Nexus Mutual, a decentralized insurance alternative focused on digital asset risks, has joined forces with Native, a newly launched crypto insurance broker. With $2.6 million in seed funding led by Nexus Mutual, Native aims to address the cryptocurrency industry's significant gap in insurance availability. The two firms will offer up to $20 million in on-chain coverage per risk, marking a considerable boost in available crypto insurance capacity.
The problem of underinsurance is acute in the crypto industry now, as insurance covers only 1% of crypto assets while the global insurance market covers about 7% of the GDP. This shows that we need more extensive coverage to cater to emerging concerns in the digital asset insurance niche.
Native, co-founded by Ben Davis and Dan Ross, aims to alleviate this shortage by connecting businesses with Nexus Mutual's capital pool, valued at about $200 million in ETH. Unlike traditional insurance models, Native offers clients the flexibility to pay premiums or receive claim payments in cryptocurrency, aligning with the needs of digital asset stakeholders.
Beyond facilitating insurance distribution, Native plans to act as a managing general agent (MGA) within the Nexus Mutual ecosystem, running its capital pool and participating directly in the underwriting process.
In line with its mission to support the growth of the decentralized finance (DeFi) sector, Nexus Mutual has introduced a product for users of Coinbase's Base layer-2 network. The Base DeFi Pass, developed in collaboration with crypto insurance startup OpenCover, covers multiple high-profile protocols such as Uniswap, Compound, and Morpho. This "set-and-forget" insurance model covers essential risks like smart contract code vulnerabilities, bugs, and exploits while excluding losses from market price fluctuations or phishing attacks.
The Base DeFi Pass aims to increase user confidence and security when engaging with DeFi on Base. According to Base creator Jesse Pollak, OpenCover's product is an additional safety layer that enables users to participate securely in the decentralized ecosystem on Base without requiring constant rebalancing of their coverage.
Since its inception in 2019, Nexus Mutual has developed a capital pool structure similar to Lloyd's of London. Members can deploy assets into syndicates in exchange for NXM tokens, which back specific risks.
According to Nexus Mutual founder Hugh Karp, the mutual currently has substantial capital to allocate toward crypto-specific risks. This approach has enabled Nexus Mutual to underwrite nearly $5 billion in crypto assets, with $18 million paid out in claims related to DeFi exploits and other crypto-native risks.