Aave Loan Has Been Repaid
On 26 August 2025 when the price exceeded $4500/ETH, the Advisory Board (AB) paid off the existing Aave per the authority granted to the AB after members approved NMPIP-245: Repay Aave Loan Once ETH Reaches $4500.
As noted in the governance post above, Nexus Mutual members approved the Cover Re investment and, as part of the proposal to allocate funds to Cover Re, members signalled a desire to take out a loan against ETH collateral on Aave v3 to borrow USDC for the investment.
In May 2024, the AB deposited 9,340 ETH into Aave v3 as collateral in the Ethereum mainnet market and took out a loan against this collateral for 6,201,996.50 USDC. In total, the Mutual paid 6,612,859.55 USDC over the course of 15 months (exactly 478 days), which breaks down to:
- 6,201,996.50 USDC in principal
- 410,863.05 USDC in interest
- 25,786.38 USDC in interest per month; or
- 859.55 USDC in interest per day; or
- A 5.05% interest rate during the course of the loan
The USDC used for repayment primarily came from USDC-based premiums generated from cover sales. The FTX recoveries paid to the Mutual in USDC were also used to pay down the balance of the loan. The only ETH sold to repay the loan was in the final repayment transaction.
For the final repayment, the AB swapped 371.3010807 ETH for 1,697,537.20 USDC and repaid the loan in full, with an execution price of $4571.86 USD/ETH. Since the AB deposited ETH as collateral on Aave v3, over 202 ETH has accrued as interest which helped offset the impact on the Capital Pool to repay the loan in full, as well.
The impact on the Mutual’s ETH holdings were minimal and Mutual members were able to maintain upside exposure to ETH over the duration of the Aave v3 loan.
Cover Re Investment Update
To give members an idea of the opportunity cost of the Aave loan, let’s review the initial Cover Re investment and our returns to date.
The Mutual invested 12M USDC into Cover Re, of which 6,201,996.50 USDC originated from the loan taken out on Aave v3. Since the Mutual’s initial investment in May 2024, the Cover Re investment has returned $1.677m[1] (up to Q2 2025) with an average APY of just under 14%[2]. The performance, while positive, is below expectations somewhat due to unexpected high legal fees required on set-up. This drag won’t continue and current quarterly performance is in line with expectations.