HOW IT WORKS
NXM Token Model
Tokenised membership rights in Nexus Mutual.
KEY BENEFITS
The Tokenised Mutual Model
Membership rights will be represented by tokens. Tokens can be used to purchase cover as well as participate in claims assessment, risk assessment and governance. All funds raised from token purchases belong to members.
Continuous Token Model
Nexus Mutual uses a Continuous Token Model. NXM price depends on how the mutual is performing financially.
NXM can be purchased and redeemed directly through the platform.
Token price rises when the mutual has adequate funds.
Minimum Capital Requirement (MCR)
The MCR is the level of funds required to be very confident all claims can be paid.
MCR will have a fixed minimum value that will be set at launch.
It is a major component of the token model, influencing price and redemption conditions.
NXM Price is Formula Driven
This is the full formula for calculating the token price in ETH.
A and C are constant values which will be calibrated at launch.
NXM Price and Capital Pool
The mutual has adequate funds when the amount of money it holds (known as the "Capital Pool") is greater than the MCR.
The ratio of funds held to funds required is known as MCR%, which directly impacts the token price.
Token price rises when the mutual has adequate funds
When the Capital Pool decreases, so does the token price.
For example, when a claim is paid, the Capital Pool shrinks but the MCR remains almost unchanged, meaning the MCR% decreases, lowering the token price.
If funds are low, the token price lowers to re-capitalise the fund.
If cover is purchased, the size of the Capital Pool increases.
The MCR also increases, but in nearly all cases by less than the Capital Pool. Therefore MCR% increases, raising the token price.
As more cover is purchased, and the fund grows, the token price increases.
Buying Cover
Each cover purchased increases the Minimum Capital Requirement (in Ether) by a small amount if the MCR is above a minimum level (set at launch).
While most of the short term price movements will be driven by MCR% changes, the growth in MCRETH from cover purchases will be a long-term driver of the price, reflecting platform adoption.
Spare NXM
NXM can be redeemed for Ether from the mutual.
NXM can only be transferred to other Nexus Mutual members.
Redemption restrictions:
- Capital Pool needs to be above the MCR.
- Redemptions are capped per transaction.
- Capital Pool must have enough liquidity in Ether.
- Redemption price is 2.5% below purchase price.
NXM Token Uses
Only Nexus Mutual members can purchase, hold and use NXM.
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Membership of the mutual will be represented by “NXM” tokens. By signing up, you’ll be the first to know when we launch.
