Nexus Hub: Proposal, Structure, Next Steps

Overview

Since I became an active member in the Nexus Community, I have been trying to figure out ways to utilize the talent within our community. The Nexus Core Team is top notch, and they do the heaviest lifting for the community; however, there are so few team members and many, many members within the mutual.

We have the Community Fund to use in ways that benefit the mutual through member contributions. My one concern about the grant-proposal structure is the passive aspect. We are waiting for members to come up with individual projects that benefit the mutual.

By creating a community-driven, dynamic system of working groups with defined objectives and team leads, we can employ an active structure where team leads look for talent within the community to work within a working group.

Going forward, I’ll refer to a Nexus working group as a “Hub” and Nexus team leads as “Hub Leads.”

Proposal

After taking the better part of two weeks to analyse existing working group structures in DeFi, I believe Nexus Mutual can greatly benefit from a working group structure modelled after Index Coop’s working groups. Yearn Finance has a progressive structure, but I think it’s too overzealous for the mutual. I would like to incorporate certain features Yearn uses in the Nexus Hub model.

Creating various Hubs for specific subject areas that work independently and, at times, together will be the best way to tap our members for talent, hire them on a contractual basis, and grow the mutual through horizontal and vertical integrations within DeFi.

Each Hub will be established through Community governance using Snapshot voting. When members want to form a specific Hub, they will need to submit a Hub Charter, which outlines the mission of the Hub, the objectives the Hub intends to work toward, the budget the Hub needs to operate, and outline how the Hub benefits the mutual.

Mutual members will give each Hub a nominal amount of power to use discretion in decision making, which will enable a Hub to move quickly and effectively in their mission. To ensure a Hub cannot abuse its power, members are given greater power to keep Hubs in check:

Members can alter Hubs using the following governance powers:

Proposal Description Hypothetical Examples
Hub Improvement Proposal (HIP) A proposal to use power given to NXM holders to form, dissolve, or restructure a team. If a Hub is underperforming but is vital, members can vote to rename, restructure, and re-establish the Hub charter to create a more effective Hub,
Hub Delegation Proposal (HDP) A proposal to change the internal dynamics of a Hub or any change in duties/responsibilities. If a team member within a Hub is no longer contributing, members can vote to remove that member of the Hub and halt payments from the Treasury Hub to that member.
Hub Signalling Proposal (HSP) A preliminary proposal to signal member’s desires or feelings regarding any Hub. If a Hub is focused on objective B and members determine that objective A is a higher priority, members can provide feedback to a Hub through governance to redirect their efforts.

After a Hub submits a charter and is approved through Snapshot governance, the Hub’s budget is then managed by the Treasury Hub. The Community Fund Multi-sig will distribute NXM funds to the Treasury Hub on a quarterly basis. The Treasury Hub is then responsible for distributing funds to the various Hubs.

Within this structure, Hub Leads would make X amount of NXM a month and each team member would make Y amount a month where X > Y. Members would reward Hub leads with more NXM for managing a team, staying on task, and delivering results.

Each Hub will serve different functions, so it will be up to the community to approve the Hub budgets that are submitted with the Hub charter. Hubs will have to submit reports on a bi-weekly basis outlining their progress and objectives for the next two weeks along with any other relevant information.

After each quarter, members can vote to dissolve a Hub if they believe the Hub is not living up to its Hub Charter. Time limits are imposed on the Hubs to ensure no one Hub can receive NXM while they are not returning value to the mutual and its members. When Hubs are first created, they are temporary entities. As we start out, it is likely we’ll merge certain Hubs or dissolve others for various reasons. A Hub has to prove its value before attaining any level of permanence.

Hub Leads will be responsible for building their teams beyond its initial members. The idea is to have Hubs be active entities that seek out talent within the community and capture that talent. Hubs can coordinate to create inter-Hub programs such as Ambassador programs that utilize members en mass.

I’ll cover Hub Charters and Governance Structure below.

Hub Charters

Each Hub will have a charter document that outlines the purpose for the Hub. This document will establish the need for a Hub and other factors. When a Hub is established, this document will serve as a contract between the Hub and Nexus Mutual members.

You can see preliminary draft of a Hub Charter Template I created. As of right now, anyone can view this document and comment on it. Anyone in the community should feel free to leave comments, suggestions, additions, etc. to the document.

Governance Structure

The Hubs will all be somewhat interconnected. One Hub may be working on an initiative that requires detailed analytics. They can request the Analytics Hub produce a report on the data they need. All Hubs are going to report to the Treasury Hub for distribution of funds. While personnel payment will happen on a monthly basis, other operational funds outlined in the Hub Charter can be requested from the Treasury Hub.

Members can submit ideas to the relevant Hub through a proposal. If proposals are generated from members outside the Hub and the proposals are chosen by the Hub teams, then each Hub will have a set amount of funds to reward outside proposals that add value to the mutual. This ensures each Hub is open to outside ideas so an echo chamber isn’t formed within the Hub.

The proposed structure is detailed in the image below:

All Hubs are somewhat connected, and the Analytics Hub serves the other Hubs as well as the mutual. Any Hub that wants to make a change, request more funds, add greater scope to their Hub or change direction, etc. will have to do so through Snapshot governance.

The Community Snapshot Proposal process is as follows:

  • A Hub creates an outline for their proposal with the key information. This is posted in the forum tagged with [Outline] in the title. The Community then has five (3) days to discuss and provide feedback.
  • For every proposal, the Core Team and the Advisory Board will have the chance to weigh in and offer their recommendations for revisions or whether or not they believe it will be beneficial for the mutual. These two groups do not have any veto power, but it is important to provide these two groups with a chance to offer recommendations to the community as Hubs work to improve the protocol.
  • The Hub then takes those recommendations and creates a formal, detailed proposal. It is then posted in the forum for community discussion with a poll. Each poll will have three choices: Yes, No, and Needs to be Revised.
    • If “Yes”, it can progress to a Snapshot vote.
    • If “No”, the proposal is dead in the water in current form.
    • If “Needs to be Revised”, then the Hub has one (1) chance to revised the formal proposal and resubmit. When resubmitted, it is posted with only a “Yes” or “No” poll vote.
  • If a proposal is successful, it goes to a Snapshot vote. If a majority (>50%) approves the proposal, then it proceeds to the Multi-sig for dispersal of funds to the Treasury Hub. Those funds are earmarked for the Hub in question.
  • The Community Fund Multi-sig does have power to veto a passed proposal in an extreme case where they believe members are acting maliciously. In this case, a veto would require members to pass a veto-proof proposal with 80% super majority to override the Community Fund Multi-sig.

Why Nexus Hub

As I stated in my introduction, I believe Nexus Mutual is at the bleeding edge of the DeFi insurance sector. That doesn’t mean the mutual is problem free.

Right now, we are struggling with the MCR%, which has been <=100% since early December 2020. This prohibits NXM à ETH redemptions, and members are unable to take profit.

The community has discussed this issue over and over, but we have yet to find a solution that everyone agrees on as an effective course of action.

I believe that the mutual can use the Community Fund to hire members, give them active roles, recruit talent, and deliver value to the mutual. Below are some examples of Hubs and how I see them contributing to the mutual:

Analytics Hub : we can have a team that serves the data management needs of other Hubs and the mutual as a whole. Nexus Tracker offers us an insight into the essentials, but there are other areas we could track: membership growth, number of NXM wrapped each month, number of NXM bought through the bonding curve, number of wNXM sold through DEXs, average size of a cover buy, rate of cover buys after new protocols are launched, activity on Discord, Twitter, Telegram, etc. We can track all kind of information to gain insight on various growth initiatives and their effectiveness.

Growth Hub : I envision this as a two-sided Hub. One side would be the Alpha team: their goal is to grow membership and educate prospective members on the benefits of membership. They can onboard members, answer questions, serve as Nexus Ambassadors in various DeFi communities. Members with big bags, medium bags, small bags: it doesn’t matter. They spread the gospel of DeFi cover products.

One side would be the Omega team: their goal is to search for small-to-medium size protocols to add to Nexus Mutual. They would establish relationships with dev teams, work to identify good opportunities for new listings, submit short reports to Ricky in Business Development, etc. Their job is to identify areas for growth in listing.

These two teams work together. One side adds members where demand is present. One side adds protocols that have existing demand from the Alpha team’s contributions.

Marketing/Communications (H/C) Hub : This Hub handles all member-facing written communication. Members would create educational content through various media, establish a strong presence on social media, and establish a Mutant Network that other Hubs can tap into.

I’m already working on the mutual’s technical documents, but this Hub would be responsible for updating the docs as new cover products are added, new protocols/custodians are listed, and as new governance proposals get passed.

This Hub would serve other Hubs. For example: the growth Hub needs informational scripts to use when explaining the fundamentals behind Nexus to prospective members. The M/C Hub would create educational whitepapers that Growth Hub Alpha team members can use. The same could be done for Omega team members.

This Hub would also have a few members dedicated to providing support on Discord. We can keep track of common questions that pop up in Discord and create educational content to share on social media to help curb these questions and educate members.

Creating marketing campaigns for new cover products, creating awareness through social media about the value Nexus Mutual offers members, etc.

Treasury Hub : This is an essential Hub that will need to be prioritized first. Accountants or other qualified members can help the Nexus Hub manage finances and distribute funds between Hubs. They can provide feedback on budgets and proposals and keep track of NXM spent from the Community Fund and provide transparent bookkeeping for mutual members.

There are other Hubs, of course, but I wanted to outline the function and value different Hubs can have.

How Other Communities Implemented Working Group Models

To review existing models for the Nexus Hub, I reviewed various protocols but focused on Yearn Finance and Index Coop. Both have progressive, well-run systems.

You can read this overview report for a general breakdown of the two.

Best Model for Nexus

I used the Index Coop model to guide the formation of the Nexus Hub as outlined in this proposal. I’ve incorporated the philosophy behind “constrained delegation” from Yearn’s YIP-61 into this structure because I believe Hubs will need nominal amounts of power and discretion to execute objectives and deliver value for the mutual without being hamstrung through constant governance. I’ve incorporated checks and balances, and I’ve chose the Snapshot governance for Community Fund-related activities through the Nexus Hub.

To be clear: Snapshot governance only applies to the Nexus Hub. Changes to the protocol will still be done through GovBlocks.

Next Steps

The community needs to discuss the best way forward. If someone has a better idea on structure or other details, it should be shared so we can refine this idea. I am one community member. This should be moulded/shaped by the entire community.

Top level priorities:

  • Finalize language in Hub Charter template and other Hub docs, as needed
  • Finalize the proposed structure of the Hub
  • Seek out members to serve on the Treasury Hub
  • Identify members who would be interested in acting as a Hub Lead or working within a Hub.

Conclusion

Once we get the details finalized, I plan to submit a Hub Charter for a Marketing/Communications Hub. This is an area I would love to work in with a Co-Lead to manage marketing efforts.

I’m always available to help members who want to start a Hub. I can help with brainstorming, drafting documents, etc.

I’m 100% dedicated to growing the mutual, solving the wNXM-NXM parity issue, and extending the mutual’s reach to every corner of DeFi in any way I can.

The Core Team and the Nexus Hub could be a game changer for the mutual.

This structure would use the talent within our membership and make passive members into active ones. While we can always keep the Community Fund full and flush, I don’t believe that is the best use of those funds. At some point in the future, we can create a fee mechanism to divert some small percentage of cover premiums into the Community Fund.

However, it’s unlikely we would drain the Community Fund anytime soon. If we spent 5,000 NXM a year on the Hub, we could run this program for ~50 years.

A defined structure with checks and balances and a nominal amount of freedom given over to Hubs is the best way to move the protocol forward, further decentralized the mutual, and deliver value to members.

Just as it says in the Docs, the mutual was founded with the mission to “return the power of insurance to the people.” This proposal was created in the spirit of that statement.

7 Likes

Firstly, a huge thanks for pulling this together. Heaps of well thought out points and specifics on how it can work.

I’m very supportive of the approach. Stepping right back, Nexus is going to require experts who are actively engaged for it to succeed and the Community Fund can be used to make this happen. The challenge here are the specifics of creating hubs, with goals/objectives that lead to successful execution and the model you’re suggesting is a fantastic outline of how this can work.

There is no easy playbook for decentralised teams, so it will almost certainly require changes as things evolve. Point being, there isn’t too much value in debating detail here as it’s best to get stuck in and try it out if we think the general approach is good. I certainly do.

I’d probably pick two Hubs to start with, Capital Pool Investment and Marketing. Identify someone who’s willing to be a Hub lead and then get down to forming the members and articulating the objectives.

The Capital Pool Investment (or Investment Committee) is currently progressing along this path.

Very keen to watch this evolve!

3 Likes

Thanks for the feedback, Hugh :v: :turtle:

What are your thoughts on the Treasury Hub? This is a feature present in both the Yearn and Index Coop models. It seems important since those funds are part of the discretion members give over to the Hubs when a Hub Charter is approved.

I think the short term solution is to empower the Community Fund Multi-sig to pay Hubs directly until a Treasury Hub is created, if one cannot be created at the outset of the Nexus Hub. Once a Treasury Hub is approved, those duties related to the Nexus Hub would shift to the Treasury Hub for direct distribution of funds.

It may make sense to use the Capital Pool Investment Hub to run Treasury as well. Same skill set, so seems strange to duplicate.

More generally, I’d suggest starting small with what is absolutely required, as we’ll get experience on what works well. So could easily rely on the multi-sig + grants process to start with, then add more formalised Treasury mgmt later when it’s warranted (eg more hubs etc)

2 Likes

This is a remarkable proposal and I want to thank you for it. It’s why DAOs will ultimately prosper b/c of the decentralized innovation potential. I’ve been in marketing for 20+ years working in both centralized and decentralized marketing orgs.

If you do proceed, I’d love to explore if/how I can be of service to the Hub and the Mutual in this capacity.

BTW…you may enjoy the book I wrote about Decentralized Marketing.

Regardless…thank you for driving this.

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Agreed. Short-term, this makes sense to streamline things. Long-term, having another secondary layer in terms of treasury approving funds for investment adds more protection. Not the worst idea, but overkill right now

This is a great proposal and it’s great to see we are having progress moving towards giving more power to the community members. Would love to be involved with some of the hubs.

Nexus Mutual is still leading the DeFi Insurance space now but competitors will be coming. We need to act fast and build up a strong moat.

Yearn Finance and Index Coop have shown that decentralized team does works and it would be great to see it get replicated here in NXM.

Kudos to @BraveNewDeFi for coming up with the second iteration of the proposal in such a short timeline.

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Maybe you want to co-lead the Marketing/Communications Hub with @BraveNewDeFi? :blush:

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Happy to discuss and would enjoy working with a Mutant legend.

2 Likes

Hey @jer979! Thank you for your response here. Sorry for the delay in responding. If you want to reach out to me on Discord (BraveNewDeFi#0027), I would welcome the chance to talk about your involvement in the Marketing/Communications Hub.

Great. Just sent you a friend request. FYI…different handle

1 Like