Binance, Kraken, Coinbase and Gemini have been added to the Nexus Mutual insurance umbrella, protecting traders from hacks and prolonged downtime, according to Cointelegraph.
The project announced the new integrations on Monday as part of their “custody cover” initiative that make customers eligible for compensation if the exchange is hacked or a smart contracts is broken causing the user to lose more than 10% of their funds. Alternatively, the claim can be honored if the exchange suspends withdrawals for more than 90 days.
Nexus is not an insurance provider. The website describes itself as a "a people-powered alternative to insurance." The decision to pay out claims in Nexus Mutual is solely at the voting discretion of its members.
Ironically, the founder of Nexus Mutual, Hugh Karp, was recently hacked via a malicious MetaMask extension, with the attackers stealing a significant amount of his NXM tokens. Despite the KYC requirement to transact with NXM, it appears that the attacker used a fake identity for verification.
According to current figures, coverage is expensive. For example, a Binance coverage claim for 10 ether ($12,180) lasting 365 days requires paying a premium of more than 3 ETH ($3,646), or 30% of the coverage amount.
Only 65% of premiums are returned to customers via claims, the rest is lost in distribution, operational expenses, capital costs and profits. Read the Nexus Mutual White Paper for more details.