Full Disclosure: Delphi Ventures is an investor in Armor Protocol. We’re also invested in Nexus Mutual, which is discussed in this piece.

Armor Protocol is a DeFi insurance broker and aggregator that is positioning itself to solve some of the pain points in the space. By removing the need for KYC and offering a streaming ‘Pay As You Go’ coverage model for users across various protocols, they look to make the overall process much more seamless .

Armor will operate on top of Nexus, and likely other insurance platforms in the future. Armor will help address some of the operating barriers Nexus experiences, while also bringing additional users to the Nexus platform. This will allow Nexus Mutual to focus on utilizing its capital base to expand the type of cover they can offer, which will reflexively benefit Armor.

There will be 4 primary products:

  • arNXM Vault.
  • arNFT.
  • aRCore.
  • arShield.

The arNXM yield vault allows users to deposit their wNXM tokens in the Nexus Mutual ecosystem and earn yield without requiring KYC. arNXM is the yield bearing token of the arNXM yield vault (replacement for wNXM). arNXM accrues staking rewards, increases coverage capacity on Nexus Mutual, and circumvents the mandatory staking lockup period.

The vault has seen significant growth since its launch, with the current wNXM total sitting in the vault at 390,000 tokens. The liquidity mining program for arNXM has been a major catalyst for this growth.

arNFT’s are tokenized wrappers for Nexus Mutual coverage. Users can stake arNFT’s in the arNFT staking pool, which is used as the source of cover for the ‘Pay As You Go’ streaming model.

arCore is the flagship product that enables the type of cover streaming described above. Users can purchase cover based on what’s available, which makes the value above significant, and they’re charged by the second with no upfront cost or fixed duration requirement. It’s simply kept open as long as they need it.

arShield is the final product. It allows users to place LP tokens in arShield Vaults, which insure the LP tokens in exchange for a small fee that’s also streamed through arCore.

The goal with all of these products is to simplify and streamline access to insurance and the use of insured assets.

The Liquidity Mining program is 24 weeks in its entirety, and launches in phases:

  • Phase 1 kicked off on the 23rd and came with incentives for arNXM and the Armor token itself.

ETH: arNXM trading pairs have been incentivized on Uniswap, Sushiswap, 1inch and Balancer, with APY’s typically ranging between 100-200%. Users stake their LP tokens here, and more info on the various yields can also be found here.

Armor incentives are in place for Armor:ETH, Armor:wBTC, and Armor:DAI on Uniswap, Sushi, and 1inch. The yields here are considerably higher, ranging between 1000-1500%.

  • Phase 2 begins on the 29th, with the launch of arCore and mining incentives for arNFTs. It’s likely that many users are acquiring and staking arNFTs ahead of time in preparation for the farms, as seen by the sizable growth above.
  • Phase 3 begins on Feb 5th with the launch of Armored Vaults for LP pairs, which will be farmable with LP tokens.
  • The details of the 4th and final phase are still being ironed out, but it will focus on implementing referral rewards and an airdrop system.

We view Armor as a highly synergistic product in the insurance space, particularly with Nexus Mutual, because of how varied their strengths are. Nexus Mutual will always be the underwriter. Their massive capital pool and creative leverage based cover model insulates them well in this regard. Nexus will also receive the full payment on all cover streamed from via Armor. Armor will instead take a fee on top in return for the flexibility it provides. It really wouldn’t make sense for either to encroach on the other’s forte.

Nexus will likely leverage the accessibility Armor provides by using its capital pool to offer new and varied types of insurance, while having Armor continue to function as the improved front end. Armor will maximize this capital pool by capturing a fee from significantly improving its accessibility. Over time, I think you’ll see new insurance primitives developed knowing that Armor can address some gaps that might make their model unfeasible otherwise.

Yan Liberman, CFA, CAIA Calendar
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