In what could be an important step towards the maturation of the decentralized insurance space, Yesterday a claim was filed with the insurance protocol for DeFi projects, Cover, after the hack of USD 19 million in Dai of Pickle Finance, and so far, most users want to see compensation.
According to the claim on Cover’s website filed on November 21, There have been 99 votes at the time of publication. throwing approximately 9,800 COVER tokens (more than 99% of respondents’ tokens) on the “yes” option to pay affected coverage holders. Ivan Martinez, Cover technical advisor, said on Twitter that if the vote is approved, the claim will go to your Claim Validity Committee “to decide whether it is valid for a payment or not.”
— DeFi Ted (Bakes) (@DeFi_Ted) November 21, 2020
Although the hacker escaped with approximately $ 19 million in funds from Pickle users, Cover clarified that any payment was not going to cover the entire loss. In an interview with Cointelegraph, Cover’s semi-anonymous lead developer, Alan, said that after CVC approval, “all PICKLE CLAIM token holders will be able to exchange 1 CLAIM token for 1 DAI”, assuming the Claim Validity Committee, or CVC, approves a 100% payment to holders, as Alan expects.
There are currently over 340,000 Pickle CLAIM tokens in circulation, where they are traded on secondary markets for USD 0.9. Alan pointed out that this could generate some “arbitrage opportunities” for traders awaiting proposal approval.
Pickle’s claim is one of the first test cases of a decentralized insurance protocol that uses a blockchain to vote on coverage. Like many in the crypto space were affected by hackers taking advantage of vulnerabilities since the DeFi-mania began, the response on social media has been favorable to a payment, but also skeptical.
Many are concerned about what Cover will decide, since yesterday’s attack on Pickle did not use a flash loan attack, a common tactic among hackers who attack DeFi protocols, but an evil tool that, according to some, looks like More to an exit scam. Hackers were able to swap funds between a malicious copycat contract and Pickle’s performance vault, called jar cDAI, leading users to notice that the vault had been emptied.
Under Cover’s guidelines, the project establishes which will pay claims for exploits or certain smart contract attacks, specifically referencing flash loan attacks, resulting in “a material loss of funds from the smart contract or smart contract system with funds transferred to another address that the original owner (s) do not control or the funds become permanently irrecoverable.”
Regardless of what conclusion Cover reaches, its decision will have repercussions for the DeFi community. In addition to Pickle Finance, hackers are targeting multiple DeFi protocols this year, resulting in the loss of millions of dollars in funds, from Harvest Finance, Value, Akropolis, Cheese Bank, and Origin to name a few. A robust selection of secure protocols like Cover can help mitigate the consequences of such attacks.
Alan de Cover said:
“I think DeFi coverage is essential for the mass adoption of these protocols. Some of these protocols that people are creating will change the financial industry forever, but since we are at an early stage, there are many attack vectors present and many more unknown. Our job is to allow users to experiment with game-changing protocols while remaining protected against the risk of vulnerabilities. “
Voting on Pickle’s claim will end on November 23 at 11:59 am EST.