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.
On April 24, 2018, the DNS registration servers of MEW (MyEtherWallet) were compromised by third-party actors, in which hackers got away with over $152,000 worth of Ether.
MyEtherWallet, also known as MEW is an easy-to-use, open-source, client-side interface that enables users to interact with the Ethereum blockchain, and manage their funds without the need of a centralized platform.
The root cause of the vulnerability was the hacker's ability to spoof DNS entries after executing a BGP route hijack that diverted huge swaths of Internet traffic intended for Amazon servers to the systems they controlled.
The attackers took advantage of flaws in two fundamental internet protocols that route traffic around the world: the Border Gateway Protocol (BGP) and the Domain Name System (DNS) (DNS).
Step 2:
MyEtherWallet.com made use of Amazon's Route 53 DNS service, however neither AWS nor Amazon Route 53 were hacked or compromised.
MyEtherWallet regular internet routing. Courtesy of cloudflare.com
Step 3:
IP addresses are the communication protocol used by web browsers. In order for browsers to load Internet resources, DNS servers translate domain names to IP addresses. Each Internet-connected device has a distinct IP address that may be used by other devices to locate it.
Step 4:
The attackers used the BGP protocol to reroute traffic to Amazon's Route 53 service during the hack.
Step 5:
Using a server at Chicago's Equinix, they used a man in the middle attack to reroute DNS traffic. For more than two hours, this provided them with the necessary traffic, enabling them to intercept Internet traffic headed for Amazon Route 53 customers around the world.
Step 6:
This allowed them to redirect traffic intended for MyEtherWallet.com to the fake phishing website, which was housed on a Russian server.
Step 7:
Therefore, MyEtherWallet.com returned IPs belonging to that Russian provider (AS48693 and AS41995), instead of IPs that were allocated to their domain name.
Step 8:
MyEtherWallet customers reportedly noticed something odd when they visited the wallet's website and saw a warning that the site was utilizing an incorrect security certificate.
MyEtherWallet routing during the attack. Courtesy of cloudflare.com
Step 9:
Despite the warning, they continued to log in because the website address and everything else about the service appeared to be fine to them.
Step 10:
After logging in, a 10-second timer appeared, counting down until the funds in the wallet were transferred to the attacker.
Step 11:
The attack was especially difficult to detect because it compromised fundamental internet systems that users rarely check. This enabled an attacker to post distorted announcements that redirected traffic without being detected.
MyEtherWallet administrators discovered the DNS hijacking incident and made an effort to alert users via a Twitter announcement. The hacker collected their Ether at this address.
About two hours after the attack, MyEtherWallet was able to regain access over its DNS entries, but the hacker had already moved the 215 ETH worth of stolen funds to another account.
Domain Name System (DNS) spoofing, also known as DNS cache poisoning, is a kind of cyberattack in which a victim's DNS server is tricked into associating a hostile server with a valid domain name. If successful, this strategy exposes customers who put the genuine domain name into their browser to risks such as phishing, malware, and other types of fraud.
Utilizing secure DNS servers that encrypt DNS traffic is one potential defense against DNS hijacking attacks. This can aid in preventing traffic from being intercepted and forwarded to malicious servers by attackers. Although securing BGP could be challenging, employing security practices like DNSSEC and HSTS would have reduced the impact of this kind of attack. When DNSSEC is enabled, fraudulent DNS entries are rejected by DNS resolvers. With HSTS enabled, browsers shield users from self-signed certificates.
Utilizing a DNS firewall is another option for preventing DNS attacks because it blocks malicious traffic and only permits legitimate traffic to get to its destination. Utilizing a reliable and trustworthy DNS service provider is advisable since they will have additional safety procedures in place to guard against DNS hijacking and other attacks of a similar nature.
Users can protect themselves by keeping an eye out for suspicious activity on the platform they use. It is always important to be aware of the risks and take appropriate precautions to protect ourselves when clicking on links from unknown or untrustworthy sources.
Neptune Mutual was not available as a marketplace at the time of the event, thus users who fell for this phishing scheme probably had no way of recovering their funds. We may not have been able to prevent this hack from occurring, but we could have reduced or mitigated the aftermath of the attack to a greater extent. Users who would have purchased the available parametric cover policy for MyEtherWallet need not have to provide loss evidence in order to receive their payout. Payouts would have been made as soon as this type of incident was resolved through our governance system.
Neptune Mutual's security team would also have evaluated the platform for DNS and web-based security, frontend and backend security, intrusion detection and prevention, and other security considerations.
