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 are excited to share the news that our parametric cover marketplace is now live.
We are excited to share the news that our parametric cover marketplace is now live . The first cover creator in the
marketplace has created a diversified cover pool called “Prime dApps” with cover products that provide parametric
cover policies for some of the most well-known decentralized Applications (dApps) in DeFi.
Gillian Wu, co-founder of Neptune Mutual said,
We are delighted to be able to announce the launch of the first cover pool in the Neptune Mutual
marketplace.
The Prime dApps Diversified Cover Pool will offer 7 different cover products to cover purchasers, and will offer
leveraged returns to liquidity providers. We are working hard with cover creators to bring Dedicated Cover Pools to
the marketplace very soon, and we expect the number of cover products to grow progressively over the coming months.
AAVE, MAKER DAO,
UNISWAP and Others Lead The Lineup of DeFi Apps on Neptune Mutual Marketplace.#
As of 11h30 am UTC on November 8th, 2022, you will be able to access cover products for: Aave, Balancer, Curve,
Gnosis Safe, Uniswap, MakerDAO, and Synthetix. You will be able to review a summary of the cover products available
simply by looking through the cards in the diversified cover pool:
Cover products under the diversified cover pool
Clicking on any of the cards will lead to more detailed information about each respective project and the
corresponding cover policy. Aave Ethereum Market V2, for example, provides a cover policy that mitigates the loss of
assets as a result of a vulnerability in smart contracts on the ethereum blockchain for Aave Ethereum market V2. One
of the parameters in the policy defines a minimum loss of 5M USD, meaning that the loss to the protocol resulting from
a smart contract hack needs to be at this amount to trigger this parameter. Obviously, all the cover parameters need
to be reviewed carefully by cover purchasers to ensure that the policy matches their needs and expectations. In
addition all users should read the full terms and conditions of the marketplace.
Cover products that have liquidity supplied by a Diversified Cover Pool are labeled with a D, followed by a number
that indicates the maximum multiplier factor of the cover pool, e.g. D6 means 6x leverage at max in total for the
cover pool, though in reality subject to tech team assessment, most of the individual protocols will be subject to a %
limit for its constituent weight, hence the effective max multiplier (leverage) shall be smaller than the indicated
number. The max percentage of liquidity allocated to a specific product is indicated by the next number, So for the
AAVE card it is labeled D6X90, meaning AAVE is allowed to consume a max of 90% liquidity had there been no multiplier.
So, as an example, for the Prime dApps diversified pool with 7 cover products and 6x max leverage, a liquidity of 1M
would give a Total Capacity of 6M. Selecting one cover product out of the seven, the maximum capital available for
this product is 1/7 of 6M = 860k.
Applying the “weight” of 90% (D6x90) to the maximum capital available to this product would be 90% of 860K = 774K.
The cover fee amount (paid by cover policy purchasers when buying a cover policy) is calculated dynamically and will
change depending on how much of the capital allocated to the particular cover product has been utilized i.e. how much
of the underwriting liquidity has been committed through the sale of cover policies. As utilization of liquidity in
the pool rises as a result of cover policy sales, so the cover fee of each subsequent cover policy increases. The
cover card shows the spread between the lowest price, or floor price, of the cover policy, and the maximum price, or
ceiling price, of the cover policy.
Users should be wary of comparing the pricing of parametric cover and discretionary cover from other protocols as the
cover is very different in nature. In the case of parametric cover, if an incident is validated, ALL cover policy
holders can claim a payout, without making an individual loss claim, irrespective of whether the user has suffered a
loss. The parametric approach to cover protection whereby incidents are assessed, and not individual loss, is what
makes parametric policy payouts both fast and reliable.
In addition to purchasing parametric cover policies, you can also supply liquidity to the Prime dApps liquidity pool.
This stablecoin-backed cover pool provides the underwriting capital that enables the pool to fund the cover policies
of the portfolio of cover products. In return, liquidity providers generate a yield on the liquidity provided directly
from the cover policy purchaser fees.
Other apps in the DeFi, CeFi and metaverse spaces are expected to debut on the Neptune Mutual marketplace in the
coming weeks.
Visit app.neptunemutual.net to access the Neptune Mutual Marketplace and
engage with the various stakeholder roles. There are several video tutorials available on how to
navigate and interact with the protocol.
