Earlier today, the Bonding Curve was replaced with the Ratcheting AMM (RAMM) and the Minimum Capital Requirement Floor (MCR Floor) was removed following the approval of NMPIP-209, where members voted with more than 1.18m NXM to approve the proposal. Over the last year, the Nexus Mutual community has worked together to develop a scalable solution that will allow members to freely mint and redeem NXM and overcome the MCR lock problem.
NMPIP-209's execution is the culmination of that hard work.
The Nexus Mutual protocol has an updated mechanism that manages capitalisation and ensures all claims can be confidently paid should a major loss event occur. This mechanism is referred to as the Ratcheting Automated Market Maker (RAMM), a two-pool system built on top of the Capital Pool that allows members to mint and redeem NXM.
The Above Pool and Below Pool are the pools present in the system. These pools contain a defined amount of ETH liquidity paired with “virtual” NXM. This creates two internal pools, which have the same ETH liquidity: the NXM reserves in each pool are represented by a virtual NXM balance. The ETH and NXM balances change over time as NXM is minted and redeemed.
With the RAMM's launch, members are once again able to redeem NXM for ETH in the Nexus Mutual UI. After launch, the ratchet will move the redemption spot price towards book value in just over a day, assuming there are no redemptions during that time.
Note: Only Nexus Mutual members can redeem NXM for ETH in the UI.
For the safety and security of Nexus Mutual Members, an option to unwrap WNXM to NXM is available in the UI. Before accessing the unwrap feature, members must review and acknowledge the associated disclaimer. To learn more about WNXM and the NXM Wrapper, members can review the information available on the Nexus Mutual DAO website.
Before NMPIP-209 was posted on the Nexus Mutual governance forum, the RAMM smart contracts were audited by iosiro, the Mutual's long-term auditing partner. The iosiro team has worked with top projects such as Synthetix, 1inch, and Set Protocol; they have historically reported valid bugs found on Optimism, Polygon, Nethermind, Ondo Finance, Across, Alchemix, and others.
The RAMM mechanism also underwent an economic audit, which Chaos Labs conducted. Chaos Labs is an economic security auditing firm that provides services to leading DeFi protocols such as Aave, Compound, Curve, and Uniswap.
The following security measures were put in place before the RAMM was launched, and the Foundation Engineering team will closely monitor the smart contracts now that the RAMM is live.
To review Nexus Mutual's complete auditing history and security measures, see the Audits and Security section in the Nexus Mutual documentation.
Nexus Mutual is fully owned and governed by its members, and through their collective action, a discussion that started on our governance forum turned into a DAO-owned project with the following goals:
We thank everyone who contributed to the discussion on Discord and the governance forum. A special thank you to the DAO R&D team, the Foundation Engineering team, iosiro, and Chaos Labs.