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Neptune Mutual to Close Cover Marketplaces

5 min read
Neptune Mutual Final

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:

CEX Listing#

“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.

Growth Performance#

The above point invariably leads to the question

“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:

The DeFiInsurance Narrative#

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.

Continue to Invest in Growth, or Refund?#

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.

What's Next?#

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.

Disclaimer:#

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.

By

Taking A Closer Look at Roe Finance Exploit

3 min read
Exploit Analysis

A price manipulation attack at Roe Finance allowed a hacker to be profited by $80,000

TL;DR#

On January 11, 2023, Roe Finance was exploited using a price manipulation attack, causing a loss of $80,000.

Introduction to Roe Finance#

Roe Finance is a non-custodial liquidity markets protocol built on top of AAVE. It is based on the largest derivative opportunity embedded in Uniswap and tries to solve the impermanent loss for liquidity providers.

Vulnerability Assessment#

The root cause of the vulnerability is due to the limited liquidity of the pool, which led to the manipulation of the price oracle.

Steps#

Step 1:

Let's take a close took at one of the attack transactions executed by the exploiter.

Step 2:

This attacker-controlled address initially borrowed 5,673,090 $USDC from Balancer, and deposited them to roeUSDC pool.

Step 3:

The same address borrowed 2,953,841,283 UNI-V2 from the pool, while leaving debt to the contract creator, and then proceeded to deposit the borrowed tokens to the pool.

Step 4:

After repeating the previous step roughly 49 times, the contract address burnt 0.295 UNI-V2 and earned 2.96 $WBTC and 51,661 $USDC in return.

Step 5:

They then gave 26,024 USDC to UNI-V2 and invoked the Uniswap V2 sync function. This manipulated the price of the UNI-V2 obtained from the oracle.

Step 6:

Then, they borrowed back 5,673,090 $USDC that had been put into the roeUSDC pool earlier, swapped about 0.66 $WBTC for 14,345 $USDC, and repaid the $USDC back to Balancer.

Step 7:

The profit from these were 2.29 $WBTC and 39,982 $USDC, roughly amounting to $80,000.

Aftermath#

At the time of writing, the team had not acknowledged the occurrence of the incident.

Solution#

Roe Finance encountered an unfortunate incident when a price manipulation attack exploited vulnerabilities within their system, resulting in a significant loss of $80,000. The vulnerability stemmed from the limited liquidity of the pool, which paved the way for the manipulation of the price oracle, leading to substantial financial losses for the platform.

In terms of a solution, while the attack method may have been difficult to predict, the importance of data providers like ChainLink in regulating Oracle price manipulations becomes evident. Strengthening oracle mechanisms can help reduce the likelihood of such attacks in the future.

In an effort to alleviate the aftermath and potential impact of such attacks, Neptune Mutual emerges as a crucial asset. Although we may not have prevented the hack itself, having a dedicated cover pool within the Neptune Mutual marketplace could have significantly mitigated the resulting losses for Roe Finance. Our parametric policies empower users who experience losses due to smart contract vulnerabilities to claim payouts without the cumbersome requirement of exhaustive loss evidence, enabling swift recovery once incidents are resolved through our governance system.

Neptune Mutual's commitment to security also involves a comprehensive evaluation of the platform, encompassing DNS and web-based security, frontend and backend security, intrusion detection and prevention, and other vital security considerations.

Reference Source BlockSec

By

Tags

Exploit Analysis Roe Finance Price Manipulation Blockchain Hacks Aave Decentralized Insurance Parametric Insurance Uniswap Balancer

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