Idea: $BAL to incentivise smart contract insurance cover

Proposal idea: Provide 4% of yearly $BAL liquidity mining rewards for providing liquidity/staking for Nexus Mutual smart contract insurance (to learn more about Nexus Mutual).

Why? At the moment, there is about over $17.8M USD worth of smart contract insurance cover being taken out on Nexus Mutual, and 1.78M / 10% of that has been taking out by Balancer users. The hypothesis here is that there is a large untapped audience of potential Balancer users (mostly whales) who would be willing to use Balancer - but ONLY if there was insurance for their staked funds.

4% of liquidity mining incentives every year = 145k/1004
1.45k $BAL @ current price of $12.95 = $75,110

There are currently only 161 $NXM stakers providing $1,472,695 (USD) worth of capacity

4% of token rewards would result in an additional nearly 5% subsidized APR or more

I’ll vote “no”
I don’t think the hypothesis is true
I don’t think it’s worth 4% of the rewards

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It’s a great concept but the platform is so unproven I’d say the capital is better utilised elsewhere. From the digging that I have done the responses that I got from the community was that they will act in the best interest and properly accept claims because it’s in their best interest to do so from a public image/perception perspective (though I still have bought insurance just to try it out).

Additionally until the coverage is broader I think it’s going to be super hard to even justify the risk - it only purely covers smart contract hacking right now and we always know there are going to be edge cases like the makerdao event that happened…

I’d rather take the proposed 4% BAL tokens and put it into the ecosystem grants

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What if this was done for only 3 months as an experiment? (this would only be 1% of the total rewards a year)

Insurance is definitely a good idea and it’s probably a necessary building block for larger amounts of assets to come into DeFi (at least this is true in legacy finance). But, while I think the NXM team is doing awesome things, I don’t think the NXM business model is scalable, so I am not sure this would attract significant amounts of capital on their side.

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