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.
Guardians talk about uniting to defend the DeFi Sea against the beasts & rising threats.
Delphinus launched himself into the water and swept his tail up and down, propelling himself forward with impressive speed. He dove deeper and deeper until the water was dark and almost silent. He liked it down there. It was quiet and calm. Both things that he wasn't feeling enough of these days.
He sighed, pointed his muscular frame towards the surface, and swam hard. He broke the water's surface and flew through the air, then landed back in the water with a splash.
"Delphinus! You scared me!" a cheerful voice cried out. It was Salacia.
"Nothing scares you," he laughed.
"If only that were true," replied Salacia, sounding far less cheerful than she was just moments ago.
"I saw Aquavallo yesterday..." Her voice trailed off for a moment.
"That old seahorse? What's he up to these days?" asked Delphinus. "Living like a king, I bet."
Salacia shook her head. "He looks terrible. He'd never admit it, but he's overworked. He says there were three DDoS attacks on the exchanges on his side of the water last week. He can't stop them all single handedly."
Delphinus immediately felt a pang of guilt for being so flippant. He dipped his head underwater, then resurfaced and shook his fins, almost trying to wash the guilt away. "You're right, and he's not the only one. I see spear phishing attacks all the time these days. Times are changing."
"And not for the better." Salacia finished his sentence.
Salacia nodded solemnly. "He's worried. He's been watching the beasts for weeks. They're stepping up their attacks all over the sea. They're getting bolder by the day. And you know how he cares for those humans."
Delphinus cracked a smile. It was hard to see through his golden armor, but Salacia knew him well enough to spot the change in his demeanor. "Your husband and his affection for those reckless humans will be the end of us all, I swear it. But... I can see why he likes them so much. They're courageous. And I wish I still had their hope and bravery."
"But you do. And so does Aquavallo. You know what's lurking out there. The scams, the exploits—you fight them every day. You don't have to, but you do."
"We can't do it all ourselves. There are too many of them. Just when I think I've stamped one out, two more appear. I tried to warn one trader yesterday. They were angry with me for trying to help them." Delphinus shook his head. The frustration in his voice was obvious.
"I know..." Salacia bowed her head. "Neptune and I are going to see father tonight and his brothers. We can't be the only guardians who have noticed what's going on. He'll rally support to protect DeFi. I know it."
Salacia paused for a moment, then continued, "We may be a while. But I'm not turning my back on you all here. I learned some firewall spells recently. They won't help the traders; they're too complex right now, and I'm still learning the finer details myself. But they can protect the exchanges. That might take some of the burden off you while I'm gone."
Delphinus nodded his head in thanks. Anything that could be done to reduce the beasts' attempts at intrusion would be welcomed. "Aquavallo will appreciate that. Where is he right now, anyway?"
"The last I heard, he was off investigating a raid against the liquidity pool to the south. He says hundreds of traders’ funds were at risk."
Delphinus gasped.
"Neptune is working on some idea he's heard about a scroll of insurance. That could repair the damage if the attack succeeds," explained Salacia.
"That would be a huge boon for us," replied Delphinus excitedly.
"Aquavallo doesn't see it that way," sighed Salacia.
Delphinus rolled his eyes. "Let me guess," he quipped, "he doesn't see failure as an option?"
"He takes his role as a guardian seriously," nodded Salacia as she allowed herself to be lost in thought.
Aquavallo, Salacia, Delphinus, and Neptune had known each other for eons, and they'd faced similar struggles together before. There were always new frontiers for humans to explore, and new threats lurking around every corner. The guardians had committed to working together to protect the explorers. But something felt different this time.
Perhaps it was because humanity had changed. They were more worldly and had their own "magic" in the form of technology. They had no need for the old gods. Or so they thought.
Delphinus, seemingly aware of Salacia's train of thought, broke her reverie "Aquavallo knows the humans still need us. He'll never stop fighting, and neither will I."
Salacia smiled "Well, they do still like their boating accidents, don't they?"
"I need to go on patrol," said Delphinus. "I saw some mermen sneaking around earlier. They always make me nervous. Rumor has it one of their leaders met with Gargantuworm recently. His malware in their hands would not end well. I must figure out what they're planning."
Salacia nodded, "I won't keep you then. Be careful out there. Stay safe, and keep us informed. We leave tomorrow to meet with the other Gods and Guardians. Please come see us before we depart if you can. Neptune always appreciates your counsel, and Aquavallo may be there too."
"I will do my best," nodded Delphinus as he turned and surveyed the waters, then waved a fin at Salacia and swam off to the east, off in the direction of the main forum the mermen liked to frequent.
He felt slightly better then. Between Salacia's firewall, Aquavallo's tireless efforts, and Neptune's plans to gather allies, there was hope. The beasts were relentless, but they weren't that smart. Working together, he knew he and his guardian friends would be able to protect DeFi.
