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Neptune Mutual to Close Cover Marketplaces

5 min read
Neptune Mutual Final

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:

CEX Listing#

“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.

Growth Performance#

The above point invariably leads to the question

“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:

The DeFiInsurance Narrative#

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.

Continue to Invest in Growth, or Refund?#

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.

What's Next?#

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.

Disclaimer:#

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.

By

How Was SafeMoon Exploited?

3 min read
Exploit Analysis

Learn how SafeMoon was exploited which resulted in a loss of approximately $8.65 million.

TL;DR#

On March 28, 2023, SafeMoon was exploited due to a smart contract vulnerability, resulting in a loss of approximately $8.65 million.

Introduction to SafeMoon#

SafeMoon is working on building blockchain, NFT, and metaverse products to get more value out of the underlying crypto technology.

Vulnerability Assessment#

The root cause of the vulnerability is due to the presence of a public burn function.

Steps#

Step 1:

The most recent change to the SafeMoon token contract added the burn function, along with four other functions. It was updated yet again to allow anyone to burn tokens instead of the sender.

Step 2:

The attack was initiated by the SafeMoon Deployer. So it is likely that the private keys of their contract deployer were compromised.

Step 3:

We attempted to analyze the attack transaction executed by the exploiter.

Step 4:

The exploiter took advantage of the public burn function, which allows any user to burn tokens from any other address.

function burn(address from, uint256 amount) public {
  _tokenTransfer(from, bridgeBurnAddress, amount, 0, false);
}

Step 5:

Thus, the attacker was able to remove SFM tokens from the SafeMoon-WBNB LP, alleviate the price of SFM tokens, and sell them at a grossly overpriced rate within the same transaction, which ultimately wiped out the remaining WBNB in the liquidity pool.

Step 6:

The attack was front-run by a MEV bot, who has since transferred approximately 27,380 $BNB worth $8.65 million to this address.

Step 7:

The exploiter further mentioned that they are waiting for the setup of a secure communication channel to return the funds back to the team.

Aftermath#

After the attack, the team acknowledged its occurrence, indicated that it had an impact on the SFM:BNB LP pool, and assured everyone that their DEX were safe.

They further added that the team had a meeting with their key advisors to come up with a strategy for safeguarding token holders and the community as a whole. The team has patched the vulnerability and is working with a chain forensics consultant to identify the precise nature and scope of the attack after it appears that the vulnerability has been addressed.

Solution#

The exploit on SafeMoon highlights the critical importance of security measures in DeFi protocols. The public burn function, added in the recent change to the SafeMoon token contract, was exploited, illustrating how new features can sometimes bring unforeseen vulnerabilities. As security experts at Neptune Mutual, we believe this incident could have been mitigated and the impact significantly reduced with robust security measures and protocols.

Firstly, the importance of regular smart contract audits cannot be overstated. Independent third-party auditors can identify vulnerabilities like the one exploited in this attack and recommend ways to mitigate them. In the SafeMoon incident, an audit could have flagged the potential dangers of the public burn function.

In addition, formal verification tools can ensure that a smart contract behaves as intended, detecting issues that might be overlooked manually. These tools could have alerted SafeMoon to the risks associated with allowing anyone to burn tokens from any address.

Security also extends to the handling of private keys, as it appears likely that the private keys of SafeMoon's contract deployer were compromised. Best practices such as using hardware wallets for offline private key storage, employing multi-signature wallets, and utilizing cold storage methods could help protect against such scenarios.

These measures, while vital, are not foolproof, and this is where we at Neptune Mutual come in. Had SafeMoon established a dedicated cover pool in our marketplace, the aftermath of the attack could have been much less severe. We offer parametric policies to cover losses stemming from smart contract vulnerabilities. Users do not need to provide loss evidence to receive payouts, and claims can be made as soon as an incident is resolved through our system.

Our marketplace operates on Ethereum and Arbitrum, two major blockchain networks, ensuring broad coverage for DeFi users. Furthermore, our security team assesses platforms for potential vulnerabilities across several areas, such as DNS and web-based security, frontend and backend security, and intrusion detection and prevention, providing an additional level of protection.

Reference Source BlockSec

By

Tags

Exploit Analysis SafeMoon Smart Contract Vulnerability Blockchain Hacks Decentralized Insurance Parametric Insurance Crypto Insurance Crypto Hacks

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