Nexus Mutual implements Chainlink proof of reserve as part of enzyme integration

Nexus Mutual, a member-powered alternative insurance company, implemented Chainlink Proof of Reserve as part of the Enzyme integration that was needed for its latest investment allocation on the Ethereum mainnet. Chainlink Proof of Reserve enables reliable and fast monitoring of off-chain or cross-chain reserves through the use of automated verification based on cryptographic authenticity.

Mutual uses Chainlink Proof of Reserve to track, validate and report the price per share of interest-bearing tokens that are held in Nexus Mutual’s Enzyme Vault. These tokens represent Mutual’s deposit in the Maple Finance lending protocol. It would not have been possible for Nexus Mutual to realize its recent investment of 15,348 ETH in the Maven 11 lending pool on Maple Finance if Chainlink Proof of Reserve had not been implemented.

Maximize returns and preserve capital

Nexus Mutual is a member-driven community and allows anyone to join and share risk with others. Users and projects do not have to rely on a centralized insurance company to defend against risks such as smart contracts and technical risk, custody risk, and validator discount risk. Nexus Mutual members own the capital pool, which contains the assets used to underwrite the cover. The size of the capital pool increases each time a member buys cover, contributes ETH in exchange for NXM, or accumulates investment income.

Nexus Mutual maximizes profits and conserves capital through investment allocations within its defined risk restrictions. Nexus Mutual can retain enough cash to meet its obligations and achieve long-term growth by expanding its investment allocations and respecting its risk limits. A proposal to distribute some of the ETH in the capital pool to Maven 11’s wETH lending pool on Maple Finance has been approved by members. Nexus Mutual converted 15,348 ETH to wETH and placed the proceeds in a pool managed by Maven 11, a blockchain and crypto-asset investment organization.

Credit teams perform lending transactions on Maple’s infrastructure and assess corporate creditworthiness using typical due diligence and credit checks. As a result, Maven 11 is able to provide unsecured loans which pay higher rates than secured loans. Maple Finance’s institutional crypto-capital network has provided over $1.65 billion in loans to industry-leading crypto firms. To deposit and manage these assets, Nexus Mutual uses the on-chain asset management tool Enzyme.

Enzyme integrates dozens of protocols at the smart contract level, enabling fast and efficient distribution of money across the DeFi ecosystem, enabling Nexus Mutual to capitalize on lucrative rewards. Nexus Mutual obtained 15,348 Nexus Mutual Treasury Yield (NXMTY) shares, which mirrors the Maple pool tokens held in Nexus Mutual’s Enzyme vault after wETH was placed in Maven 11’s lending pool. Transparent infrastructure provided by Enzyme is a critical component, as it allows Nexus Mutual to validate and track its deposit using Chainlink Proof of Reserve. This presents the mutual fund with new chances to expand investment allocations within DeFi.

Track and publish asset values ​​on Maple Finance

This latest implementation allows Nexus Mutual to automatically track and publish the value of its assets to Maple Finance. Chainlink Proof of Reserve is used by Nexus Mutual to validate the number of lending pool tokens stored in our Enzyme Vault. This allows Nexus Mutual to maintain transparency and allows each user to independently confirm the value of assets held in their Enzyme Vault.

The Chainlink Proof of Reserves protocol validates collateralization of on-chain or cross-chain assets by comparing the current supply of the asset to the reserves that back it. The verification of deposits that Nexus Mutual maintains on Maple Finance contributes to the development of a diversified approach to capital management and a transparent governance process.

Several core benefits of Chainlink Proof of Reserve include:

  • On-chain automated audits — By maintaining a current benchmark contract, smart contracts can receive automated on-chain verification of an asset’s collateral, eliminating the need for manual audits.
  • High quality data – Chainlink is able to acquire data from premium data providers, who are financially motivated to provide highly accurate and available data, through the use of configurable external adapters.
  • Decentralized – There are no longer single points of failure in the provisioning and distribution of external data to Nexus Mutual thanks to the decentralization of Chainlink Proof of Reserve Feeds at the data source and oracle node level.
  • Transparent — Anyone is able to monitor Chainlink Proof of Reserve Feeds in real-time, allowing any user to independently verify that assets have been collateralized.

It is crucial for Nexus Mutual to limit its own risks by using highly secure and decentralized technology. Nexus Mutual is a decentralized insurance alternative that helps Web 3 initiatives mitigate their financial risk by providing smart contract coverage. By integrating Chainlink Proof of Reserve, Nexus Mutual is able to validate its deposits held on Maple Finance in real time, further enhancing its clients’ confidence in the capital reserves that underpin our protocol.

According to Tomasz Wojewoda, Head of Global Sales at Chainlink Labs, “We are delighted that Nexus Mutual is using Chainlink Proof of Reserve to help automatically verify assets deposited on Maple Finance. On-chain definitive proof of pool tokens held by the Nexus protocol helps support transparent capital management and governance processes.

About Meredith Campagna

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