Decentralized insurance alternative Nexus Mutual received a $2.7 million boost to its foundation treasury, the not-for-profit umbrella organization charged with selling NXM tokens to fund core development of the protocol.
The strategic contribution was led by Collider Ventures with participation from Nick Tomaino’s 1confirmation, Blockchain Capital, Version One, Dialectic, 1kx and several angel investors.
Nexus started out focused on providing protection against risk and potential bugs in the smart contract code of decentralized finance (DeFi) projects. Recently, the startup announced it was extending its community-based offering to cover users for hacks and losses incurred at centralized exchanges like Coinbase, Binance, Kraken and Gemini.
The Nexus foundation previously raised $1.4 million from an NXM token issuance in 2018, bringing the total raised to date to $4.1 million.
How NXM works
NXM is the governance token for the Nexus Mutual protocol. It is used to buy cover, vote on governance decisions and participate in risk and claims assessments. It is also used to encourage capital provision and represents ownership to the mutual’s capital.
“When Nexus launched, it granted a bunch of NXM tokens to our foundation, which has gradually sold them to cover operational costs,” Nexus Mutual CEO Hugh Karp said in an interview. “We expect to wind down the foundation as the protocol becomes more stable and fully decentralized.”
Karp said the $2.7 million token sale took place around December of last year, at the market value for NXM at that time, without stating the exact figure.
It has been a momentous year for Nexus. The platform saw its pool of capital covering risks within the DeFi ecosystem increase from $4 million to $100 million within the final five months of 2020.
Nexus Mutual has a very aggressive roadmap for 2021, Karp said, aiming to sell over $1 billion worth of cover spread across at least 30 protocols.
“We see Nexus Mutual as an indispensable pillar of DeFi … and decided to take a proactive approach to support the development of the platform,” Adam Benayoun, founding partner of Collider Ventures, said in a statement.
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