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Explore Neptune Mutual's ongoing collaboration with SushiSwap offering several benefits.
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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.
The above point invariably leads to the question
“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.
Best practices for CeFi and DeFi treasury management that help build brand resilience.
Treasury management is an essential part of business operations for any CeFi or DeFi project. The bull run of 2020 and 2021 created a sense of exuberance and invincibility for many projects, leading to a rather lax attitude towards managing their finances. However, the recent market downturn has highlighted why it's essential to have good treasury management practices in place.
Some of the leading DAO treasuries have seen their assets drop to as low as ~5% of their peak value:
Treasury managers must find ways to protect their funds against the volatility of the crypto markets while also keeping them secure, and ideally be able to generate returns from them.
Before you can maximize the performance of your treasury, it's important to understand your goals and the needs of your clients. Issues to consider include:
Ideally, you'd maximize security and accessibility and generate a high ROI with minimal volatility. Ticking all of those boxes at the same time is almost impossible, so you'll need to perform risk assessments and think carefully about what you're willing to sacrifice in each area.
With many DAOs, the majority of the funds held by the treasury are in the form of the protocol's native token. This puts the DAO in a precarious position because those funds aren't really assets but more like a modern, blockchain-focused version of 'authorized but not issued shares.'
If the value of the native token starts to fall in a bear market, the DAO could be forced to liquidate that token. The downward pressure on the token's price caused by selling a significant amount of the token could further depress the token's price, potentially leading to a death spiral if investors lose faith in the protocol.
This is why it's so important to evaluate your treasury holdings carefully and consider how you can protect yourself against unnecessary risk.
One option is diversifying the treasury to minimize the risk of overexposure to one area of the market. Another option is investing in stablecoins to decouple your treasury's funds from the volatility of the crypto markets. Even within the stablecoin market, it's a good idea to diversify to reduce the risk of being impacted by any stablecoin depegging.
One of the main selling points for CeFi and DeFi projects is that they make financial tools accessible to those who are shut out of the TradFi world. While that's admirable, and there are many areas in which TradFi could be improved to be fairer and more accessible, there are areas where CeFi and DeFi could learn from TradFi.
Sustainability and brand resilience are among those areas. For CeFi and DeFi projects to survive for many years, they must have robust plans for securing their treasuries. In addition, they must make it clear to their users what those plans are, so they have faith in the project even during hard times.
Even traditional banks have fallen victim to crises of sentiment. We're going through a period of economic instability that is affecting institutions globally. Both retail and institutional investors are worried about the stability of their investments and the organizations that hold them.
It's vital for CeFi and DeFi projects to take steps to make themselves as resilient as possible internally and to work to protect their image so they're less likely to be impacted by the equivalent of a bank run on their protocol should there be some "bad news" spreading online. A little transparency and forward planning can go a long way toward reassuring users and investors that a DAO can weather any storm that comes its way.
One model for DAO treasuries that can improve their resilience is the Fibonacci treasury model:
This model is designed to kick-start treasury discussions within DAOs, DeFi, and CeFi projects; it is not supposed to be followed blindly. Each CeFi and DeFi project should construct its own treasury investment plan and determine its own requirements and capital allocations.
Investing 1% of a project’s treasury in its own dedicated stablecoin cover pool in the Neptune Mutual marketplace contributes in a variety of ways to the best practice goals identified for treasury management.
If you'd like to learn more about how Neptune Mutual can help your project become more resilient, contact us to discuss your cover pool needs.