What is NXM?
Nexus Mutual is an open-source blockchain project that offers its users decentralized, cryptographic protection products for smart contracts. Users can obtain coverage or protection for certain activities. It can be seen as a type of insurance, different only from traditional insurance , which sometimes, to maximize its benefits, sacrifices certain customer needs. Nexus offers smart contract coverage to address these vulnerabilities.
The NXM token represents membership rights in Nexus Mutual, as well as the ability to participate in the ecosystem through application, risk assessment and management. The token uses a binding curve to determine the price, which depends on the amount of capital the mutual company has and the amount of capital required to satisfy all claims with a certain probability. Users can place NXM bets to vote on claim estimates and whether to pay a given claim. Participants who choose to vote in accordance with the consensus are rewarded with NXM, while those who vote against it lock their tokens for a certain period of time. Participants have different roles, one of which is to assess the risk of each smart contract. Whenever a claim is submitted, they are responsible for voting on the validity of that claim and the ability to pay. Participants can also use their tokens to vote on smart contracts, depending on how secure they think each particular contract is. The more the NXM stakes out a smart contract, the cheaper it becomes to buy coverage for it; a larger amount at stake is an indication that many participants think the contract is secure.