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.
Learn about the four pillars of the Neptune Mutual ecosystem from this in-depth article.
DeFi (Decentralized Finance) has emerged as a revolutionary innovation, promising an inclusive, efficient, and transparent financial ecosystem. Maintaining robust security measures has become paramount for the sustainability and credibility of this innovative financial landscape.
However, this expanding ecosystem has been attracting the attention of malicious actors seeking to exploit vulnerabilities within the system. This has led to an increase in sophisticated cyber attacks, fraudulent schemes, and security breaches.
That’s where Neptune Mutual comes in. Neptune Mutual is a DeFi protocol focused on the protection of users’ funds from such threats. We have created a cover marketplace where Web3 projects can create cover pools from which users can purchase cover policies for their investments.
For Neptune Mutual to function seamlessly, there's the involvement of four major entities, which we call the pillars of the Neptunite ecosystem. In this article, we are going to explain them.
Cover creators are entities that offer insurance coverage on Neptune Mutual. Blockchain projects or companies that want to protect their community create covers in our marketplace for their users to purchase and insure their funds.
The insurance coverage process at Neptune Mutual starts with cover creators creating cover pools. Cover creators would reach us through our contact page with their submissions to create covers. Our team analyzes the projects’ background and risk profiles to determine their viability. If suitable, we reach back to the projects to proceed with the next steps.
It typically involves deciding several aspects of the cover policy, like terms and conditions, parameters and exclusions, types of risks to be covered, liquidity pool limits, policy fees, and so on. Subsequently, the cover creators collaborate with our team to finalize them, ensuring seamless cover creation.
Neptune Mutual has two types of cover pools, namely:
Dedicated cover pool
Diversified cover pool
A dedicated cover pool is created for an individual project, whereas diversified cover pools are created to provide liquidity to multiple cover products.
Policyholders are the users who purchase cover policies from the Neptune Mutual cover marketplace. Policyholders pay a premium, known as a policy fee, in exchange for coverage of a specific amount for a certain period of time.
Being a parametric cover marketplace, Neptune Mutual doesn’t require policy purchasers to provide evidence of loss. Similarly, loss adjusters are not required to verify and/or analyze claims.
Learn how to purchase a policy in this tutorial video:
When it comes to policy fees, the protocol automatically determines the amount of policy fee a purchaser should pay. The protocol takes numerous variables into account, including policy term/coverage duration, sum insured, utilization ratio, total pool balance, reassurance pool, etc.
The cover pool’s utilization has a significant impact on the policy fee calculation. All other things being equal, a pool with a low utilization ratio charges lower policy fees than one with a high utilization ratio. A pool with a high utilization ratio charges higher policy fees, which in turn provide higher returns to liquidity providers, which provides an incentive to LPs to contribute more stablecoin liquidity to increase the pool’s underwriting capacity.
A liquidity provider (LP) is any user who supplies liquidity to a cover pool. To provide liquidity, users first need to stake the required number of NPM tokens, following which they can deposit stablecoins into the pool. LPs receive a portion of the cover fees paid into the pool by cover purchasers as a return for supplying liquidity.
Here’s a video on how to add liquidity to cover pools in the marketplace:
A cover pool is owned by all the liquidity providers and not by Neptune Mutual. This means that the gains from cover fees are distributed proportionally to all the liquidity providers according to their investment amounts.
The marketplace has cover pools for a wide range of DeFi projects, from which LPs can choose to provide liquidity. As mentioned earlier, they are of two types: dedicated and diversified. In a dedicated cover pool, the liquidity is dedicated entirely to one project. A diversified cover pool distributes liquidity into a portfolio of cover products.
You will receive POD (Proof of Deposit) tokens in exchange for supplying liquidity. The POD tokens are assets that generate revenue (or loss). PODs can be redeemed in exchange for stablecoin during the withdrawal period, for which details are provided for each respective pool.
Let’s understand NPM tokens in brief. NPM is the governance token of Neptune Mutual, and it’s the foundation of our ecosystem. It plays a central role in powering our decentralized marketplace.
The fourth pillar of the Neptunite ecosystem is token holders, who are users who own and hold the NPM tokens in their wallets. Accessing most features of the Neptune Mutual Marketplace requires holding a predefined number of NPM tokens.
Whether you're looking to purchase cover policies, provide liquidity to cover pools, or report incidents, holding NPM tokens is crucial. Similarly, projects that want to create cover pools also need to hold and stake NPM tokens.
In addition, token holders are eligible to access bond pool features and mint NFTs. You can check out our blog explaining all the use-cases of the NPM token to learn more in detail.
In conclusion, the four pillars—cover creators, policyholders, liquidity providers, and token holders—are the important aspects of the Neptunite ecosystem. The synergy among these entities forms the heart of the Neptune Mutual ecosystem.
If you have a project in DeFi, CeFi, or Metaverse that you want to protect along with your community, you can reach out to us. We’ll help you create cover pools for your projects in our cover marketplace. Our marketplace is available on Ethereum, Arbitrum, and BNB Smart Chain.
