Governance
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.
In addition, members determine how DAO treasury funds are allocated and spent. These funds are often used to fund DAO teams or grants that improve awareness and education or technical infrastructure and capabilities.
Protocol governance power
Every member 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 undue influence in protocol governance.
Advisory Board
The Advisory Board is currently made up of five 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
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 on the Nexus Mutual Protocol Improvement Proposals (NMPIP) page.
Advisory Board Members
The Advisory Board requires three of five members to enact changes.
DAO governance power
Voting power in DAO governance, which uses Snapshot, is equal to the sum total of an individual member’s NXM tokens.
Governance proposals
Nexus Mutual members can start discussions on the Nexus Mutual governance forum, which can then be transitioned to a vote after enough time has passed. There are two different proposal types, and they focus on either the protocol or the DAO.
Protocol improvement proposals, votes
Members can create a Nexus Mutual Protocol Improvement Proposal (NMPIP) to share on the forum and discuss with other members. These proposals can generally be classified in one of the two following categories.
Protocol improvement proposal quorum parameters
- Quorum (Regular Resolutions): 15% of total NXM supply
- Quorum (Special Resolutions): 75% of total NXM supply
- Majority (Regular Resolutions): 50%+ of voting weight
- Super-majority (Special Resolutions): 75%+ of voting weight
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 protocol improvement proposal, not the number of tokens cast in a vote. These rewards make it worthwhile for all members to participate.
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 days after they cast their vote. This prevents anyone from using a flashloan to borrow a large amount of wNXM and unwrap the wNXM to NXM to sway a vote with a significant voting weight.
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 claims assessment, but transfers and redemptions will not be possible for the duration of the three-day period.
DAO proposals, votes
Members can create a Nexus Mutual DAO Proposal (NMDP) to share on the forum and discuss with other members. These proposals can generally be classified in one of the three following categories.
Signaling votes
These are not required but may be used to gauge sentiment as part of a protocol or DAO proposal. To gauge sentiment, someone can conduct a Snapshot vote with the title “Signaling vote: [Title of proposal]”.
These votes should be open for a minimum of three days.
Learn more about NMPPs and NMDPs in the following pages.
Disclaimer: While all care has been taken there may be some discrepancies between the Governance documentation and the functioning of the on-chain governance smart contracts. In the event a discrepancy exists in this documentation, the smart contract rules apply.