Spotlight: Four Pillars of the Neptunite Ecosystem

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.

The Four Pillars of Neptune Mutual#

Neptune Mutual’s four pillars are:

• Cover Creators
• Liquidity Providers
• Policyholders
• Token Holders

Let’s understand each of these entities in detail.

1. Neptune Mutual Cover Creators#

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.

2. Neptune Mutual Policyholders#

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.

3. Neptune Mutual Liquidity Providers#

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.

4. NPM Token Holders#

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.

To make purchasing NPM tokens easy, we have made them available in Uniswap and Sushiswap. They are publicly available in an NPM/USDC pool in Sushi on Arbitrum and also in a Uniswap-v2 pool on the Ethereum blockchain. Recently, we launched another NPM/USDC pool in SushiSwap on the BNB Smart Chain.

Neptune Mutual Ecosystem#

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.

You can follow us on X (Twitter) and join our Discord channel to get regular updates from us.