NMDP 5: Create the Nexus Mutual Community Staking Pool

On behalf of the DAO Teams, BraveNewDeFi is sharing this proposal regarding the 57,607 NXM allocated to Option 4: Stake it against selected risks in the Nexus Mutual protocol from the February 2022 NMDP titled How should we utilize the wNXM purchased during Operation TM-12?

Voting Options

Members can select one of the following choices:

• For
• Against
• Abstain

Summary

To date, this earmarked NXM has not been allocated to stake against any risks within the Nexus Mutual protocol. As the Foundation and DAO teams work to scale cover sales and increase cover fees earned, the addition of a new staking pool with 57.6k NXM would be a significant advantage.

On behalf of the DAO teams, BraveNewDeFi is asking members to approve the creation of the Nexus Mutual Community Staking Pool, where the 57,607 NXM can be staked and used to open Protocol Cover and Bundled Protocol Cover capacity. More capacity can help the Mutual achieve our current goal of scaling cover sales

Specification

Members have already allocated 57,607 NXM for staking within the Nexus Mutual protocol in a previous NMDP in 2022. BraveNewDeFi has proposed that the following 2/4 Safe multisig be used to custody the 57,607 NXM. Once the NXM is in the wallet, the signers can create a new staking pool, which would be managed by the Product & Risk team (Hugh and BraveNewDeFi) to open up capacity for Protocol Cover and Bundled Protocol Cover. The NXM in this multisig would be staked for a one (1) year period and the NXM Staking NFT would be held in the multisig.

The Safe multisig is setup with the following signers:

• BraveNewDeFi
• Hugh Karp
• Roxana Danila
• Rei Melb

Rationale

In Q1 2024, the Mutual sold $75,112,320 worth of cover and earned $549,723 in cover fees. We’ve seen popular products like Pendle Protocol Cover, Spark Protocol Cover, and the Pendle Bundled Protocol Cover products see significant demand from members, while capacity has been constrained.

These three (3) products collectively represent 40.40% of all cover sales and 61.58% of fees earned in Q1 2024. If more capacity were available, there’s no doubt the Mutual could sell more cover for in-demand Protocol Cover products such as these and others.

Since Protocol Cover and Bundled Protocol Cover represent 66.67% of all cover sales and 82.34% of all cover fees earned, it would make the most sense to use the 57,607 NXM from the above NMDP to open up additional capacity on Protocol Cover and Bundled Protocol Cover products. For more information on the Mutual’s Q1 2024 cover sales, see the First Quarter (Q1) 2024 Insights Report.

With additional capacity, more cover can be sold, more cover fees can flow into the Capital Pool, and the DAO Treasury can generate more NXM.

Technical Specification

Send the 57,607 NXM to the Nexus Mutual Community Staking Pool multisig.

Launch and manage a private staking pool with the 57,607 NXM allocated only to Protocol Cover and Bundled Protocol Cover products, as managed by the Product & Risk team.