Nexus Mutual DAO Treasury Updates - karpatkey

Investment
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Introduction

This report summarises karpatkey’s activities and achievements in November 2024, with the focus on selling and diversification of NXM Token.

Financial Results

  1. The treasury has increased from $6.68 million at the end of October to $9.28 million as of the end of November.
  2. The revenue generated from protocol fees to the treasury amounted to $83.3k in November.
  3. Treasury allocation to DeFi activities stands at 34.3%.
  4. Detailed information about the treasury results is available in the November report, accessible via the dedicated Nexus Mutual dashboard on the Karpatkey website.

Treasury Operations

NXM Staking

  • As part of the mandate from the Nexus Mutual DAO treasury, 100% of the NXM earmarked for the staking program (35,803.80 NXM) has been allocated across five staking pools. The allocation strategically balanced exposure between high and low-claim-rate products to maximize returns while mitigating the risk of over-staking, thereby safeguarding the pool’s APY.

  • An additional 10,200 NXM was staked to improve capital efficiency in the context of prices below book value and slow redemption process, which limits the immediate usability of unwrapped NXM.

  • To encourage cover purchases, the overall staking period was extended by 91 days to 23rd April 2025.

NXM Selling

  • An amount of 2,000 NXM were swapped at spot price, staying within the aligned 1% of the redemption price.
  • Selling was paused in the last week of November to protect Nexus Mutual’s financial interests, as the spot price showed a significant deviation from the book value.
  • By not selling NXM well below book value, karpatkey ensures the treasury’s value is preserved, avoiding unnecessary devaluation of Nexus Mutual assets.
  • Moving forward, karpatkey will closely monitor the deviation and only resume selling in line with the 1% mandate, maintaining a responsible and professional approach to treasury management.

Liquidity provision

  • Two positions have been created in the WNXM/WETH V3 pool on Uniswap: one with a tighter range for improved capital efficiency and another with a broader range to better capture price volatility.

  • Both positions are currently out of range but have accrued significant swap fees (~$3,288). The broader range is designed to ensure liquidity availability during periods of high price deviation, while the tighter range optimizes earnings during periods of stability.

  • ETH Derivative
    As a part of mandate, WETH resulting from wNXM diversification was allocated to wstETH to gain exposure to ETH staking yield. The Nexus Mutual treasury now holds ~30 wstETH, and we plan to increase our exposure to ETH derivatives as the price improves.

Next Steps

  • Explore WNXM/USD pools on CoWAMM.
  • Adding new Zodiac Permissions so that CoWAMMs can be incorporated, which is now insured by Nexus Mutual.
  • Actively monitor the NXM price to continue the diversification process.
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Introduction

This report summarises karpatkey’s activities and achievements in December 2024, with our focus on building a diversified and sustainable DAO treasury.

Financial Results:

  • Treasury Balance: $9.08M, down from $9.28M in November, mainly due to NXM price variation. This is depicted by the Price Var for Init Bal in the below Treasury Variation chart.

  • Protocol Fee Revenue to Treasury: Operations results (also shown in the Treasury Variation chart below) increased to $122K from $83K in November.

  • DeFi Allocation: 43.7%, up from 34.3% in November, mostly driven by staking an additional 10,200 NXM for capital efficiency.

  • DeFi Revenue: $28.3K, up from $17.4K in November. This is depicted by the DeFi results entry in the below Treasury Variation chart.

  • Full treasury breakdown is available on the Nexus Mutual dashboard at the karpatkey website.

Treasury Operations:

  • 140K USDC that had accrued from protocol fees was deposited into the Aave V3 core market.

NXM Tokenomics:

  • The total circulating supply of NXM currently stands at 3.23M, with 1.08 million held in wNXM and the remaining 2.14M in NXM.
  • Of the 2.14M NXM, 576K is actively staked within Nexus staking pools.
  • Out of the 1.08M wNXM in circulation, 17K are deployed across various DEX liquidity pools.

NXM Price:

  • The NXM spot price remained notably below its book value (“BV”) during the first half of December but showed signs of recovery in the latter half of the month.
  • Since the NXM spot price did not recover sufficiently in alignment with the 2% mandate, no WNXM sales were executed in December.
  • As the NXM spot price improved in the second half of December, both Uniswap concentrated liquidity positions are in range and generating swap fees.
  • Going forward, karpatkey will closely monitor the NXM spot price and execute WNXM sales whenever the NXM price is between BV and BV-2%, maintaining a responsible and professional approach to treasury management.

Next Steps:

  • Establish monitoring infrastructure to facilitate Ether.fi ETH re-staking within the curated set of strategies.
  • Conduct research and perform risk assessments for the Resolv and Ethena protocols to support a broader portfolio of stablecoin strategies, while defining the necessary monitoring infrastructure.
  • Implement new Zodiac permissions for the Sky Saving Rate (e.g., for staking USDS) and the Aave Prime market.
  • Actively monitor the NXM price to support the ongoing diversification process.
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