Cash News
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Crypto specialist insurance broker Native goes live with $2.6 million of seed funding led by Nexus Mutual.
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Native will start by offering $20 million on-chain cover per risk, and will also run a capital pool on Nexus Mutual.
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Nexus Mutual’s insurance alternative is also available through many of the main protocols on Coinbase’s layer 2 network via a product called Base DeFi Pass.
Nexus Mutual, the decentralized alternative to traditional insurance geared towards risks involving digital assets, is widening its distribution capabilities by backing a dedicated crypto insurance broker called Native.
Native goes live with $2.6 million of seed funding led by Nexus Mutual, and the two firms are offering $20 million on-chain cover per risk, according to a press release on Tuesday. Nexus Mutual currently has a capital pool of about $200 million, mostly denominated in ETH, the token of the Ethereum blockchain, meaning the mutual will be able to write multiple coverage lines per risk from day one, Nexus Mutual said.
There has always been a dire shortage of insurance capacity within the crypto industry. At a rough estimate, about 1% of crypto assets are insured today, compared with the traditional world where a general rule of thumb is that about 7% of GDP is insured.
“Native’s role is to help solve this chronic under insurance problem,” said Native co-founder and CEO Ben Davies in an interview. “No industry can grow without a liquid insurance market and so we have built a commercial insurance broker on-chain, which is what the market has really been missing.”
The aim is to increase capacity by connecting businesses with Nexus’s capital pools, while giving clients the ability to pay in crypto, or be paid in crypto if there is a claim, said the broker’s other co-founder Dan Ross. In addition, Native will go beyond mere distribution by running a capital pool on Nexus, he said. It means the firm will also be involved in underwriting in the form of a managing general agent (MGA) positioned on top of Nexus Mutual.
Since starting out in 2019, Nexus Mutual has underwritten about $5 billion of crypto assets and paid out $18 million in claims. This has involved various risks associated with decentralized finance (DeFi), for instance, that conventional insurers might struggle to meet.
The protocol also allows its members to deploy assets into syndicates, in a way similar to how the Lloyd’s of London market operates, for which they receive NXM tokens. These tokens are then used to back certain risks. Like being a Lloyd’s investor, or “Name,” there is a risk attached to this, but yields can reach around 25%, according to Nexus Mutual founder Hugh Karp.