Behind the skyrocketing NXM: DeFi market demand, or speculative demand?
Editor's Note: This article comes fromDeepChain (ID: deepchain-eva), Author: Mark, reproduced by Odaily with authorization.
Editor's Note: This article comes from
DeepChain (ID: deepchain-eva)
In 2020, DeFi will become the biggest outlet of the blockchain, and the ever-growing pool of funds will soon become a treasure in the eyes of hackers. 5 months, 7 thefts, 35 million US dollars, DeFi has become a cash machine for hackers.
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In 12 hours, USD 7.2 quickly soared to USD 25.2, and the market value of NXM exceeded 100 million. The rapid beating of the K line made the investors who were out of space sighed.
Decentralized insurance NXM soared 4 times
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K-line chart of NXM listing on the exchange
Then a dramatic scene appeared, the price of NXM finally stagnated, the big investors kept smashing the market, the early investors sold, the price slowly fell back to $11, and the investors who received the order at a high level were trapped at the top of the mountain.
NXM is the native token of Nexus Mutual and one of the few leading decentralized insurance projects among DeFi derivatives.
The sudden skyrocketing price of NXM was largely due to the launch of the Biker Exchange, which gave speculators a convenient opportunity to speculate.
Because NXM can only be purchased through the official website, foreign KYC is also required, and the tokens will also be locked in the contract. On the online exchange, investors can obtain tokens through this low-threshold method, so a large amount of funds will enter the market in a short period of time.
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Calling orders on the WeChat community
However, Nexus Mutual issued multiple official tweets to warn investors: NXM can only be purchased on the official website through members at present, and is not listed on any exchange. The price of the token fluctuates greatly in a short period of time. Investors are advised to pay attention to risks.
DeepChain inquired with the Biker staff and got the news that the NXM tokens on Biker cannot be charged and withdrawn. Biker only helps users purchase NXM through their accounts. The tokens on Biker are currently only anchored stand-alone tokens, and they can only be listed on the exchange after Nexus Mutual opens up permissions.
Although the price of the currency has plummeted, many speculators are still waiting for NXM to fall back to the normal psychological price and then buy the bottom.
"There are not many DeFi hotspots that can be hyped in the market, and derivatives are a good direction." A DeFi investor shared his investment ideas, wanting to follow the general trend before the heat dissipates.
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What is the role of NXM in the decentralized "Xiang Hu Bao"?
Leaving aside the ups and downs of the secondary market, what is the role of this Nexus Mutual?
Nexus Mutual is an Ethereum mutual insurance that shares risks through carte blanche. It is somewhat similar to the Alipay "Xianghubao" we are currently using. The user's insurance premiums are concentrated in the fund pool. When encountering a claim, the user will be able to obtain a certain amount of compensation from the fund pool after the review is passed.
As the current head project of DeFi insurance, NXM mainly provides insurance services for DeFi agreements, and is therefore favored by domestic investors.
Users only need to pay 0.0002ETH to become a member of Nexus Mutual, and they can purchase insurance after completing KYC.
Take a look at how to buy insurance services:
The first step is to fill in the smart contract address of the transaction form of the DeFi project you participate in.
The second step is to choose the amount of funds you want to insure. Here, Nexus Mutual reminds that it only protects the orders that cause fund losses due to code problems. Each order can make up to two claims.
Why is buying insurance so important in DeFi? You can take a look at the incident of bZx being stolen in February this year.
On February 15, hackers used flash loans to attack bZx twice. The first attack used 5 DeFi protocols, and the second attack used 4 DeFi protocols. Both attacks were in a 15-second Ethereum block completed. The income from the first attack was about 1,271 ETH, and the income from the second attack was about 2,378 ETH. The income from the two attacks was $320,000 and $600,000 respectively.
When this happens, the role of insurance comes into play.
In this incident, users who bought NXM insurance did apply for a claim, but not all users got the premium.
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5 claim details
In the second tranche, the claim for 4 ETH was accepted, and all 4 evaluators voted in favor;
The third claim for 30,000 DAI was accepted and 9 out of 10 assessors voted in favor (a reapplication of the first claim);
The fifth, 2600 DAI claim was approved.
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Nexus Mutual Indemnifies Statement of Claims
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In addition to the hype mentioned above, what are the reasons for the skyrocketing price of NXM?
In simple terms, the payout power ratio is the ratio of the reserve pool to the minimum payout fund. That is to say, the minimum amount of funds needed in the NXM reserve pool will not face the risk of not being able to pay compensation to customers.
From a mechanism point of view, the factor that has a lot to do with NXM price fluctuations is the compensation capacity ratio (MCR%)
MCR% fluctuation status
In simple terms, the payout power ratio is the ratio of the reserve pool to the minimum payout fund. That is to say, the minimum amount of funds needed in the NXM reserve pool will not face the risk of not being able to pay compensation to customers.
The NXM pump may seem crazy, but it is actually just a false boom.
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NXM Fund Pool Status
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NXM daily trading volume status
The daily transaction volume has hardly moved in the past six months, and it didn't start to grow until the project was hyped in July.
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NXM address quantity status
At present, the number of addresses holding NXM tokens is 977. The number of users participating in this project is very small, and the number of users actually participating in the insurance policy is even less.
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NXM Active Policy Status
The amount of effective insurance policy is large in a short period of time, but with the extension of time, there is a trend of cliff-like decline. The fund scale of the insurance policy is not large. Through data tracking, it can be found that there are very few orders participating in the policy, and the most important thing is that the large order expands the fund scale of the policy.
It can also be seen from the side that Nexus Mutual users, like DeFi users, are still a minority.
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NXM 25 Claims Status
All governance measures, such as Nexus Mutual's claims, are subject to proposals and votes by members, advisory committees, and owners. Once the claims exceed a certain level, token holders vote against compensation.
Without joining a third-party arbitration court, such an approach is not convincing. The likely outcome is that you pay your premium, the hacker steals your money, and Nexus Mutual denies your claim.
To sum up, the skyrocketing price of NXM is not a business growth, but a serious market hype, which only raises the price of NXM in the short term. If there is no steady increase in the amount of DeFi project insurance policies and a real increase in business volume, it will be difficult to stabilize the price of NXM.
However, the market hype has also allowed Nexus Mutual to expand its influence, and the entry of many incremental users has stimulated business growth and made the entire project a step forward.
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Is decentralized insurance worth the wait?
Such an approach can stimulate risk assessors to increase the NXM pledge rate. The more insurance policies written in the user's smart contract, the better protection can be provided for the user.
Although NXM has become a hot topic in the short term, it is just market hype, but decentralized insurance is still worth exploring and trying. After all, security issues are always the sword of Damocles hanging over DeFi.
references:
《Understanding staking with Nexus Mutual》
However, like the problem of DeFi, the biggest risk of NXM at present is the risk of its own system.
