimate functions — may be disputed. Cover wording specifies exactly what qualifies.
• Events outside the cover period: Losses from events that occurred before your cover started or after it expired are not eligible.
• Uncovered protocols: If the specific contract or version you were using is not explicitly listed in the cover, you may not be protected.

Always read the full cover wording for your specific product before purchasing. NexusMutual provides detailed cover wording documents for each listing so you know exactly what is and is not included in your coverage.

NexusMutual operates as a decentralized autonomous organization where NXM holders govern the protocol. Key governance functions include:

• Protocol parameters: Members vote on changes to cover pricing formulas, staking mechanics, MCR adjustments, and other protocol variables.
• Cover wording: New cover products and amendments to existing cover wordings are approved through governance votes.
• Advisory Board: NexusMutual has an elected Advisory Board of 5 members who can exercise emergency powers in critical situations. Board members are elected by NXM token holders and serve defined terms.
• Capital pool management: Significant decisions about how the capital pool is deployed or managed require governance approval.
• Improvement proposals: Any member can submit a governance proposal. If it reaches quorum and majority approval, it is implemented.

Governance voting on NexusMutual is conducted on-chain using NXM tokens, ensuring that the community with the most economic stake in the protocol's health has the most say in its future. This aligns incentives and creates a self-regulating system where bad decisions hurt the voters who made them.

You can view all current and past governance proposals in the Governance section of the NexusMutual app, as well as on the community forum at forum.nexusmutual.io.

NexusMutual has been operating since 2019 and places security at the core of its design. Key security measures include:

• Multiple professional audits: NexusMutual smart contracts have been audited by multiple leading security firms including Solidified, G0 Group, and others. Audit reports are publicly available.
• Bug bounty program: A live bug bounty program incentivizes white-hat security researchers to responsibly disclose vulnerabilities in exchange for rewards.
• Time-locks and multi-sig: Critical protocol upgrades require multi-signature approval and are subject to time-lock delays, giving the community time to review changes before they take effect.
• Advisory Board emergency powers: The elected Advisory Board can pause certain functions in emergencies to protect the capital pool.
• Capital adequacy ratio: The MCR system ensures the protocol maintains a minimum ratio of assets to liabilities at all times, providing a financial safety buffer.
• Skin-in-the-game: NXM stakers who underwrite cover have their own capital at risk, creating strong incentives to select safe protocols and properly price risk.

Since 2019, NexusMutual itself has not suffered any smart contract exploit, and the capital pool has remained solvent through multiple bear markets and DeFi crisis events. However, as with all DeFi protocols, users should conduct their own research and understand that no system is 100% risk-free.

Cover pricing on NexusMutual is dynamic and market-driven, set by the stakers who underwrite each pool. Prices vary significantly based on the risk profile of each protocol:

• Low-risk, well-audited protocols: Annual fees as low as 0.12% to 0.55% (e.g., Safe multisig cover starts at ~0.12%)
• Mid-risk DeFi protocols: Annual fees typically in the 1% to 4% range (e.g., Aave v3 at ~1.88%, Uniswap v3 at ~0.28%)
• Higher-risk or newer protocols: Annual fees from 4% to 8.9%+ (e.g., Hyperliquid at ~6%, Aevo at ~8.89%)
• Custody cover: Exchange custody cover ranges from ~1.95% to 8.9% depending on the exchange's risk rating
• Depeg cover: Stablecoin depeg products range from ~0.48% to 8%+ depending on the stability mechanism

The cover fee displayed in the NexusMutual app shows you both the minimum and maximum price range — the actual price depends on how much cover capacity is currently available in the pool. Fees are paid upfront for the entire cover period and are non-refundable (except in cases of cover cancellation under specific conditions).

As a guide, covering $10,000 of Aave v3 assets for 90 days would cost approximately $47 — less than 0.5% of your protected value for three months of peace of mind.

Yes! NexusMutual has expanded significantly beyond Ethereum mainnet. Coverage is available for protocols deployed on numerous networks including:

• Ethereum mainnet — the primary network with the widest protocol coverage
• Arbitrum — supported for protocols like GMX v2, Camelot, Ramses Exchange, and others
• Optimism — covered protocols include Velodrome, Exactly, and others
• Base — Aerodrome, Moonwell, and growing Base ecosystem protocols
• Polygon — various DeFi protocols on Polygon
• BNB Chain — select protocols including PancakeSwap and Venus
• Sonic — emerging coverage for Sonic ecosystem protocols
• Hyperliquid — specialized cover for the Hyperliquid perpetuals platform

The NexusMutual cover NFT is held on Ethereum, but the covered assets and protocols can be on any supported chain. This means you can protect your DeFi positions across the multi-chain ecosystem from a single NexusMutual membership. The cover wording for each product specifies exactly which contract addresses and chains are included in the scope of coverage.

As new chains and protocols emerge, NexusMutual community members can propose adding new cover listings through the governance process.

NexusMutual is a mutual — not an insurance company — and is structured under UK company law as a discretionary mutual. To become a full member of NexusMutual and access all features (including purchasing cover, staking, and governance), you must complete a light membership process:

• Membership application: You submit a membership request through the NexusMutual app.
• ETH contribution: A small membership fee in ETH is required (historically 0.002 ETH, subject to change).
• Identity verification: NexusMutual requires members to verify their identity (KYC) to comply with legal requirements as a UK-registered entity. This is handled through a third-party verification partner.

Importantly, NexusMutual does not collect sensitive documents in a centralized way that could be breached. The KYC process is designed to be minimal while complying with applicable regulations.

For those who prefer not to undergo KYC, wNXM (wrapped NXM) is available on secondary markets and does not require membership. However, wNXM holders cannot directly purchase cover or participate in governance — they can only hold the token as a speculative asset.

Some cover products are also accessible through partner interfaces (like Armor.fi, OpenCover, etc.) which may have different onboarding requirements — though underlying cover is still issued by NexusMutual.

NexusMutual is compatible with all major Web3 wallets that support Ethereum mainnet. The following wallets work seamlessly with the NexusMutual app:

• MetaMask — the most widely used Ethereum browser extension wallet
• WalletConnect — compatible with 200+ mobile wallets including Rainbow, Trust Wallet, and Argent
• Coinbase Wallet — Coinbase's self-custody wallet app and browser extension
• Ledger + MetaMask — hardware wallet users can connect via MetaMask for enhanced security
• Trezor + MetaMask — Trezor hardware wallets also work via MetaMask integration
• Safe (Gnosis Safe) — multi-sig wallets through WalletConnect are supported for institutional and DAO users

For best security, NexusMutual recommends using a hardware wallet when holding significant amounts of NXM or interacting with high-value transactions. The NexusMutual cover NFTs and NXM tokens are standard ERC-20 and ERC-721 tokens and are compatible with any wallet that supports these standards.

The NexusMutual app uses RainbowKit for wallet connection, providing a smooth experience across all supported wallet types. Simply click "Connect your wallet" and choose your preferred option.

NexusMutual has a vibrant community and comprehensive resources to help you get the most out of the protocol:

• Official documentation: docs.nexusmutual.io contains comprehensive technical documentation, protocol explanations, and guides for cover buyers, stakers, and developers.
• Community forum: The NexusMutual governance forum at forum.nexusmutual.io is where members discuss proposals, share analysis, and engage with the core team.
• Discord: The official NexusMutual Discord (discord.gg/aQjkzW5) is the primary real-time community hub where you can ask questions, report issues, and connect with other members.
• Twitter / X: Follow @NexusMutual for protocol updates, incident alerts, and community announcements.
• GitHub: All NexusMutual smart contracts and frontend code are open source at github.com/NexusMutual.
• Dune Analytics: On-chain data dashboards track key NexusMutual metrics including capital pool size, cover volume, NXM price, and claims history.
• Support chat: The NexusMutual app features a live chat widget for direct support queries.

The NexusMutual team also publishes regular blog posts and monthly stats updates to keep the community informed about protocol health, new cover listings, and governance decisions. For media inquiries and business partnerships, you can reach the team through the Contact page at nexusmutual.io/contact.

NexusMutual positions itself as an "alternative to insurance" rather than insurance itself. Here is a comparison between NexusMutual and traditional insurance:

• Decentralized vs. Centralized: Traditional insurers are centralized companies with shareholders and executives making decisions. NexusMutual is governed by its NXM-holding members who share both the risks and rewards.
• Transparent vs. Opaque: NexusMutual's capital pool, claims history, and governance decisions are all on-chain and publicly verifiable. Traditional insurers operate with significant opacity.
• Crypto-native risk: Traditional insurers largely exclude or don't understand DeFi and smart contract risks. NexusMutual was built specifically to cover these risks from day one.
• Speed of claims: NexusMutual claims can be resolved in days. Traditional insurance claims often take weeks, months, or even years to settle.
• No intermediaries: There are no brokers, adjusters, or lawyers in the NexusMutual claims process — just verifiable on-chain evidence and community voting.
• Regulatory status: NexusMutual is not regulated as an insurer, which means it has more flexibility but also fewer legal protections for cover buyers compared to regulated insurance policies.
• Community trust vs. legal trust: Traditional insurance relies on contracts enforceable by courts. NexusMutual relies on community governance and shared economic incentives to pay claims honestly.

For crypto users, NexusMutual offers a uniquely tailored solution that traditional insurance simply cannot provide — instant, verifiable, community-governed protection against the specific risks inherent in DeFi and blockchain technology.