Neptune Mutual's Offerings for DeFi Insurance

6 min read

Explore what features set Neptune Mutual apart from others in the DeFi insurance space.

The importance of risk management solutions is apparent in the crypto world. Hacks, scams, social engineering, exploits of smart contract vulnerabilities, and other issues have frequently targeted the space, resulting in substantial financial losses. Among several security measures, DeFi insurance has been the focus due to its ability to reimburse users for what they have lost in those unforeseen incidents.

Neptune Mutual is one of the projects offering DeFi insurance, dedicated to reducing the inherent DeFi risks and secure users’ funds with parametric coverage. In fact, we are the  number #1 DeFI insurance protocol in Arbitrum.

If you are a cryptocurrency participant requiring cover protection, Neptune Mutual could be the best option for you. There are also several benefits for project owners and liquidity providers.

In this blog, we delve into the distinct attributes and strategic measures that distinguish Neptune Mutual in the DeFi insurance landscape. It will help you understand why you should choose us to secure your assets.

Here are the things that make Neptune Mutual stand out:

Stablecoin Liquidity#

Neptune Mutual allows users to purchase covers through the liquidity available in its cover pools. These pools are essential components of the platform, providing the necessary funds to cover claims. The liquidity in these pools is sourced from liquidity providers (LPs) who contribute to the pools, increasing the cover purchase capacity of the pools and yielding rewards in return.

One of the key features of Neptune Mutual's system is the ability for users to add liquidity using stablecoins. This is particularly advantageous as it reduces market volatility, which can be prevalent in other tokens and currencies.

This stability protects the LPs' contributions from the typical volatility in the crypto markets by ensuring the value of the liquidity they provide remains constant.

Allowing liquidity contributions in stablecoins not only helps to maintain the economic stability of the cover pool, but also enhances user confidence and security.

Instant Claim Payout#

Neptune Mutual streamlines the claims process by employing a parametric model, which eliminates the need for victims to submit detailed proof of loss. This model utilizes predefined parameters established during the cover creation process.The parameters clearly establishes the conditions for payouts, thereby significantly simplifying the decision-making process during claim submission.

When an incident occurs, meeting these predefined parameters, cover purchasers automatically become eligible for payouts. It bypasses the conventional requirement of submitting proof of loss, which can often be a hassle and a time-consuming process. Instead of waiting for months, as is typical with discretionary cover protocols where individual proof must be verified and claims undergo extensive reviews, Neptune Mutual allows for quick resolution and payout.

Following the occurrence of an incident, the resolution process is initiated and typically concludes within nine days. After resolution, the cover purchasers have a seven-day window to submit their claims, ensuring that the total time from the occurrence of the incident to the payout is less than 20 days.

In contrast, discretionary cover protocols can take months to even begin the incident voting process, followed by additional months for the submission and verification of proof of loss. It can extend to years before payouts are received. The payouts are followed by the discretion of a privileged user, possibly an admin, who also has the right to deny the payout claim.

Community Governance#

Neptune Mutual uses a community governance model to manage claim resolutions fairly and without bias. This model promotes community involvement in decision-making, which increases transparency and trust in the platform. In addition, by adopting community governance, Neptune Mutual carries the spirit of DeFi, where governance is a crucial pillar, ensuring fairness and transparency.

Community members of the Neptune Mutual ecosystem are encouraged to report any incidents affecting the cover products available in the Neptune Mutual marketplace. This engagement ensures comprehensive and accurate coverage by not missing any incidents.

When an incident is reported and flagged, community members vote using their NPM tokens to confirm or deny the occurrence of the event. A vote in favor indicates their agreement that the incident did occur. Whereas, a vote against suggests that the incident did not occur as reported.

Neptune Mutual only intervenes to flag the incident when reported at first, verify the occurrence of the incident, and ensure that the reported events align with the established parameters for proceeding with a payout.

The model encourages precise and active voting with rewards. If the community accurately predicts an incident's outcome, 60% of the tokens staked by incorrect voters are given to those who voted correctly. The first correct voter, or 'final reporter,' gets an additional 10% from the wrong voters' stakes. To manage token supply and increase value, 30% of the losing side's tokens are destroyed.

Rewards and Incentives#

Neptune Mutual leverages multiple rewarding opportunities for DeFi users, encouraging both the securing of funds and active participation.

For liquidity providers (LPs), there is a chance to earn up to 12% yield by adding liquidity to the pools. This yield is generated from the policy fees collected from cover purchases, which are distributed proportionally among the LPs in that pool.

In addition, Neptune Mutual also incentivizes cover purchasers with exclusive NFTs. Initially, purchasers receive a Soulbound NFT when they buy a cover policy worth $10, at a nominal cost of about $0.2. This NFT is non-tradable and marks the buyer’s entry into the system. Subsequently, purchasers can receive tradable NFTs, which vary in level based on the amount of funds covered, thus adding a layer of gamification and potential rewards.

You can read more about the Neptune Mutual NFTs in our detailed article.

Expanding its innovative approaches, Neptune Mutual has introduced veNPM tokens and liquidity gauge pools. These mechanisms are part of a new reward system that uses NPM token emissions to incentivize LPs. LPs can lock their NPM tokens to obtain veNPM, enhancing their voting power in liquidity gauge polls conducted via Snapshot. This increased power allows them to direct NPM emissions favorably towards their pools.

The ecosystem also extends rewards through various programs like bug bounty, community events such as content creation, and testnet competitions, fostering robust community engagement.

We have a detailed article on the different ways you can yield rewards at Neptune Mutual that you might want to check out.

Final Words#

To sum it up, Neptune Mutual stands out in the DeFi insurance landscape through its innovative use of stablecoin liquidity, parametric coverage models, community governance, and multiple reward opportunities for participants.

In addition to streamlining the claim process, these features also enhance user confidence and security, making Neptune Mutual a good choice for those looking to protect their digital assets.

Whether you're a project owner, a liquidity provider, or just starting out in the cryptocurrency space, Neptune Mutual offers a robust platform with opportunities for earning rewards while securing your investments.

Our marketplace offers coverage for several major protocols on different networks: EthereumArbitrum, and BNB Smart Chain.

To stay up-to-date with Neptune Mutual, follow us on X and connect with us on Discord.