Protocol Governance Overview

Nexus Mutual is a decentralized people-powered protocol that is governed by members. Through protocol governance, members can propose and vote on changes to any aspect of the protocol. These decisions determine the Mutual’s future operations.

Nexus Mutual Protocol Improvement Proposals (NMPIP)

A Nexus Mutual Protocol Improvement Proposal (NMPIP) is a proposal to signal or enact change to the Nexus Mutual protocol. These proposals are used to engage with the community, reach consensus, and enact proposals if approved through an on-chain vote.

Members can create a Nexus Mutual Protocol Improvement Proposal (NMPIP) to share on the forum and discuss with other members, who discuss and vote on those proposals.

‣

Protocol Governance Power

Every person who joins Nexus Mutual has voting power equal to one vote plus the sum total of their NXM tokens, which applies to protocol governance.

On-chain voting power = 1 + MIN (5% of NXM supply, NXM holdings)

A single member’s voting power is capped at 5% of the total NXM supply.

This is designed to prevent a large holder from having outsized influence in protocol governance votes.

‣

Governance Security

Members that use their NXM to vote on a protocol improvement proposal will not be able to redeem or transfer their NXM for three (3) days after they cast their vote.

The governance restriction can be calculated as follows:

Restriction = T + 3 days

Where T = timestamp when vote is cast

Members can still use their NXM to stake and delegate to a staking pool and participate in claim assessment, but transfers and redemptions will not be possible for the duration of the three-day period.

‣

Voting Incentives

Voting requires members to dedicate time and attention to reviewing proposals, making decisions, and casting votes.

To encourage wider participation and reward members for their time, 100 NXM in incentives is split between the number of members who vote on a proposal, not the number of tokens cast in a vote.

These rewards make it worthwhile for all members to participate.

‣

Quroum Requirements

For every Nexus Mutual Protocol Improvement Proposal (NMPIP) vote, there is a minimum number of votes required to successfully approve a proposal. This minimum threshold is referred to as the voting quorum.

Regular Resolutions

Quorum. At least 15% of the total NXM supply is required to acheive quorum on most votes.

Majority. To acheive a majority of quroum, more than 50% of the voting weight needs to be cast on one voting option.

Special Resolutions

Quorum. At least 75% of the total NXM supply is required to acheive quorum on special resolution votes.

Super-Majority. To acheive a super majorityof quorum, more than 75% of the voting weight needs to be cast on one voting option.

‣

NMPIP Categories

‣

Upgrades, technical changes, use of funds

Members can propose changes to protocol parameters and incentives, the capital model, and the pricing mechanism. When new products are developed, an NMPIP is shared, discussed, and voted on by members. All investment allocations or any use of Capital Pool funds require an NMPIP and vote before execution, as well.

The proposals are implemented via the governance process with the following quorum requirements:

• Regular quorum (15% of total NXM supply)
• Majority threshold (50%+ of voting weight)
• If quorum isn’t reached, the default outcome will be determined by the Advisory Board

Role of the Advisory Board

The Advisory Board members provide a recommended outcome for each proposal via an Advisory Board vote.

If the 15% regular quorum isn’t reached, then the Advisory Board's recommendation is the default outcome.

‣

Critical decisions

In extreme circumstances, members can create an NMPIP and hold an on-chain vote to decide if Nexus Mutual should make changes to the Advisory Board, stop cover purchases, or wind up and shut down.

Proposals to replace an Advisory Board member have the following quorum requirements:

• Regular quorum (15% of total NXM supply)
• Majority threshold (50%+ of voting weight)

Other proposals in this category are implemented via the governance process with the following quorum requirements:

• High quorum (75% of total NXM supply)
• Super majority (75%+ of voting weight)
• Default outcome of decline

Advisory Board

The Advisory Board is currently made up of five (5) members of the Mutual and contains members of the founding team and other experts. The goal is to have a qualified mix of individuals covering three broad skill sets of:

• Technical expertise: smart contract security and blockchain
• Technical expertise: insurance and mutuals
• General expertise: legal, regulatory, corporate governance, and business management

Advisory Board members are elected by Nexus Mutual members through governance.

If a vote to appoint or replace an Advisory Board member is approved, the elected member will be granted the Advisory Board role through the MemberRoles contract, which you can find in the Nexus Mutual SDK.

The Advisory Board has power in limited circumstances and is primarily there to provide qualified technical guidance to the members of the Mutual on improvement proposals as well as take emergency action, should it be required. The scope of the Advisory Board’s power in governance is outlined in the NMPIP Categories section.