NMPIP: Deprecate Custody Cover product
Summary
Since Custody Cover first launched in December 2020, Nexus Mutual members have sold $220m in cover, earned $1.48m in cover fees, and paid out over $6m in claims.
Given the lack of transparency and high correlation between custodians, Nexus Mutual members should take action to deprecate (i.e., delist and no longer offer) the Custody Cover product.
Rationale
Below, you can find a high level overview of the historical cover sold, fees earned, and claims paid for Custody Cover products since launch.
Source: Covers Dune Dashboard, Claims Dune Dashboard
The two main reasons for deprecating this cover product are:
- Lack of transparency, high degree of correlation. The risk presented by the Custody Cover offering was more significant than previously thought.
- High risk, not enough reward. To date, members have paid $6,065,241.96 in Custody Cover claims–33.86% of all claims paid–while cover fees earned only represent $1.48m, or 6.19% of total cover fees earned.
For more detailed information, you can refer to the [RFC]: Deprecate Custody Cover product post on the forum, which includes members’ comments.
Specification
If members support sunsetting Custody Cover, Custody Cover will be deprecated by:
- Setting the
isDeprecate flagto true on all existing listings under Custody Cover - Removing “Custody Cover” references and associated listings from the Nexus Mutual UI
Proposal status
This proposal will be on the forum for review and comment until Monday (12 June), at which time it be put to an on-chain vote. Previously, this proposal was posted as an RFC on the forum for 12 days, afterwhich time it was moved to a formal NMPIP.
Open for comment until 12 June
On-chain vote (12 June)
Members can now review and vote on this NMPIP in the Nexus Mutual UI. Both the Custody Cover and Yield Token Cover proposals have been combined since feedback was minimal.
Outcome of vote
After the three-day voting period ended, members unanimously voted to deprecate Custody Cover and Yield Token Cover, with 448,026 NXM worth of votes cast to accept the proposal.
This proposal has been executed, which means Custody Cover and Yield Token Cover have both been deprecated–members can no longer purchase coverage across these two cover types and any staking pool managers can re-allocate any NXM staked against these two product types.
Source: Nexus Mutual UI in Governance tab