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 December 05, 2022, Roast Football was a victim of an attack, in which the exploiter repeatedly swapped $RBF and $WBNB tokens by manipulating their reward system to book a profit of approximately 12 $BNB worth $3500.
The occurrence of this exploit is unique when compared to the other analyses that we have covered. The project's smart contract operation also relied on the block number and time stamp, which was eventually exploited by the attacker.
Roast Football $RBF is a BSC token, which according to the team, follows the roast beef model for the world's first soccer hot spot, as well as the lottery mechanism double economic model.
The Roast Football contract includes a randMod function that uses the parameters buyer and buyAmount to generate a random number. This random number is then used to determine whether the withdrawDistributor or withdrawPlazz functions on the distributor contract should be called.
They have a lottery mechanism that gives users a chance of receiving a 10x reward when they purchase the $RFB.
This perpetrator only purchased $RFB tokens when he was certain he would win the lottery.
If the exploiter does not win the lottery, the function will revert, and losing in the gas fees.
The exploiter was funded by Tornado Cash, and his lottery profits for winning two out of fifty times are still available at his address.
There are many a potential issues with the implementation of this function. The use of block number, and time stamp in the generation of a random number can be exploited by an attacker who can predict these values. This would allow an attacker to manipulate the outcome of the random number generation, and gain an unfair advantage in the distribution of the funds.
The use of catch statement to ignore any errors in the transfer of funds may also hide potential issues with the transfer of funds.
The impact of this attack could have been significantly reduced if Roast Football had a dedicated cover pool in the Neptune Mutual marketplace. We have standard terms and conditions in place to provide coverage to various types of DeFi attacks, but we are also open to make exceptions in some cases.
Users who purchase our parametric cover policies do not need to provide loss evidence in order to receive payouts. Payouts can be claimed as soon as an incident like this is resolved through our governance system.
Additionally, auditing the smart contracts for vulnerabilities is insufficient due to the existence of varying attack vectors. Neptune Mutual's security team can also assess your preferred protocol for DNS and web-based security, smart contract evaluations, and frontend and backend security.
