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.
It’s official! Our parametric cover marketplace is set to go live on the Ethereum mainnet.
It’s official! Our parametric cover marketplace is set to go live on the Ethereum mainnet on Tuesday the 8th
November. The marketplace will launch with a diversified cover pool that includes cover products from Prime dApps
including: Uniswap, AAVE, Maker, Balancer and more!
/After over a year of fundraising, development, code audits, user testing on Polygon Mumbai and Avalanche Fuji
testnets, the growth of our Neptunite community and the support of our investor community, we are delighted to be able
to launch our marketplace live on the Ethereum mainnet.
Despite the tight market conditions we have chosen to launch our parametric marketplace in order to make parametric
cover protection available to users. Whilst we have seen a downturn in market conditions, hacks of digital losses have
been on the rise, and we firmly believe that a scalable solution to this problem is urgently needed in the blockchain
industry.
We have been working hard since the incorporation of our company in September last year: building the team, raising
funds, building the product, testing UX and of course testing security.
From the outset we have been driven by four design principles:
security, minimizing risk, scalability, and user experience.
In March 2022, the protocol launched on the Polygon Mumbai testnet with over 25k Neptunite community members
participating in gamified contests that saw them become cover purchasers, liquidity providers, and incident reporters.
Security expertise is a core strength of Neptune Mutual and we are fully committed to being open and transparent
about security, most particularly our own; we aim to lead by example and we are one of the few cover protocols with a
codebase that is fully open to the public on Github.
We have invested heavily in security and code audits, and we shall continue to do so on an ongoing basis. The
protocol underwent its first code audit, which was
conducted by leading security audit firm, BlockSec.
We commissioned Open Zeppelin to conduct a 2nd audit of our codebase and we have been working closely with them since
the month of August to review and refactor the codebase to take into account their recommendations. Security is our
first priority at Neptune Mutual and the team has invested a lot of time and energy over the last few months in
checking the extensive codebase of our marketplace. The Open Zeppelin audit report is now publicly available on their website and we will also be updating our
website with links to this report and also the audit report published by Blocksec.
Likewise, we perform rigorous assessments to gate-keep what projects are allowed to create cover products in the
Neptune Mutual marketplace. Our security assessments are based on a wide range of factors such as the project’s
overall IT security health, whether its open sourced, audit records, the project’s track record of incidents, the
experience and transparency of the team etc. We provide guidance to diversified cover pool creators in relation to the
risk of their portfolio of cover products and then review the cover creator decision relating to capital efficiency of
their diversified pool. The intent, as always, is to safeguard our ecosystem, and, as far as possible, find the right
balance of risk/return for both LPs and cover policyholders.
We are growing what we believe to be a robust Neptune Mutual ecosystem made up of key stakeholders, marketplace
actors, strategic partners, lending protocols, and of course, the Neptunites community.
Neptune Mutual Association is a not-for-profit entity whose primary purpose is to moderate the marketplace and
oversee the correct operation of the event reporting and incident resolution process.
There are four primary stakeholder roles in the Neptune Mutual marketplace:
Cover Creators – These are the blockchain projects and applications that create parametric covers
for their communities.
Cover Purchasers – These are the individuals and institutions that purchase cover policies
offered by the cover creators.
Liquidity Provider – These stakeholders supply liquidity to cover pools, which are then used to
underwrite cover policies in the marketplace.
Incident Reporter – These stakeholders are responsible for reporting and verifying incidents that
may trigger payouts.
As additional utility of the NPM token is being developed, the marketplace will launch before the NPM Token
Generation Event (TGE). This means that an interim reporting and incident resolution will be used until such time as
NPM tokens are in circulation and NPM token holders are available to participate, as Incident Reporters.
The interim reporting and incident resolution will be based on the existing model, albeit with PoT (proof of
authority tokens) as opposed to NPM tokens. PoT tokens will be held by a small and limited “community” and the process
will be governed by the Neptune Mutual Association.
You can learn more about the Neptune Mutual ecosystem here.
Our parametric marketplace offers a new approach to mitigating the risk of hacks of CeFi, DeFi and Metaverse digital
assets. Cover policies will be available for a range of well-known projects, including: AAVE, Balancer, Curve,
Gnosis-Safe, Uniswap V2, maker DAO and Synthetix. We hope cover creators will be adding to the cover products
available in the marketplace over the coming months.
We have designed the marketplace in a way that the claims process, based on the validation of a hack event as opposed
to individual loss claims, should appeal to cover purchasers.
Similarly, we hope that liquidity providers are attracted by the transparent nature of the stablecoin pools that are
decoupled from the influence of price volatility from project tokens. This transparency should help LPs make decisions
when weighing up the risk/return investment associated with providing liquidity to each respective cover pool.
Perhaps one of the most important, and often overlooked, aspects of liquidity provision in the cover protection
sector is that of an exit strategy for LPs. We have provided a solution to this by allowing LPs a regular and
recurring window of opportunity to exit their position, if so desired.
Our team worked hard to bring forward the launch of Diversified Cover Pools to coincide with the mainnet launch. We
believe Diversified Cover Pools will complement the Dedicated Cover Pools, as they provide LPs the option to select
either leveraged or unleveraged cover pools depending on their risk/return appetite, and depending on the market
sector they are interested in.
Users will be able to access both dedicated and diversified cover pools on Neptune Mutual. Dedicated cover pools
means the underwriting capital in the pool is only available to a single cover project. Popular blockchain projects or
protocols that handle high-value transactions and have large communities will benefit from dedicated cover pools.
On the other hand, diversified cover pools supply
liquidity to a basket of cover products. There are a range of differences between dedicated and diversified
pools, both for policyholders and LPs, and these have been covered in depth in our blog articles.
Each cover product in this basket relates to a specific project and has its own card in the marketplace, as well as
its own specific cover policy trigger parameters.
There are several video tutorials available if you need a refresher before the mainnet
launch. You can also chat with the moderators on Discord or Telegram if you have any questions.
If you’d like to learn more about the protocol and its mechanics, please visit docs.neptunemutual.com.
You can also check out Neptune Mutual’s Resource Section for
informative articles, protocol update reports, partner profiles, hacks & exploit analyses, and more.
Finally, there’s still time before the mainnet launch. Try out the various functionalities of the Neptune Mutual
marketplace before mainnet launch by trying it out on Avalanche Fuji
testnet today.
We hope that our parametric marketplace will prove to be a useful tool in the mitigation of the very prevalent and
real risk to digital assets posed by cyber criminals. To support our aim of protecting digital assets please join our
community and take action to mitigate the risk of hacking of your digital assets.
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.
