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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

Understanding the Civilization Exploit

3 min read
Exploit Analysis

Learn how Civilization was exploited, resulting in a loss of funds worth 96.7 ETH.

TL;DR#

On July 8, 2023, an old contract belonging to Civilization was exploited, resulting in a loss of 96.7 ETH, worth approximately $179,000.

Introduction to Civilization#

Civilization is the decentralized cryptocurrency investment fund.

Vulnerability Assessment#

The root cause of the exploit is due to a vulnerability in the approval function for creating limit orders on Uniswap.

Steps#

Step 1:

We attempt to analyze one of the attack transactions executed by the exploiter.

Step 2:

The exploiter used approvals on the vulnerable contract to manipulate a callback function, sending funds directly to the Uniswap pools for sell orders.

Step 3: 

Thus, tokens such as CIV and USDC approved for CIVNFT were stolen and sent to the attacker.

Step 4:

The exploited funds, totaling approximately 96.7 ETH, were sent to this address and then  laundered to Tornado Cash.

Aftermath#

Following the exploit, the team acknowledged the occurrence of the incident and stated that the CivTrade contract had been put on hold. Neither the contract nor the users' wallets were breached, but the hacker was only able to exploit approvals to the contract to hack a callback function that sends funds directly to uniswap pools for creating sell orders.

Solution#

As part of the Neptune Mutual team, we believe this situation reemphasizes the importance of security measures and protective protocols in the DeFi space. Our first recommendation is regular and comprehensive audits for all smart contracts. Although Civilization had some security measures in place, it appears they were insufficient to prevent this incident.

Secondly, users should always exercise caution when granting approvals to contracts. The attacker in this case was able to exploit these approvals to their advantage, ultimately leading to the loss of 96.7 ETH.

The incident also underscores the value of DeFi insurance in reducing the impact of such attacks. Had the Civilization team set up a dedicated cover pool in the Neptune Mutual marketplace, the damage inflicted on its users could have been significantly mitigated.

Neptune Mutual provides coverage for losses stemming from exploits such as this, shielding users from the fallout of smart contract vulnerabilities. If the affected users had Neptune Mutual's parametric coverage in place, they could have claimed their losses quickly and efficiently without the need for loss evidence, thanks to our expedited claims system post-incident resolution.

Our marketplace is available on multiple popular blockchain networks, including Ethereum, Arbitrum, and the BNB chain. This broad reach allows us to serve a diverse array of DeFi users, offering them protection from potential vulnerabilities and bolstering their confidence in the ecosystem.

But Neptune Mutual goes beyond providing coverage. We also conduct evaluations of platforms for web-based security, DNS, frontend and backend security, intrusion detection, and prevention, amongst others. This holistic approach ensures our users are safeguarded from multiple fronts, thereby fostering an enhanced level of trust within the DeFi ecosystem.

Reference Source Beosin

By

Tags

Exploit Analysis Civilization Investment Fund Smart Contract Vulnerability Blockchain Hacks Decentralized Insurance Parametric Insurance

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