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.
Explore Neptune Mutual's cover pools, and their benefits for cover creators and LPs.
Traditional insurance operates on a simple model, pooling policy fees to reimburse policyholders in the event of a claim. However, DeFi introduces a distinct approach to this model. For this example, let’s take a look at our DeFi insurance protocol: Neptune Mutual.
Here, rather than a centralized pool of policy fees, projects establish their own liquidity pools. These pools enable the community to purchase cover policies, backed by stablecoin liquidity contributed by liquidity providers. In return, these providers gain the potential for attractive financial returns and rewards.
The amount of liquidity available directly influences the number of cover purchases that can be supported. Therefore, increasing liquidity enhances the risk underwriting capacity of the project.
Neptune Mutual offers two primary types of cover pools: Diversified and Dedicated. Each type is tailored to meet the distinct needs of liquidity providers (LPs) and cover creators, optimizing benefits for all parties involved.
This blog aims to provide a fresh perspective on the different types of liquidity pools available at Neptune Mutual and their specific implications. Let's dive into the details.
Dedicated cover pools at Neptune Mutual are specialized liquidity pools created by product owners or developers for a singular, standalone product. These pools are particularly designed with cover parameters that directly address the unique security risks relevant to their specific project community.
It is beneficial for DeFi or Metaverse projects that have an established community, the members of which are the primary beneficiaries of these customized cover policies.
In a Dedicated cover pool, liquidity providers contribute their assets solely to this individual pool. So, the funds are used explicitly to cover the risks associated with that specific project. This singular allocation also allows pool owners to seek liquidity support from their trusted community members or investors, enhancing the pool's robustness and capacity.
The returns on the liquidity provided to a Dedicated pool are entirely dependent on the fees collected from the cover policy purchases.
A significant advantage of Dedicated cover pools is the assurance of cover payouts. These pools are specifically allocated to cover a single project, they maintain a liquidity level that exceeds the maximum coverage underwritten. This structure provides a 100% guarantee of payouts to cover purchasers, ensuring that claims can always be met.
Neptune Mutual’s marketplace provides easy navigation for users interested in exploring or participating in Dedicated cover pools as cover purchasers or liquidity providers. You can simply select "Dedicated" from the drop-down menu to view available dedicated pools on each network.
In contrast to Dedicated cover pools, Neptune Mutual also offers Diversified cover pools, which consist of a variety of cover products under a single portfolio. These pools are formed with the collaboration of multiple teams or product owners collaborating and pooling liquidity collectively.
In a Diversified cover pool, liquidity providers (LPs) do not allocate their resources to any single cover product. Instead, their contributions are spread across all the cover products included in that pool.
This distribution of funds ensures that liquidity impacts a broader range of projects, enhancing the overall stability of the pool. Returns for LPs in this model are derived from a collective share of the cover fees generated by all the cover products within the pool.
Each cover product within a diversified pool is governed by its own specific parameters, which trigger the cover policies when certain conditions are met. It's important for cover purchasers to understand that cover policies can only be bought through a specific project pool and cannot be bought directly from the diversified cover pool. This ensures that while the liquidity is pooled for enhanced capacity, the cover purchases remain targeted and specific to individual project needs.
Moreover, Diversified cover pools offer a notable advantage to liquidity providers. LPs can expect higher returns provided there's a significant policy purchase in the pool. The diverse range of cover products within the pool makes it highly unlikely that all will become claimable simultaneously, allowing for higher potential returns on pooled funds.
To explore the Diversified cover pools on the Neptune Mutual marketplace, you can choose "Diversified" from the drop-down menu in all networks.
Who Else Can Create Cover at Neptune Mutual Marketplace?#
At Neptune Mutual, the scope for creating cover extends beyond individual product developers and owners establishing Dedicated or Diversified cover pools. We also empower organizations and agencies operating within the Web3 space to create cover pools to cater to the needs of their clients.
This is especially advantageous for agencies with a portfolio of multiple projects, as they can establish diversified cover pools to secure the communities of their client projects. Each project under such an agency can have its own individual cover pool, from which its users can purchase cover policies.
If you're a Web3 project and are considering setting up a cover pool, you can work collaboratively with Neptune Mutual. We can discuss and determine the essential aspects such as trigger parameters, required liquidity, cover fees, and the returns on liquidity provided.
Additionally, Neptune Mutual offers an SDK that allows other protocols to seamlessly integrate and offer Neptune Mutual cover policies directly through their applications. This integration facilitates project owners in providing their users with an easy and quick way to purchase cover policies directly from their own platforms.
Furthermore, any seller can integrate Neptune Mutual’s SDK into their platform, not just product owners. A seller who integrates our SDK and sells cover policies becomes eligible to earn a commission on sales, as per the terms agreed with Neptune Mutual.
Investing in Neptune Mutual cover pools offers liquidity providers (LPs) several compelling benefits. Firstly, LPs enjoy high returns from their liquidity contributions. These returns are generated from the cover policy fees collected on cover purchases within the pool they contribute to.
Notably, the recent surge in cover purchases, especially on the BNB Smart Chain network, has yielded returns exceeding 12% for LPs, underlining the robust demand for more liquidity in our pools.
Another major advantage of Neptune Mutual’s system is the absence of indefinite lock-ins, which often deter participation in liquidity pools. Our protocol is designed with a maximum coverage period of three months, ensuring that LPs are not bound indefinitely. Moreover, the Proof of Deposit (POD) received by LPs acts as a certificate for their stablecoin deposit.
Neptune Mutual has introduced an innovative reward system through NPM emissions, specifically designed to benefit LPs who lock their POD tokens. By locking their NPM tokens, LPs can receive veNPM tokens, which boost their voting power in Snapshot voting and influence the liquidity gauge that determines the distribution of NPM emissions across the cover pools.
Neptune Mutual stands out in the DeFi insurance landscape primarily due to its parametric cover approach, which simplifies and streamlines the process of assessing incidents and disbursing payouts.
This system is based on predefined parameters that determine whether an incident falls within the scope of coverage, eliminating the need for traditional proof of loss. This feature is especially beneficial for cover pool creators or product owners, as it allows them to set specific parameters tailored to the risks most likely to impact their communities. By aligning the cover parameters with probable risks, product owners can provide targeted and effective protection, enhancing the relevance and appeal of their cover offerings.
Another significant advantage is the speed of its payout process. As a parametric cover protocol that does not require proof of loss, Neptune Mutual can execute incident resolutions and hand payouts swiftly. This rapid response not only meets the immediate financial needs of the victims but also builds the trust of community members with the cover creators.
Neptune Mutual stands out in the DeFi insurance industry by offering innovative liquidity pools that empower both LPs and cover creators with unique advantages.
Through Dedicated and Diversified cover pools, participants can choose their investment style, whether focusing on a single project or spreading risks across multiple initiatives.
The platform's parametric cover approach eliminates the need for traditional proof of loss, streamlining the payout process and enhancing trust. Additionally, Neptune Mutual’s features like limited lock-in periods, high returns, and innovative rewards systems like NPM emissions make it a leading choice for those seeking to secure their investments and communities in the Web3 space.
We have a marketplace on Ethereum, Arbitrum, and BNB Smart Chain Networks for LPs to contribute liquidity, project owners to create cover pools, and crypto users to purchase cover policies.
To learn more about Neptune Mutual, follow us on X and connect to our Discord server.
