The Thorchain team is looking to purchase a material amount of coverage as part of a increased focus on security following the two recents exploits. They are discussing with multiple DeFi insurance protocols in an effort to source as much coverage as possible.
The Nexus core team has been discussing with Thorchain directly and have come up with a structure that works from both sides. However this needs to be agreed upon by the Nexus community, and one major item, price is still outstanding. Once the Nexus community gains agreement on price we can list the protocol for staking, and then cover purchase can follow.
- Proportional coverage based off non-RUNE TVL (total value locked excluding RUNE).
- Nexus Mutual to cover 30% of losses up to a maximum amount of 30,000,000 DAI (actual capacity dependent on staking with a max cap of 30m DAI).
- Payments only made where RUNE DAO also pays a proportional share of the losses in reimbursements of at least 20%. Note: this is to ensure alignment of interest.
Total TVL = $100m
non-RUNE TVL = $50m
- Hack occurs resulting in losses of $30m total, with $20m of the loss coming from the non-RUNE TVL portion.
- RUNE DAO contributes at least $4m (20%) of the non-RUNE TVL loss as reimbursements.
- Nexus Mutual pays 30% of $20m = $6m claim payment.
Note: Proportional coverage structure was agreed upon with RuneDAO as it allows other providers to easily add coverage independently as required.
- Standard Protocol Cover wording applies, with adjustment saying the cover can only be purchased by the Rune DAO as well as applying the proportional structure criteria from above.
- Cover must be bought in smaller tranches initially, until Nexus Mutual has implemented partial claims payments. Note: this is because Nexus is currently only capable of total payout or nothing. In the event of a claim of a partial amount individual tranches will be submitted to claims assessment that add up to the loss actually incurred. This is expected to change in late 2021 and only one cover will be required from then.
- Coverage period, minimum of 3 months.
- Non-standard flat pricing that does not rely on NXM staked.
- Annualised price of 8.5% - 10% ← to be discussed with members. Note: for reference the current price of Thorchain cover is 8.5% and this is riskier because Thorchain team reimbursements won’t prevent claims being paid.
- Discuss with Nexus community and gain broad consensus on terms.
- Finalise wording document and make technical changes to off-chain pricing.
- List protocol on Nexus Mutual and open for staking.
- RuneDAO to purchase cover.
Key Points of Discussion
- Pricing rate
- Maximum capacity offered