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 02, 2022, the Ankr protocol on BNB chain suffered a governance key compromise, allowing an attacker to mint 10,000,000,000,000 $aBNBc tokens and drain the DEX pool, resulting in the loss of approximately $5 million.
Ankr is a decentralized Web3 infrastructure provider that helps developers, decentralized applications, and stakers interact easily with an array of blockchains.
The team had announced changes to all Reward Bearing and Earning Tokens token models prior to the incident.
The $aBNBc token is an upgradeable token contract, which means that the admin can change the code at any time.
The exploiter stole the key of Ankr Deployer and minted himself 10T $aBNBc tokens as viewed from this transaction.
The preparator transferred 1.125 $BNB tokens to Ankr Exploiter address as a gas fee by controlling the key of Ankr Deployer, and then began to dump $aBNBc.
At the time of this writing, the exploiter address has approximately $5,132,588 worth of assets and has already deposited 900 $BNB tokens into Tornado Cash so far.
The attacker also sent between $3 and $4 million involving multiple transactions to the ETH mainnet through the Celer bridge.
Additionally, the exploiter used PancakeSwap to exchange $aBNBc tokens for $BNB and $USDC before converting them to $ETH.
The $aBNBc-related pool on PancakeSwap has been depleted, and the exploiter has consequently ceased dumping aBNBc.
After the incident, the team issued a statement on Twitter mentioning that they were currently working with exchanges to immediately halt trading. The price of the $ANKR token plummeted and was last observed trading at $0.02168.
In addition, they stated that all the underlying assets on Ankr Staking were safe at this time, and all infrastructure services are unaffected. The team will be drafting a plan to compensating affected users.
The exploiter deployed an attack contract, changed the upgradeable aBNBc contract to the malicious implementation, and then minted a massive amount of tokens for his wallet. This can either be caused by the compromise of the private key of the deployer during their migrations, or it could also potentially be an insider job where the attack was planned to coincide with the event.
Multisignature wallets and pause contract events are also industry standards for the majority of blockchain teams to mitigate against events of such nature to a greater extent.
Had Ankr partnered with Neptune Mutual to set up a dedicated coverage pool before the incident, the fallout might have been significantly mitigated. At Neptune Mutual, we understand the intricacies of the DeFi landscape, which is why we offer coverage to users who might face losses from vulnerabilities in smart contracts.
Our avant-garde parametric policies ensure that users are not mired in bureaucratic processes when proving their losses. Instead, they can readily claim their payouts and post an incident's confirmation and resolution through our rigorous incident resolution framework.
Our security team at Neptune Mutual can validate your platform for DNS and web-based security, smart contract reviews, as well as frontend and backend security. We can offer you a solution to scan your platform and safeguard your protocol for known and unknown vulnerabilities that have the potential to have catastrophic long-term effects. Contact us on social media if you are serious about security and have the budget, desire, and sense of responsibility to do so.
