Cover Protocol project ends
Cover Protocol (COVER), an insurance project aimed at decentralized finance (DeFi) has shut down, according to an announcement on September 5. Users are encouraged 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 cash funds equally to token holders.
The closure comes after the development team suddenly left the project. The remaining team communicated their desire to end the project:
“The decision was not an easy one to make. We were extremely disappointed to learn that the development team left so suddenly.
Cover’s descent into hell also follows a hack in December 2020. Indeed, the protocol had suffered an attack of its own, which can be more or less the last straw for an insurance policy. The hackers had managed to create 40 quintillion COVERs, which had caused the price of the token to drop by 96% in a few hours. The hacker had returned the 4350 Ethers (ETH) he had stolen, attaching the following message to the transaction:
“Next time, take care of your own problems.»
What is the purpose of decentralized insurance? Are there any other projects?
What was the idea behind the project? Cover Protocol allowed users to hedge against risks associated with smart contracts such as bugs or attacks. By blocking funds on Cover as collateral, users received tokens that covered them in case a DeFi protocol they invested in fell victim to a flaw or an attack. The value of the guarantee depended on the estimated risk of each DeFi protocol.
There are other insurance projects for the DeFi ecosystem such as Opium Insurance, Bridge Mutual (BMI), Opyn and Nexus Mutual (NXM).
The latter project is surely the best known of the four and regularly pays out to aggrieved investors. For example, on August 30, the C.R.E.A.M. protocol was exploited for about 18 million dollars. At the time of the attack, Nexus Mutual had 25 active C.R.E.A.M. v1 coverage policies for a total of $6 million.
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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.