A dedicated liquidity pool is created along with the creation of a new cover contract. Each liquidity pool is collectively owned by the liquidity providers who supply the liquidity, benefit from the profits, and collectively bear the loss during a cover incident. The Neptune Mutual protocol does not own the liquidity pool.
Before supplying liquidity, the liquidity providers can evaluate a cover contract to ensure that it is up to their satisfaction. One can then provide liquidity in DAI/USDC/BUSD/ or other supported stable cryptocurrency. A liquidity provider needs to also stake 250 NEP or higher to participate in the pool.
To maximize return on investment, 25% of the idle/uncovered assets in the liquidity pool is supplied to Venus Protocol for lending. The interest received on loan is capitalized back into the liquidity pool, shared amongst all liquidity providers. The platform will deduct 2% of the profit generated to purchase (and burn) NEP tokens from decentralized exchange(s).
The liquidity providers collectively earn cover fees paid by the platform users. Initial liquidity provider will receive additional 10% rewards in NEP tokens.