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.
The first cover creator in the Neptune Mutual marketplace has created a diversified cover pool.
The first cover creator in the Neptune Mutual marketplace has created a diversified cover pool called “Prime dApps,” a basket of cover products that provide parametric cover policies for some of the most popular DeFi dApps (decentralized Applications).
DeFi, CeFi, and Web 3 users can now take out cover policies that provide a layer of protection to safeguard their digital assets in the event of a smart contract hack.
Users can also participate in the marketplace as liquidity providers. This is when you supply liquidity to cover pools that provide underwriting capital for cover products on Neptune Mutual.
The very first cover pool on the Neptune Mutual is the Prime dApps Diversified Cover Pool.
Prime dApps is a collection of parametric cover products for seven top-rated DeFi projects – AAVE, MakerDAO, Uniswap, Curve Finance, Balancer Labs, Gnosis Safe, and Synthetix. These projects are relatively mature, with large TVLs (Total Value Locked) and they have relatively high levels of security.
Users of these dApps can purchase cover policies to provide cover for their digital assets with fast and reliable payouts to all policyholders should an incident arise and be validated by our incident resolution process.
Parametric cover makes sense for blockchain projects because it empowers the community of those projects to mitigate security risk. It also demonstrates to communities a mature and responsible attitude of the project developer in relation to a commitment towards high level security and a process to manage loss if an incident arises.
Parametric cover is different from the cover found on many other cover protocols in that it does not require individual claims processing.
One of the main standout features of the Prime dApps basket is that cover products are underwritten with capital from a single diversified cover pool. This means that the underwriting capital for all seven DeFi projects listed under Prime dApps is sourced from a single cover pool.
Capital is provided to cover pools in stablecoin (USDC). This helps ensure that the underwriting capital does not fluctuate in value as a result of cryptocurrency / digital token price volatility.
It’s important to note that cover policies can only be purchased directly with the individual projects (as identified by their corresponding cards) within the portfolio of a diversified cover pool. In contrast, liquidity can be provided by users to the diversified cover pool and this liquidity is allocated across all of the different cover products.
Diversified cover pools help enhance underwriting capital provision for projects that may not be large enough, or popular enough to warrant a dedicated cover pool, or for low risk projects where policy premiums might be insufficient to attract liquidity providers.
All cover pools in the marketplace are set up by cover creators. For diversified cover pools there are a range of specialist actors in the DeFi space that we are in touch with in relation to creating diversified pools.
In the case of dedicated cover pools it is likely that the cover creator will often be the project developer.
Accessing Prime dApps Cover Products on Neptune Mutual#
Visit the Neptune Mutual marketplace at app.neptunemutual.net. Project cards are displayed under Cover Products. Here you’ll find the cards for all seven cover products under Prime dApps.
Click on any of the cards to reveal all the information about that specific project and the corresponding cover policy. For instance, the Balancer V2 cover product provides cover that mitigates the loss of assets resulting from a smart contract hack or code exploit for the Balancer project.
As a cover purchaser, you need to carefully review all the cover parameters to ensure that the policy matches your needs and expectations. For example, one of the parameters in the AAVE Ethereum Market V2 cover policy defines a minimum loss of 5M USD. All parameters are clearly outlined in the Purchase Policy page that can be accessed by clicking on each project card. It’s also very important for users to read the full terms and conditions of the marketplace.
2022 has been quite a productive year for hackers and cybercriminals. Compared to 2021, crypto--project related hacks and scams went up no less than 94%! So far an estimated $3 billion USD worth of digital assets has been stolen by hackers in 2022.
In the year prior, centralized exchanges were the main targets of hackers. Security breaches in which hackers gained access to victims’ private keys were prevalent.
Over time, their attention has shifted to DeFi protocols. As of 2022 Q1, hacks on DeFi projects accounted for over 90% of the value stolen by cybercriminals.
DeFi protocols have been highly targeted for hacks and exploits in 2022 | Source: chainalysis.com
Code exploits are becoming increasingly common, but there are a whole number of other attack vectors that cybercriminals can use as well. Even protocols that have undergone extensive security audits have been hacked.
The bottom line is that hacks on blockchain projects are on the rise. We’ve even launched an Exploit Analysis section that decodes the latest hacks and exploits in the blockchain space. Regular security measures do not guarantee 100% security of your digital assets.
Mitigate your risk exposure today by taking out a cover policy. With the Prime dApps portfolio, users can now access parametric cover protection for seven different popular DeFi projects and of course users can also contribute liquidity to the diversified cover pool and benefit from a share of the policy revenues.
Cover products with dedicated cover pools for CeFi and Web 3 projects are also scheduled to launch on the Neptune Mutual marketplace in the coming weeks. Stay tuned for the update.
Visit neptunemutual.com/marketplace to access our parametric cover marketplace. There are several video tutorials available in Neptune Mutual’s YouTube channel on how to navigate and interact with the protocol.
