In every system, there exists an undeniable duality: the good and the evil. In this case, we are talking about it in the context of the incident reporting mechanism in our protocol, Neptune Mutual.

To get the whole picture, it’s important to understand how Neptune Mutual, a DeFi insurance protocol, decides payouts. In short, we let the community report and vote on hacks and exploits to dictate a payout to the cover purchasers. For doing so, we reward the voters with significant rewards. This process is pivotal for maintaining trust and fairness.

In this blog, we are going to talk about everything you need to know about reporting incidents. Is there a way users can report or vote on incidents dishonestly and gain an unfair advantage? Let’s find out.

How Does Neptune Mutual Work?#

The Neptunite community is familiar with what the Neptune Mutual protocol does. Well, we are a marketplace that provides cover policies  to DeFi and crypto users. Users can purchase the available  cover policies to protect their funds and claim payouts in case of a valid incident reporting.

The core of our system is the community governance model. We let users participate in our ecosystem by letting them report and vote on incidents. To encourage users to report the incidents correctly, we also offer them rewards.

Users can report on incidents, such as hacks or exploits, that may trigger the parameters of a cover pool policy. This process is crucial for the timely resolution of reported incidents.

Either you are a policy purchaser or someone willing to contribute to the community, you can report the incidents. All you need to do is stake a certain amount of NPM tokens.

You can either vote whether the incident has taken place or challenge a report that you believe is false by voting against it. The tokens staked by the incorrect voters will be distributed proportionally to the correct voters after the incident is resolved.

Honest and Dishonest Incident Reporting#

It’s obvious that voters will look to vote correctly and receive rewards for doing so.

However, some users may attempt to exploit the system by dishonestly reporting or voting. They can either falsely report the occurrence of an incident or vote against an incident that has indeed occurred.

In both cases, the dishonest reporters may have a terminal advantage in the reporting cycle where they try to gain an unfair advantage by maintaining a majority of the votes. Most probably, the motivating force behind it could be to influence the voting and unfairly receive the rewards.

But it’s not that simple for them. To prevent such unfair voting and influencing strategies, we have set up a wait period. In this period, the Neptune Mutual Governance admin checks to validate the cover parameters as well as the actual occurrence of the incident to validate the votes that have been cast.

The admin has the power to overturn any falsely cast votes, even if that’s the majority of the votes. This step is crucial to making sure that the victims are compensated and the dishonest voters don’t gain an unfair advantage. Also, it ensures that Neptune Mutual is fair to everyone.

Ultimately, the voters who voted falsely will be on the losing side, causing them to lose their staked NPM tokens.

On the other hand, correct voters who vote for the occurrence of the incident or someone who votes against a wrongly filed incident are awarded 60% of the assets staked by incorrect voters. Additionally, 10% of them are awarded to the final reporter, who could either be the first reporter (who first reported the incident correctly) or candidate reporter (who first reported against the incorrect incident report).

Final Words#

Maintaining integrity within Neptune Mutual's incident reporting mechanism is important for ensuring fair compensation to victims and preserving trust within the community. While the allure of gaining an unfair advantage may be tempting, users must recognize the consequences of dishonest reporting.

If you are looking to participate in the Neptune Mutual ecosystem, you can purchase a cover policy and add liquidity to our cover pools in exchange for rewards. Or, if you own a DeFi, CeFi, or Metaverse project, you can set up your own cover pool and protect your communities. Just reach out to us through our contact page.

To learn more about Neptune Mutual, follow us on X and join our Discord chat.