Neptune Mutual is a blockchain-based insurance protocol that protects the Ethereum community from modern cyber threats targeting financial products. It follows a parametric insurance coverage policy to protect users from risks and digital asset loss. ^[1]

Binod Nirvan, Edward Ryall, and Gillian Wu founded Neptune Mutual.

Overview

Established in 2021, Neptune Mutual operates as a parametric insurance protocol built on the Ethereum blockchain, offering coverage tailored to risks in digital asset transactions. It introduces guaranteed payouts upon predefined events termed "cover incidents," determined through a reporting consensus involving NPM tokenholders. This system ensures immediate payouts to policyholders without proof of loss requirements compared to other protocols. Tokens from the invalid camp are forfeited post-resolution, with some burned and others awarded to the valid camp. ^[2]

Neptune Mutual utilizes transparent parametric triggers to respond to events such as smart contract breaches or exchange hacks, automatically triggering payouts. Users can report incidents and earn rewards within the platform. As a cover marketplace, it allows Web3 projects to create cover pools, enabling investors to purchase cover policies and liquidity providers to enhance pool capacity. If incidents meet predefined parameters, Neptune Mutual facilitates prompt stablecoin payouts to policyholders. ^[2]

Parametric Coverage

Parametric coverage shields policyholders from financial losses resulting from specific occurrences, referred to as cover incidents. Policyholders pay a premium, or policy fee, to secure coverage for a defined period and amount. The parameters of each cover pool are verifiable, transparent, and consistent. Unlike traditional models, users are not obligated to provide evidence of loss, and claims are not subject to verification or analysis by loss adjusters. Consequently, claims payment is expedited and straightforward without requiring a case-by-case review. ^[3]

Technology

Liquidity Gauge Pools

The Liquidity Gauge Pools in Neptune Mutual incentivize user engagement and long-term commitment by allowing users to lock their liquidity provider (POD) tokens in exchange for NPM token rewards. This mechanism encourages liquidity provision and strengthens community governance by granting users veNPM voting power. Users receive POD LP tokens when providing liquidity, which can be staked in the Liquidity Gauge Pool to earn NPM token rewards, influenced by veNPM voting power obtained through locking NPM tokens. ^[4]

This system ensures proportional emissions distribution, maintaining fairness among participants. veNPM holders get enhanced rewards and voting power based on lock duration. Users with veNPM tokens receive a larger share of emissions, increasing rewards. The gauge system allows emission redirection to preferred pools without gas fees. Incentivizing participation and boosting rewards and voting power foster community engagement and decentralized governance.^[4]

Proof of Deposit (POD)

Supplying stablecoin to a cover liquidity pool, known as a vault, results in the protocol issuance of Proof of Deposits (PODs) tokens, representing a proportional share of the vault. Each cover has its own liquidity pool and distinct POD. It's important to note that PODs from different liquidity pools are separate smart contracts and cannot be exchanged between them. As policy fees are automatically compounded into the liquidity pool, additional liquidity contributions may lead to fewer units of PODs being generated. ^[5]

Gauge Controller Registry

The Gauge Controller Registry plays a key role in Neptune Mutual's governance, allowing the community to participate actively in decision-making. By listing insurance pool PODs in the registry, eligible pools can receive NPM token block emissions as incentives. Monthly, the community votes on proposals through a decentralized Snapshot governance portal, ensuring transparency and fairness. Once a consensus is reached, the GaugeControllerRegistry contract is updated to reflect the new allocations. ^[6]

The gamified gauge voting process enhances community engagement and aligns interests with platform growth. It encourages users to participate more actively, benefiting third-party protocols by incentivizing veNPM token holders to redirect NPM emissions to their pools. Third-party protocols can offer native tokens as rewards to veNPM token holders, attracting more liquidity providers and strengthening the insurance pool. ^[6]

Neptune Mutual NFTs

Neptune Mutual's NFT collection is categorized into Free to Mint and Soulbound types, aiming to offer diverse and inclusive experiences. Free-to-mint NFTs are unique artworks that users can mint without charge, obtained by progressing through levels and engaging with the platform. On the other hand, Soulbound NFTs are personalized for individual users and cannot be transferred or sold after being claimed. These NFTs grant exclusive access to the benefits and functionalities of the NFT ecosystem. To mint additional Neptune Mutual NFTs, users must possess a Soulbound NFT, ensuring that only dedicated users with at least 10 NPM tokens can access the platform's premium rewards and features. ^[7]

Neptune Mutual has a variety of NFT collections, each with different themes, providing users with a diverse selection from which to explore and trade. In line with the commitment to making blockchain-based collectibles accessible, these collections are provided for free. Whether drawn to mythical beasts or tales of Greek mythology, individuals are invited to immerse themselves in the wonders of the ocean's mythology. ^[7]

The Neptune Mutual NFT program features three distinct categories of characters: ^[7][8]

• Beasts: These characters serve as the adversaries within the collection, embodying threats and dangers prevalent in the DeFi space.
• Guardians: The Guardians represent a group of divine beings committed to safeguarding the DeFi waters alongside Neptune.
• Neptune: As the primary figure in the NFT collection, Neptune, the Roman god of seas and freshwater, orchestrates strategies to protect the DeFi realm. He leads the Guardians in combatting the Beasts' threats.

NPM Token

The Neptune Mutual token (NPM) has a maximum supply of 1 billion tokens, with issuance limits for each category. It may take around ten years, until mid-2033, to fully mint all NPM tokens. Tokens allocated to strategic and institutional investors are subject to a cliff and vesting schedule lasting up to two years, varying by region. Additionally, team tokens will be vested over the next five years, resulting in approximately seven years of token lockup since the project's inception. ^[9]

Tokenomics

NPM had the following distribution:^[9]

• Lockup, Vesting, and Circulation:
  • Seed and Strategic Round: 8.43%
  • Private Round: 2.7%
  • Team Tokens: 16%, 12-month lockup followed by a 4-year vesting schedule
  • Reserves and Foundation: 20%. 12-month lockup
  • Grant and Ecosystem: 15%, 12-month lockup
  • Security Research and Future Development: 12.87%, 12-month lockup
• No Lockup
  • Community Incentives: 15%
  • Liquidity Pool: 10%

veNPM

The veNPM token in Neptune Mutual incentivizes long-term engagement by allowing users to lock their NPM tokens for a minimum of 1 week and a maximum of 208 weeks. Locking NPM tokens grants users veNPM tokens and increased voting power, capped at 4x. Voting power decreases gradually until it reaches 1x over the lockup period. VeNPM tokens are non-transferable, and their voting power depends on the lockup duration, encouraging sustained commitment to the Neptune Mutual community. ^[10]

Governance

Cover Incidents

A cover incident in the Neptune Mutual Protocol is a situation where all cover rules and exclusions are met. Upon reporting an incident, a governance process is undertaken to determine a resolution, which can result in either an "Incident Occurred" or "False Reporting" outcome. The protocol penalizes users attempting to cheat to deter fraudulent behavior by seizing all their stakes. Participation in the governance system is incentivized, with users who report incidents potentially earning extra NPM rewards within a short timeframe, typically one week. ^[11]

During a cover incident, anyone can report it and receive a 5% commission on the protocol's fee earnings. It's crucial to ensure that all terms and rules of the cover are met for an event to qualify as a cover incident. Users who agree with the incident can contribute additional votes or stakes, while those who disagree can dispute or refute the report. Disputing allows the reported incident to be marked as "False Reporting" once, after which users can refute by adding more NPM votes or stakes. ^[11]

There is a 7-day reporting period for users to participate in the governance process, with the end of this period known as the "Resolution Date." The outcome of the cover incident is determined on the resolution date, with users who vote against the majority forfeiting all their stakes to the majority voters. ^[11]

Partnerships

XT Labs

Neptune Mutual and XT partnered to implement parametric insurance for user protection. ^[12]

“As the world moves from Web2 to Web3, the protection of user assets and liquidity pool[s] become more sufficient to [the] blockchain industry. We believe Neptune Mutual’s parametric insurance model with guaranteed payout to policyholders (upon incident resolution), is much more effective compared to discretionary models” - Frank Quinn, Head of XT.Labs

Avalanche

Neptune Mutual announced the launch of a Gleam competition on October 8, 2022, to inaugurate its marketplace on the Avalanche Fuji testnet. This event followed extensive security evaluations, UI optimizations, and the implementation of Diversified Cover Pools. Additionally, the competition took place on the Avalanche Fuji testnet, marking a change in operations. ^[14]