After much deliberation and careful thought Neptune Mutual decided to close the cover marketplaces.
After much deliberation and careful thought Neptune Mutual decided to close the cover marketplaces. Below the reasons for the decision as well as what it means for the community.
The marketplaces will be closed using an emergency withdrawal process whereby the liquidity provided to cover pools by LPs will be returned to the wallet addresses from which the liquidity was supplied. In addition to protecting cover pool LPs, there will also be refunds to all cover policy purchasers with an existing and valid policy who have paid over 10 USD in policy fees in one transaction.
For veNPM holders, please fill out this form to receive a refund for your veNPM to NPM conversion penalty.
From the end of June there will no longer be NPM emission incentives for LPs i.e. Epoch 3 of the liquidity gauge emissions will be canceled.
Unused funds raised from financial backers will be returned to those backers; this includes DEX liquidity that has now been removed from SushiSwap and Uniswap. A small amount of liquidity on SushiSwap Arbitrum has been left to enable a minimum amount of NPM trading.
The protocol will be open sourced, and become a true public good. Enabling the community to fork the code developed by the Neptune Mutual team such that others might use the existing resources to further our mission to make the blockchain space better protected against smart contracts and other risks.
There are numerous factors that have led to this difficult decision, some of which are external factors which are uncontrollable or unforeseeable. A few factors summarized below:
“Given Neptune Mutual’s Tier 1 backers, why have you not listed on a top CEX?”
This is perhaps one of the most frequently asked questions. In short, the answer is that for a variety of reasons Neptune Mutual was not able to achieve the diverse set of performance metrics (community size and engagement, marketplace user activity, DEX 24 hour trading volume, TVL growth etc.) required to list on top tier CEX. The CEXs that are prepared to list NPM token do not have the depth of liquidity or breadth of user-base to offer good prospects for NPM tokenholders.
“Why has Neptune Mutual not achieved strong growth?”
It is tempting to take a shortcut to answer this question by pointing a finger at one specific factor, but the reality is that there are many contributing factors. A few summarized below:
Since the outset of engaging with the community we have endeavored to highlight the need for DeFiInsurance; Neptune Mutual built a comprehensive dataset of on-chain hacks available, anywhere, and each week we highlight the many millions of dollars that are stolen as a result of smart contract hacks. Despite this, we have consistently been confronted by projects unwilling to spin up cover pools in our marketplace because of the sentiment that audits of their code are sufficient to persuade their community that their protocol is safe. Less than 0.3% of all digital assets are protected with some form of DeFiInsurance, and yet despite all the media reports of hacks, the conference discussions about the importance of governance or CEX proof-of-reserves, it continues to be the case that it is extremely difficult to get media attention to focus on the need for a fast and efficient means of mitigating smart contract risk.
A variety of approaches have been taken by different DeFiInsurance protocols to address this, from attending multiple conferences throughout the year and significant marketing spend, to the leaner approach that Neptune Mutual took (in part as a result of the bear market in 2023). What can be said is that no DeFiInsurance protocol has managed to achieve significant growth over the last 18 months, sadly the overall TVL of the sector has shrunk a lot.
For all the reasons above, at this moment the best course of action is no longer to double-down on investing in growth, but rather to refund unused capital and close the marketplaces.
The consequences are very tough for the Neptune Mutual team who have spent the past 3 years of their time on the mission to facilitate safer environments within DeFi. The team has delivered products according to the roadmap and the fact that the protocol was never hacked, despite attempts being made on the darkweb, is testament to the expertise, passion and absolute focus on security. The team survived the FTX and UST crisis unscathed, and believed that the continued growth in hacks would lead to growth in the demand for a good solution to mitigate these risks, but sadly, as can be seen right across the DeFiInsurance category, this is not yet in sight. So we would like to thank the team for all the dedication, skill and passion invested into the Neptune Mutual project since the outset.
The team will open source the protocol, including blockchain indexing protocol (subgraph alternative), frontend, middleware, database, and backend code, to make it a true public good. This will allow anyone to fork the code and create covers by defining parameters and premium ranges, potentially leading to innovative covers and organic usage.
The Discord channel will be closed to reduce the risk of phishing and other types of cyber attack, any questions / queries will be responded to in the Telegram channel.
We want to take this final opportunity to thank you all for your support.
Neptune Mutual will contact only its financial backers, with whom a signed agreement exists, in relation to next steps (i.e. holding NPM tokens does not qualify you for any form of refund). Contact will be made only from a neptunemutual.com domain email address so please check the source of any email you may receive very carefully. Please ignore any messages from any other email or social media accounts in relation to token/cash refunds.
Discover the benefits of decentralized governance in the Neptune Mutual ecosystem.
Neptune Mutual is a DeFi insurance protocol designed to protect policyholders from unforeseeable crypto hacks and exploits. While this might seem straightforward at first glance, Neptune Mutual is more than just a reimbursement service for the victims. It operates through a sophisticated system that ensures comprehensive protection, participation, and decentralization.
A key aspect of Neptune Mutual's advanced system is its integrated, decentralized governance mechanism. This governance structure is crucial in making decisions and maintaining the protocol's integrity and efficiency.
In this blog, we'll explore the specific benefits of governance at Neptune Mutual and how it enhances our protocol's effectiveness and reliability.
Neptune Mutual's governance and voting mechanism play a crucial role in our incident reporting and resolution process. This system ensures that claims are managed fairly and without bias, giving the community a significant role in deciding which cover purchasers receive payouts.
The process begins with community users reporting any incidents that occur, ensuring that no incident goes unnoticed. Once an incident is flagged, users vote in favor or against the occurrence of the event. A vote in favor indicates agreement that the incident did occur, while a vote against suggests that the incident was falsely reported.
However, there can be instances where dishonest individuals or groups attempt to manipulate the vote to unfairly claim rewards. To prevent this, Neptune Mutual has measures in place to identify and discard such dishonest votes. During a designated one-day wait period, the Neptune Mutual Governance admin validates the actual occurrence of the incident to ensure the integrity of the votes.
For more detailed information on how Neptune Mutual prevents dishonest reporters from gaining an unfair advantage, check out our dedicated blog on the topic.
As a DeFi protocol, it's essential to involve the community in your protocol's affairs and activities. Community involvement offers several advantages, including maintaining transparency, trust, and credibility. When the community feels informed and engaged, they are more likely to support and invest in the project.
One effective way to involve your community is through governance. Community participation in governance proposals and decision-making processes helps ensure a fair and balanced approach, reducing the risk of centralization and misuse of power.
There's nothing better than having your community involved in the most crucial aspects of your protocol. For Neptune Mutual, this means active participation in incident reporting and resolution, that leads to fair payouts.
As previously mentioned, the process begins with the community reporting incidents. This involvement ensures that no incident goes unnoticed and that cover purchasers receive fair compensation. By empowering the community to take part in these critical decisions, Neptune Mutual fosters a sense of ownership and collective responsibility, which strengthens the overall integrity of our protocol.
It’s important to note that reporting incidents and voting on them requires users to stake their NPM tokens. If you hold NPM tokens, you can actively participate in reporting incidents and voting on their validity.
One of the crucial benefits of utilizing NPM tokens is that it ensures that they are not stagnant. The more activity and engagement with the token, the more its value is likely to increase. Higher utility often translates to greater demand, as more users will need the token to take part in essential activities like staking.
To induce participation, the governance process rewards users for correctly voting when resolving incidents. This ensures that incidents are addressed promptly and fairly.
As mentioned earlier, users need to stake their NPM tokens, participating in either validating or disapproving the reported incidents. The same tokens staked by incorrect voters or the losing side will be proportionally awarded to the correct voters or the winning side.
When voting, you can either confirm that the incident occurred or vote against the initial reporter if you believe the incident was falsely reported. After an incident is resolved, those who voted correctly share 60% of the staked tokens with the invalid voters. These rewards are distributed proportionally based on the amount staked by the valid reporters.
Additionally, 30% of the invalid reporters' tokens are burned, helping to maintain the token's value. The remaining 10% is awarded to the final reporter. This final reporter could be the first reporter who reports the incident correctly or the candidate reporter who votes against the incorrectly voted first reporter.
One of the inspirations for the origin of DeFi is the need to break away from the traditional financial systems, where power and decision-making are centralized. Thus, governance is a crucial aspect of DeFi, alongside decentralization, transparency, and anonymity.
By integrating governance into the Neptune Mutual ecosystem, Neptune Mutual upholds the core principles of DeFi. Additionally, this makes sure the decision-making power is decentralized, ensuring fairness in insurance payouts.
This means that our protocol doesn’t have complete control over the protocol regarding who receives the payouts and who doesn't. Instead, users are allowed to have their say in the incident resolution, promoting fairness and inclusivity.
Another key area where governance is applied is in the liquidity provider (LP) reward system. Neptune Mutual has recently launched an innovative reward system for LPs of its cover pools through NPM emissions.
In this system, NPM emissions are distributed to cover pools within the marketplace. LPs who lock their POD tokens in these cover pools benefit from this distribution.
But how does governance play a role in this process? Let’s understand.
Users who have NPM tokens are allowed to vote on the Snapshot platform to determine which pools receive what proportion of the emissions. With the vote escrow feature, users can lock their NPM tokens to receive veNPM, which grants them greater voting power compared to standard NPM holders.
This means that veNPM holders have more influence in the Snapshot voting process, allowing them to direct NPM allocations toward the cover pools where they have staked their liquidity.
Check out the YouTube video below to learn how to navigate veNPM and liquidity gauge features.
The governance mechanisms within Neptune Mutual are crucial in maintaining integrity, fairness, and efficiency in incident reporting and payouts. It ensures that the community has the upper hand and that we don’t hold excessive power in payout and emission decisions.
We encourage crypto users in need for protection of their assets to check out Neptune Mutual. We offer users parametric cover policies to ensure quick and transparent payouts to the users affected by hacks and exploits.
As a user of the Neptunite ecosystem, you can also participate in incident reporting to receive rewards. In addition, LPs can add liquidity to our cover pools and yield significant returns.
