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.
Popular DeFi Apps diversified cover pool launches in Neptune Mutual marketplace dApp.
We are delighted to announce that one of our partners will create and finance initial liquidity for a new diversified
cover pool: “Popular DeFi Apps”. Projects to be included in the pool’s portfolio include: 1Inch, Sushiswap, Compound,
Uniswap V3, Convex Finance, GMX, dYdX, AAVE V3 and Bancor.
The combination of these projects have a TVL in excess of 8.6 billion USD at the time of writing. This compares with
the 277 million USD of TVL in the DeFi Insurance category, underlining the extent to which digital assets remain
uninsured and the extent to which DeFi insurance needs to scale for users to have a better protection of their
investments. The Popular DeFi Apps pool represents an investment opportunity for stablecoin investors; you can find
out more about funding cover pools in our articles about Bootstrapping Cover Pool
Liquidity, and Understanding
Underwriting Capital. To date, liquidity providers (LPs), have funded cover pools in the Neptune Mutual
marketplace with in excess of 200K USD of capital, and this is expected to grow significantly over the course of 2023
- you can track the progress of TVL in DeFillama.
As with the Prime dApps diversified cover pool, a moderate level of leverage will be allowed to improve capital
efficiency for better LP returns, given not all projects in the pool are expected to have incidents at the same time.
Keep an eye out for the diversified pool leverage number in the Popular DeFi Apps card (the Prime dApps card shows D6
- that refers to Diversified and max 6x leverage).
We will be sharing more information about each of the respective cover products within the Prime dApps portfolio over
the coming weeks, however these are all projects that are well recognised with significant amounts of TVL and/or
transactions on a daily basis and are well known to the DeFi community. We recommend users to take the opportunity to
purchase covers in the promotional period where the premium fees are attractive compared to other platforms.
We are open to answering questions to the communities of 1Inch, Sushiswap, Compound, Uniswap V3, Convex Finance, GMX,
dYdX, AAVE V3 and Bancor. If you would like us to do an AMA session in one of these communities then please reach out
to the respective community managers and ask them to invite us to explain how these cover policies can help build
confidence in these projects by providing added protection against security risk.
The cover cards for these projects will go live when the diversified cover pool is launched on Friday the 20th
January.
If you have any questions regarding the use of the cover marketplace
dApp then you can contact us in Discord or Telegram and we are here to help.
We published our annual report about our
activity and progress in 2022, and if you scroll down to the About Us
section in our new website you will find our roadmap for 2023. As you will see we have just hit our first milestone of
the year, and you will also see there is much more to come.
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.
