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DeFi

DeFi insurance project Nexus raises $2.7 million in NXM token sale

  • DeFi insurer raises $2.7 million in a private sale of NXM tokens.
  • The insurer is planning to sell insurance cover worth over $1 billion to at least 30 protocols.
  • Collide Ventures, one of the investors in Nexus Mutual, regard the project as a pillar of the DeFi ecosystem.

A DeFi insurance protocol has raised more than $2 million from the sale of its native tokens to several angel investors.

Nexus, a decentralized project that covers “smart contract failure,” secured $2.7 million in funding to increase the coffers of its foundation, a not-for-profit organization tasked with selling NXM tokens and oversee the core development of the project.

Raising $2.7 million

The strategic round was led by Collider Ventures with support from Blockchain Capital, 1confirmation, Version One, Dialectic, 1kx, and additional angel investors.

Collide Ventures’ founding partner Adam Benayoun regards Nexus Mutual as an important part of the DeFi ecosystem.

“We see Nexus Mutual as an indispensable pillar of DeFi … and decided to take a proactive approach to support the development of the platform,” he said.

Hugh Karp, the CEO of Nexus Mutual said the foundation was allocated tokens to sell to finance operational costs.

“When Nexus launched, it granted a bunch of NXM tokens to our foundation, which has gradually sold them to cover operational costs. We expect to wind down the foundation as the protocol becomes more stable and fully decentralized.” 

The $2.7 million-token sale took place in December last year, and the tokens were sold at the market value of that time, said Karp.

Trading at a discount

Wrapped NXM (wNXM) trades at a discount to NXM because the minimum capital requirement (MCR) is under 100%.

NXM tokens are not traded on exchanges and can only be bought on the Nexus Mutual platform where buyers have to complete KYC. Purchasing wNXM does not require KYC.

When the MCR is at 100%, users can no longer sell NXM to the Mutual. This drives them to the secondary market wNXM to sell their NXM tokens.

 A growth period

2020 was a good year for the insurer. The protocol’s pool fund increased from $4 million to $100 million within the last five months of 2020.

Karp said that they are planning to sell $1 billion worth of cover to more than 30 protocols.

In mid-December last year, a member of the protocol hacked Karp’s personal address and drained NXM tokens worth more than $8 million.

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