📜 Course Description

Become a Nexus Mutant expert and level up your knowledge of Nexus' tokenomics. Get to grips with cash flows, the NXM token, the bonding curve, what MCR is, as well as wNXM and how it relates to NXM.

Learn through a combination of written materials, videos and diagrams that are designed to bring you up to speed in no time.

Expected Time to Completion: Up to 2 hours

🗝 Assumed Knowledge

Prerequisite(s): You understand the basics of the products Nexus Mutual offers and the different roles users can take in the system; e.g., Cover Buyers, Risk Assessors, Claims Assessors, NXM holders.

📚 Topics

#1 Cash Flows

Before diving into NXM, we need to understand the core cash flows underlying Nexus Mutual. These are the foundations on which Nexus Mutual is built. Conceptually, it is easiest to think of the cash flows as the foundations, with NXM sitting on top as an incentive layer. We will return to NXM and how the incentives work in the next topic.

You can dive right into the video, or skip below to access the same content in written form.

📺 Cash Flows Explainer

https://www.loom.com/share/cf335fb80f5b4407b7f7ac35e52e10e8

📝 5 Cash Flows

Underlying the Nexus Mutual system are 5 primary cash flows, these are the foundations on which members share risk with each other. All cash flows either flow into, or out of, the shared Nexus Mutual capital pool.

The Capital Pool is jointly owned by all Members of the mutual, and there is no fee or other external cash flow involved.

  1. Cover Costs - All cover costs are paid into the capital pool in full. Cover can be purchased in either DAI or ETH terms with the DAI or ETH flowing directly into the pool. Cover costs can be tracked here: https://nexustracker.io/ see the premiums charts.
  2. Claims - All claims are paid from the capital pool in either DAI or ETH terms, as per the covers purchased. Claims can be tracked here: https://nexustracker.io/claims Note: that the relatively large number of declined claims are because most of them are for testing purposes, or members submitting speculative claims to see how the system works.
  3. Buy NXM - Members can contribute ETH directly to the mutual to generate new NXM. All the ETH goes into the capital pool. Members can contribute ETH at any time.
  4. Sell NXM - Members can redeem NXM for ETH directly from the mutual, but only when the MCR% is above 100% (further details in a later section). MCR means Minimum Capital Requirement and the "MCR lock" makes sure the mutual has enough funds to pay valid claims.
  5. Investment Earnings - The mutual intends to invest the capital pool of funds in order to generate a return, this is also called earning money on the "float" in insurance terms. All the investment earnings accumulate in the capital pool. The mutual started off by just holding ETH and DAI, but has started making investments (as of Aug 2021).