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.
We can now announce that cover policies will be available for the Binance Exchange.
We can now announce that cover policies will be available for the Binance Exchange in our marketplace from Thursday
1st December. Binance is set to become the first project for which a dedicated cover pool is created.
The Binance Exchange cover will have its own dedicated cover pool and will provide users a means to mitigate the risk
of loss of assets as a result of cybersecurity incidents. Binance Exchange is the first CeFi exchange for which
parametric cover will become available in the Neptune Mutual marketplace.
Our CEO, Binod Nirvan, said,
We are glad to announce that the Binance exchange custody cover has been added to our platform. Binance, the
biggest cryptocurrency exchange in the world, was selected as the first dedicated cover product in order to provide
the Binance community an access to parametric cover policies. Neptune Mutual is the first decentralized cover protocol
to offer a parametric cover policy for the Binance exchange.
In contrast to diversified covers, the Binance pool will be a dedicated cover. The Binance dedicated pool will offer
guaranteed payouts, which will enhance the user experience. In addition to guaranteed payouts, the Binance community
will also enjoy quick claims processing, eliminating the need to wait, submit a claim, and prove losses individually.
A message sent by CZ, CEO of Binance, that was shared on Twitter earlier in the month, commented on the need for
Binance to lead the industry by example in terms of transparency, proof-of-reserves, and insurance funds. Binance
Exchange created its own user insurance protection fund (Secure Asset Fund for Users or SAFU) back in 2018, and it was
reported earlier this year to have
exceeded $1B in valuation.
The Binance Exchange cover that can be found in our marketplace is completely independent from Binance. It is a
complementary solution to the SAFU fund and it is a solution with a very different approach, not least of which is
that user payouts are not determined by Binance in relation to individual loss (or other criteria they may use), but
rather by the marketplace incident resolution process based on an evaluation of whether the policy parameters have
been triggered or not.
Clicking on the Binance card will lead you to more detailed information about the project and its corresponding cover
policy.
You can purchase a policy after having carefully reviewed the parameters and terms of the cover policy. If an
incident occurs, and is validated by the incident resolution process, then all cover policy holders are eligible to
receive a payout. No individual loss claims need to be assessed, making the process scalable, fast and reliable.
You can also provide liquidity to the dedicated cover pool. Currently, LPs generate yield resulting from the fees
paid by cover policy holders. In addition, dedicated cover pools lend a small percentage of liquidity to low risk
lending protocols, such as Aave and Compound, in order to improve the returns to LPs.
We have designed into the protocol a number of other means by which LPs can generate returns, including Proof of
Deposit (POD) staking, and as well as other staking mechanisms; these are not currently available but we expect cover
creators to launch these over the coming weeks and months. To help you understand the risks and returns of becoming an
LP, and understand the difference between parametric and discretionary cover, we have written a comprehensive article
on “Understanding
Underwriting Capital”.
We recognise that sourcing liquidity for cover protocols is one of the biggest constraints to widespread adoption of
cover in the blockchain industry, and so we have paid particular attention to LP needs in terms of transparency of
risks and returns of the stablecoin pools and also exit strategies for LPs.
For those of you who have interacted with either of our testnet applications over the last couple of months, the
process of navigating through the marketplace is the same.
We have published a number of in-depth explainer videos in its YouTube channel,
and you can also visit the resource section for informative articles,
updates, cover creator profiles, hack analyses, and more.
Moderators are available to answer questions and share information in our Discord and Twitter communities.
Founded in 2017, Binance is the largest centralized crypto exchange ranked by daily volume traded. The exchange
facilitates spot, futures, and derivatives trading via its online platform and mobile app.
As a CeFi exchange, it operates order books and offers custodial services of digital assets to facilitate trading.
Binance also offers lending and borrowing services, as well as other features such as staking and NFT sales to its
user base.
Neptune Mutual project safeguards the Ethereum community from cyber threats. The protocol uses parametric cover as
opposed to discretionary insurance. It has an easy and reliable on-chain claim process. This means that when incidents
are confirmed by our community, resolution is fast.
Join us in our mission to cover, protect, and secure on-chain digital assets.
