Decentralized finance insurance service Nexus Mutual has launched a crypto asset custody coverage.
According to a Dec. 2 announcement, Nexus Mutual announced that its new custody cover service “will protect users who put funds into an organisation which is responsible for the safekeeping of private keys to cryptocurrency assets on behalf of their users.”
Currently, Nexus Mutual’s custody coverage service can cover funds custodied at crypto lending and interest-earning firms Celsius Network, BlockFi, Nexo, Ledn, Hodlnaut and InLock. Some funds are already staked in all the contracts, making the coverage already available to purchase.
Still, Nexus Mutual’s prices of yearly coverage—ranging from 8.73% to 35.01%—for many of the custodians are significantly higher than the interest that the firms provide, making the service virtually useless. Fortunately, the announcement explains that the situation is expected to change:
“Prices will decrease as more Risk Assessors start staking.”
Nexus Mutual will compensate the users of the custody cover service if the custodian gets hacked and the user loses more than 10% of their funds, or withdrawals from the custodian are halted for more than 90 days. The company notes:
“It’s our first product to provide protection outside of the DeFi space.”
Nexus Mutual explains that this product is just part of its efforts to build the service in a way that makes it suitable for long-term adoption. The first product launched by the firm was smart contract coverage, which protects the company’s customers against hacks.
It is not the first firm to develop a decentralized on-chain DeFi insurance service. As Modern Consensus reported in mid-November, Bridge Mutual launched coverage for smart contracts, stablecoins and exchanges against a market crash or an attack.
Interestingly, Nexus Mutual aims to “become a marketplace which covers diverse risks both in and outside of the crypto space.” The company believes that blockchain brings advantages to the insurance space that allow it to cover underserved communities.