Cover Product Spotlight: Compound Finance
A spotlight article on Compound Finance with its features, financials, & security record.
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An introduction to the NPM token and why it is important in the Neptunite ecosystem.
At Neptune Mutual, we help CeFi, DeFi, and Web3 projects provide parametric cover for their users. We work with various projects across the Ethereum base layer and Arbitrum, covering numerous token types.
The NPM token is a utility token that powers the Neptune Mutual ecosystem and will be publicly available on one or more DEXs in May 2023. They make it easier for users to interact with our marketplace, and no more than one billion tokens can ever be minted. It's predicted that full issuance of the tokens will take around ten years. If you'd like to participate in the Neptune Mutual marketplace, having some NPM tokens in your wallet is the best way to start.
NPM tokens enable users to access the wide range of products and features of the Neptune Mutual marketplace. Whether you want to purchase cover, provide liquidity, or report incidents, you'll need NPM tokens.
If you're looking to purchase a cover policy from the marketplace, you'll need to have a certain number of NPM tokens in your wallet when you do so. You'll also need to keep at least that number of tokens in your wallet for the duration of the policy.
If an event occurs that triggers the parametric insurance policy to pay out and you are a qualifying policyholder, the policy will pay you out if you have enough NPM in your wallet to meet the conditions of such a policy.
The NPM requirements vary between cover policies. For example, the Curve Finance V2 Cover Product has relatively low NPM requirements, starting at just 10 NPM tokens. You can view the NPM requirements on the "view cover parameters" screen for the product you're interested in.
Individual cover pool creators can set their own requirements when it comes to how many NPM tokens they want users to hold. You must read the details of a policy carefully before making any purchase so you fully understand the terms.
NPM tokens don't just unlock cover; they also make it possible for users to become Liquidity Providers and earn stablecoins from the policy fees of the pools for which they provide liquidity. When Neptune Mutual first launched, there was no requirement for Liquidity Providers to hold NPM; they simply contributed their tokens to the cover pool to earn stablecoin rewards.
The incident-reporting process is a major part of the way our parametric insurance pools work. Users who hold NPM tokens can take part in the incident-reporting process, either by reporting a new incident or voting on ones that someone else has already initiated.
The number of NPMs needed depends on your role. Voting on an incident requires only a small number of NPM tokens. However, the Candidate and First Reporter are required to stake a greater number of tokens since they have a chance of becoming the Final Reporter and taking larger gains from the pool.
Cover creators can set their own requirements when it comes to the number of tokens needed to report an incident. In general, would-be reporters can expect to be asked to contribute around 250 NPM as the First or Candidate Reporter.
This NPM requirement helps ensure that the users who participate in the incident-reporting process are acting in good faith. Those who report valid incidents or vote truthfully are rewarded. Those who make false reports or vote maliciously will be penalized.
The features mentioned are the ones most end-users are likely to interact with on a day-to-day basis, but NPM tokens have other uses, too.
If you run a DeFi project and would like to launch your own cover pool, you'll need NPM tokens to do so.
If you're a trader or developer that has been following the development of the Neptune Mutual marketplace and experimenting with the upcoming features on our Testnet, you'll have seen some of the features we have planned, including:
These features will be coming to the mainnet once the token is publicly available. They will offer investors opportunities to boost their returns in a variety of ways. We also run a bug bounty program that rewards developers and security researchers who identify potential issues with our platform.
CeFi, DeFi, and Metaverse projects looking to create a cover pool in the Neptune Mutual marketplace to protect their communities should reach out to the Neptune Mutual team. We will provide more information about the cover creator creation process, which involves staking and burning some NPM tokens.
So these are five different reasons for holding NPM tokens. In summary, NPM tokens are the keys that open the doors to the Neptunite ecosystem and the activity that takes place within the marketplace. Neptune Mutual is community-driven, and we look forward to welcoming you to participate and help shape the development of our ecosystem. Come visit our new community forum here.
Disclaimer: This blog aims to highlight the practicality of NPM tokens and should not be regarded as investment advice. The trading of cryptocurrency assets carries substantial risks and may lead to the loss of your funds.