[Proposal] Nexus Mutual - Shield Mining

1

Hi All,

I notice that there is no further cover available on Nexus Mutual for Balancer. Nexus have a mechanism called “Shield Mining” (Shield Mining - Nexus Mutual) for incentivising their Risk Assessors to stake against preferred projects. These preferred projects put a predetermined quantity of their native tokens up as reward for providing extra cover capacity for the project, so in our case, we would need to identify probably a fairly significant quantity of BAL to offer as a reward.

As I understand it, most projects that offer shield mining tend to keep quite a lot of the funds staked against the project even once the shield incentives have been fully mined.

I suspect there is a great deal to be discussed around this matter and I am by no means an expert here, just an interested party.

I have compiled my thoughts and experiences to argue my position:

  1. Balancer has been listed on Nexus Mutual for a while now, I have personally purchased cover for my Balancer Pools and this has helped me sleep better.

  2. Nexus Mutual has recently paid out on some 14 cover claims relating to the Yearn Finance yDAI Vault hack, so we can be confident that the Mutual is operating as it says it will (Nexus Mutual Tracker).

  3. Incomplete polling results for “Increasing AAVE capTier” indicates we should expect the vote to pass. I would argue that in turn, we should expect more AAVE liquidity to follow.

  4. With increased liquidity, we should consider the importance of ensuring more cover capacity; Is it feasible that Balancer will attract less liquidity in the long run if there is insufficient cover capacity available right now?

  5. The introduction of shield mining has essentially given us a new “Tool” for promoting Balancer and attracting more liquidity. We should begin thinking about different ways we may implement this tool.

  6. This proposal also somewhat falls in line with the aim of the “Extend the Exchange Gas Reimbursement Program”, in that the result is essentially the same; distributing BAL tokens amongst more addresses for the sake of improved decentralised governance:

    "The initial pilot has gone well. During its first 3.5 weeks, a total of 9332
BAL have been issued to 4568 recipients. Of these recipients, only 846 had
held BAL before the start of the program, which indicates that distributing
governance tokens to traders does indeed improve decentralization of 
voting power."

I should declare that I am a member of Nexus Mutual and my existing Nexus cover is coming to an end soon, which is my motivation for this proposal.

So, in summary, I think the upsides here are numerous for Balancer, but I wouldn’t know where to begin in suggesting a quantity of BAL tokens to offer as reward, nor the duration to run a shield mining program for.

I expect we’d be able to get a member of the Nexus Core Team in to iron out further details, if needed.

I open the floor to discussion and look forward to reading all your comments and criticisms.

Cheers

James

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