NMDP: Using DAO Community Staking Pool Funds to Pass Aggregate Risk onto Symbiotic Restakers
Overview
The Nexus Mutual team has launched the Nexus Mutual Network on Symbiotic, where the Mutual plans to pass excess risk onto restakers that delegate capital to our network. Some of the risk the Mutual underwrites is split across several different listings, as noted below. Once capital is attracted to the Nexus Mutual Network, we will need to pass aggregate risk for certain listings using our Symbiotic Excess of Loss Cover product. In order to pass that risk directly, the Mutual will need to purchase cover that is directed to the second-loss layer on Symbiotic.
On behalf of the Nexus Mutual team, I am proposing members approve the use of NXM in the DAO Community Staking Pool multisig to pass risk onto our Symbiotic network for the initial 8-12 months of our network going live with at least $10M in capital from restakers.
Rationale
To scale cover sales, the Mutual needs to attract more capital. Currently, the Nexus Mutual team plans to do this in two ways:
- Use our Symbiotic network to pass excess risk onto restakers. By creating a network on Symbiotic, attracting restaking capital, and passing risk onto restakers, the Mutual can share a portion of premiums with restakers in exchange for restakers taking on excess risk from the Mutual. This enables the Mutual to underwrite larger covers and ensure that a large claim event doesn’t wipe out a material amount of the Mutual’s capital.
- Redirect RAMM Value to Stakers to Increase NXM Staking and TVL. As outlined and approved by members in NMPIP 260, redirecting value from the RAMM to NXM stakers is another key way we can increase Nexus Mutual’s TVL while increasing available underwriting capital participating in staking. The engineering team will begin work on this project in Q2 2026.
The Nexus Mutual Network is live on Symbiotic, and the team is in the process of attracting restaked capital from curators to our network.
Some risk the Nexus Mutual team will pass onto restakers is split across multiple listings.
For example: the largest exposure the Mutual has to any one protocol is Aave v3 and that exposure is split across the main Aave v3 Single Protocol Cover listing and several Fund Portfolio Cover listings. To pass this risk in aggregate, the Mutual will need to purchase Aave v3 Symbiotic Excess of Loss Cover, which would pass that risk directly onto restakers and, in the event of a claim event that exceeded $20M, the remaining claim liabilities would be split between the Mutual and restakers on a 20%/80% basis.
In order to pass risk, the Mutual needs capital to reward restakers who take on the second-loss liability when they delegate to the Nexus Mutual Network. In the beginning, the easiest way to do this is to use NXM from the Community Staking Pool Safe multisig, which currently holds 115,555.66 NXM between NXM, wNXM, staked NXM, and NXM staking rewards.
In the future, The Nexus Mutual team plans to use a separate Safe multisig to hold Capital Pool funds that can be used to pass risk to the restaking layer. This Safe will need to track its holdings, so those funds are still tracked in the Capital Pool. The team did this previously when we managed the previous loan taken out on Aave. A similar approach will need to be taken to pass risk onto the Symbiotic layer, but that will take time to develop.
Specification
If this proposal is approved, the Product & Risk team will have a mandate from members to use NXM held in the DAO Community Staking Pool Safe multisig to pay for the coverage that will pass risk onto the Symbiotic layer. This mandate will be in place for a maximum of 12 months; during this time, the Nexus Mutual team will develop a solution to hold a portion of Capital Pool funds in a separate Safe multisig, which can be used to pass risk onto the restaking layer.
Funding Request
The Product & Risk team will only spend the necessary NXM to pass aggregate risk onto the Symbiotic layer. For example:
- If the Nexus Mutual Network had $10M in total TVL, the maximum annual spend would be $386,580
- If the Nexus Mutual Network had $50M in total TVL, the maximum annual spend would be $1,932,900
The maximum assumes the Mutual can pass the maximum amount of risk for the protocols included in the Nexus Mutual Network.
Proposal Status
This NMDP will be posted for one (1) week before moving to a vote.
We look forward to your review and any comments!