The Nexus Mutual insurer now covers 1% of DeFi funds

A well-informed investor is worth 2 – Although decentralized finance manages to gain new followers every day, it is not immune to a flaw that can lead to big losses. Fortunately, protocols, like Nexus Mutual, try to ensure this fund in the face of such incidents.

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Nexus Mutual: decentralized insurance

Nexus Mutual is a decentralized insurance protocol launched in May 2019. It connects 2 types of users: insurers and policyholders .

On the one hand, insurers deposit assets on the platform in order to generate a return on their assets, hoping, however, that no bug occurs. On the other hand, policyholders buy insurance coverage on the platform. Insurance costs paid by the insured are paid back to the insurers.

In the event of a problem with a smart contract, policyholders can invoke their insurance rights and the funds deposited by insurers will be used to cover losses .

1% of the DeFi ecosystem insured

The protocol has convinced a growing number of users. Thus, since July 1, the amount of insured funds has increased by 1,400% , from 5 to 74 million dollars at the time of writing.

Evolution of the amount covered by Nexus Mutual in dollars – Source: Nexus Mutual Tracker
In practice, this amount represents more than 1% (1.2% at the time of writing) of all funds involved in decentralized finance .

At first glance, this may seem ridiculous. However, this is a significant first milestone for the decentralized insurance industry.

The KYC problem

Unfortunately, the adoption of Nexus Mutual has seen a major brake: the presence of KYC . In fact, to buy Nexus Mutual insurance coverage, the user must go through a KYC (Know Your Customer) in which he will have to reveal and prove his identity. A process that can block a large number of users concerned about their anonymity.

Fortunately, a solution seems to exist thanks to yEarn.insure , the insurance offered by the yEarn.finance protocol. Indeed, it is based on the insurance offered by Nexus Mutual, but without having to go through the KYC process . What to reconcile the aficionados of anonymity.