Nexus Mutual, a peer-to-peer risk sharing mutual built using smart contracts and blockchain technology, announced today it is now using Chainlink’s price reference data contracts for decentralized valuations of its multi-currency capital pool
Chainlink’s decentralized oracle network will bring transparent and accurate on-chain valuations to Nexus Mutual’s multi-currency capital pool.
The integration allows Nexus Mutual to perform daily on-chain updates and rebalances of its minimum capital requirement (MCR) by consistently recalculating the value of each capital asset (currently ETH and DAI) in the multi-currency pool using Chainlink’s Price Reference Data Contracts.
Leveraging the DAI/ETH price reference contract, which is now live on mainnet, will bring Nexus Mutual secure and reliable on-chain valuations to ETH and DAI by tapping into a decentralized network of data aggregators that pull prices from all the top liquidity sources in the market.
“We are excited to be working with Chainlink to further increase our security against liquidity attacks. Security is a critical aspect of what we are doing; it’s at the core of our product and is absolutely essential to providing the best options for our members.”
– Hugh Karp, Founder of Nexus Mutual
Current and Future Integration
One of the critical components for operating Nexus Mutual in a secure and reliable manner, which is easily verified by all its members, is maintaining the minimum capital requirement (MCR) on the blockchain. The minimum capital is a key value for the mutual as it influences how much cover can be written on any particular smart contract system, and is also the level at which redemptions are restricted. It is essentially the level of funds the mutual needs to operate.
Since the MCR is vital to calculating quotes for new coverages and rebalancing the capital pools, updating the MCR regularly is critical to managing risk and maintaining profitability in the face of price volatility. For this, Nexus Mutual needs a secure and reliable price feed for the ETH/DAI price.
Chainlink’s Price Reference Contracts come into play, as they not only provide highly decentralized pricing that secures the underlying collateral in Nexus Mutual’s capital pool (presently DAI), but also source it from an aggregation of the top liquidity providers and provide it on-chain in a transparent manner. By tapping into true market price discovery, quotes more accurately reflect the current risk distributed in the capital pool. Additionally, members are always up-to-date on the risk present within the system, therefore are better equipped to make more informed governance decisions.
In addition to the recent integration, both teams are exploring how Nexus Mutual can provide cover for Chainlink’s Price Reference Contracts in the event of contract failure. While their reference contracts are already highly decentralized and secure; this would provide for an additional level of security for the numerous DeFi apps currently leveraging them for critical smart contract functions.
“We’re glad to work with Nexus Mutual by supplying their mutual with highly reliable and accurate price reference data secured by our decentralized network of price oracles. This allows their mutual to tap into true market prices when valuing their on-chain capital pools, ultimately bringing more security to their members.“
– Sergey Nazarov, Co-founder of Chainlink
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