End of the Cover Protocol project
Cover Protocol (COVER), an insurance project for decentralized finance (DeFi) has closed its doors, according to an announcement made on September 5. Users are urged to withdraw their funds from the protocol as soon as possible, as the developers will no longer maintain the user interface. The remaining team will redistribute the remaining treasury funds equally to token holders.
The shutdown comes after the development team suddenly quit the project. The remaining team communicated their wish to end the project:
“The decision was not easy to make. We were extremely disappointed to hear that the development team left so suddenly ”.
Cover’s descent into hell also follows a hack in December 2020. Indeed, the protocol itself had suffered an attack, which can be more or less a shame for an insurance policy. The hackers had managed to create 40 quintillion COVER, which had dropped the price of the token by 96% in a matter of hours. The hacker returned the 4,350 Ethers (ETH) he had stolen, attaching the following message to the transaction:
“Next time, take care of your own problems. “
What is decentralized insurance used for? Are there other projects?
What was the idea of the project? Cover Protocol allowed users to cover themselves against risks related to smart contracts such as bugs or attacks. By blocking funds on Cover as collateral, users received tokens that covered them in the event that a DeFi protocol they were investing in fell victim to a breach or attack. The value of the collateral depended on the estimated risk of each DeFi protocol.
There are other insurance projects aimed at the DeFi ecosystem such as Opium Insurance, Bridge Mutual (BMI), Opyn and Nexus Mutual (NXM).
This last project is surely the best known of the four and regularly reimburses aggrieved investors. For example, on August 30, the CREAM protocol was mined for around $ 18 million. At the time of the attack, Nexus Mutual had 25 active coverage policies for CREAM v1 for a total of $ 6 million.
👉 To read on the same subject: Opyn launches an insurance platform for decentralized finance (DeFi)
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About the author: Florent David
Engaged in the crypto ecosystem since 2017. I am particularly interested in decentralized finance (DeFi), Ethereum 2.0 and non-fungible tokens (NFT).
All articles by Florent David.