Nexus Mutual, a decentralized insurance provider focusing on digital asset risks, is expanding its distribution by supporting a new crypto insurance broker named Native. Announced in a recent press release, Native launches with $2.6 million in seed funding led by Nexus Mutual. Together, the firms are offering an innovative $20 million on-chain insurance coverage per risk. Nexus Mutual boasts a substantial capital pool of about $200 million, mostly in Ethereum's native token, ETH. This robust capital foundation allows Nexus Mutual to write multiple coverage lines per risk from day one, enhancing its capacity to insure the crypto market significantly.
The crypto industry has long suffered from a severe lack of insurance capacity, with only around 1% of crypto assets currently insured. In contrast, traditional sectors often have about 7% of their GDP insured. Native aims to tackle this chronic shortage of insurance. "Our goal is to help solve the underinsurance problem in the crypto industry," says Ben Davies, Native's co-founder and CEO. "No industry can thrive without a liquid insurance market, and Native's on-chain broker model addresses this need." By connecting businesses with Nexus's extensive capital pools, Native not only increases insurance capacity but also provides flexibility for clients to transact in cryptocurrency, which includes claims payouts.
Native plans to extend its role beyond mere distribution by operating a capital pool on Nexus. This integration positions them as a managing general agent within Nexus Mutual, aligning underwriting processes closer to crypto-specific needs. Since its inception in 2019, Nexus Mutual has underwritten roughly $5 billion in crypto assets and paid out $18 million in claims, primarily covering risks traditional insurers might struggle with, such as those associated with decentralized finance (DeFi).
To incentivize participation in their unique insurance model, Nexus Mutual allows members to contribute assets to syndicates, much like the Lloyd's of London market, earning NXM tokens as a reward. These tokens are used to secure various risks, similar to the concept of being a "Name" at Lloyd's, offering potential yields of up to 25%. Hugh Karp, founder of Nexus Mutual, highlights, "We understand the nuances of crypto-native risks better than anyone else. Unlike traditional insurers, we're here to support the crypto space with dedicated capacity."
Furthermore, Nexus Mutual's alternative insurance offerings are now accessible on Coinbase's layer 2 network, Base, through a product called Base DeFi Pass. Created by OpenCover, Base DeFi Pass provides coverage for high-profile protocols on Base, including Uniswap and Compound. This "set and forget" insurance offers a comprehensive safety net across various applications, covering smart contract bugs and hacks but excluding phishing and certain market-related losses.
Jeremiah Smith, OpenCover's CEO, notes, "Base Pass simplifies the process of obtaining extensive insurance coverage on Base. Rather than seeking separate coverage for each protocol, Base Pass ensures peace of mind across the board." Jesse Pollak, the creator of Base, adds, "OpenCover's Base DeFi Pass adds confidence for users engaging in the DeFi ecosystem on Base, creating a secure environment for exploration and innovation." Insightfully edited by Stephen Alpher.
