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.
In this blog, you will get a brief introduction about Neptune Mutual, and its focus.
Neptune Mutual is the brainchild of Binod Nirvan. The journey from nought-to-Neptune started with the notion that there was a disconnect between one of the underlying attributes of blockchain, security, and one of the most important developments in blockchain, namely smart contracts, that brings the power of programming to crypto transactions. The disconnect relates to the fact that whilst blockchain technology remains eminently secure, the use of smart contracts often leaves a range of opportunities open for criminals to hack and exploit these contracts.
In addition to this disconnect, as the market for cryptocurrencies grows with the increasing adoption by mainstream institutions, so the need for mainstream style tools for protection, such as insurance and financial hedging, increases.
With this in mind, Binod starting crafting a new architecture for on-chain financial cover driven by four underlying principles that were applied rigorously across all aspects of the new design:
Security
Minimise risk
Scalability
User Experience (UX)
One of the challenges of traditional insurance is the mis-match in understanding, between the insured and the insurer, about what is, and is not, covered by the insurance policy. If ever there was an industry where “read the small print” was considered a universal axiom, it is the insurance industry … and for good reason. A surefire recipe for all-round dissatisfaction is a crypto hack, followed by an announcement from the insurer that the policyholders will not be able to claim a payout because the type of hack/exploit was not covered by the terms of the policy. The challenge of protecting consumers and corporations in a digital environment against a wide range of highly technical scenarios just adds a whole extra layer of complexity to this mis-match in understanding.
The parametric cover architecture adopted by Binod not only provides an elegant path through the challenge of defining and understanding the scope of protection, but also lends itself to meeting the four design principles adopted by Neptune Mutual.
After designing the Neptune Mutual architecture and preparing some plans (including no small amount of Github repository), Binod set about forming a team to turn plans into action: Edward Ryall joined in mid-2021, shortly followed by Gillian WU. Edward brought with him experience of financing and operating startups, and Gillian brought her knowledge and network of the digital asset industry gained through her role as CEO of Huobi Asset Management.
Together the team set about raising funds to get from nought to somewhere. By the end of October a 1.75m USD Seed round had been closed with an impressive array of diverse investors, led by the renowned Fenbushi Capital and including one of the world’s most familiar names in crypto, Coinbase Ventures. The momentum of this success immediately carried forward into a subsequent strategic round where again, new and exciting opportunities opened up for Neptune Mutual. This time the round was led by Animoca Brands, as the vision of Neptune Mutual’s cover protection was found to be an ideal fit with the goal of protecting virtual assets in the metaverse.
During the course of November and December, financial resources were used to recruit human resources. In the space of just under two months Neptune Mutual has been transformed from code to community. The team is diverse and vibrant, willing and hungry to make a difference. Nearly 20 individuals have landed on Neptune, arriving from India, Hong Kong, the Philippines, Nepal, the UK, France, and Holland; all with one aim, to provide the best possible protection against crypto market risks.
So if 2021 was from nought to Neptune, what does 2022 hold in store? The collective will of the team is to build a successful future for Neptune Mutual and our Neptunian ecosystem (… and obviously go to its 14 moons!) … based on our four principles: security, minimise risk, scalability and UX. What a privilege to take on this challenge with the Neptune team.
