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DeFi coverage protocol Nexus Mutual has expanded the list of centralized plants eligible for incident protection. Users trading on Binance, Kraken, Coinbase and Gemini can now purchase protection in the event of an exchange hack or prolonged withdrawal outages.

The project announced the new integrations on Monday as part of their “custody cover” initiative. Users who purchase coverage are eligible for compensation if the custodian is hacked and the user loses more than 10% of their money. Alternatively, the claim can be honored if the custodian suspends withdrawals for more than 90 days.

Launched in late 2020, the program initially included centralized lenders such as BlockFi, Celsius, Nexo, Ledn and Hodlnaut. To apply for coverage, users must join the Nexus health insurance fund and undergo know-your-client verification.

According to current figures, coverage is quite expensive. For example, a Binance coverage claim for 10 Ether (ETH) that lasts 365 days requires a premium of more than 3 ETH or 30% of the amount of cover. Still, these could be temporary numbers. For example, the annual cost of coverage for BlockFi and Celsius is a little over 2%, while coverage for other providers is much more expensive. Given the overall positive track record of the exchanges added today – save for periodic failure problems – it is likely that their cost of coverage will decrease significantly over time.

It’s also worth noting that Nexus is not an insurance company. The difference stems largely from the fact that the insurance policy has contractual clauses that determine how and when a claim should be honored. The decision to pay out claims in Nexus Mutual is at the sole discretion of the members and strikers. While this may not be a problem in practice, edge cases can put the system to the test.

The founder of Nexus Mutual, Hugh Karp, was recently hacked via malicious MetaMask extension, with the attackers stealing a significant portion of its NXM tokens. Despite KYC’s requirement to transact with NXM, it appears that the attacker used a false identity for verification.