DeFi insurance protocol is a procedure that protects against financial loss, owners of tokens have been promised a part of the remaining treasury funds by Ruler and Cover.
In an honest open letter, “DeFi Ted,” the chief contributor to the Cover and Ruler Protocol, revealed that the protocol would be shutting down its virtual doors in the near future, citing a mass developer exodus as the primary cause for the project’s termination.
The Ethereum-based decentralized finance (DeFi) insurance marketplace, which launched earlier this year, allowed users to stake Cover tokens as collateral and receive insurance payouts if their assets in other DeFi protocols were hacked or the rug pulled out from underneath them.
In December 2020, the Cover protocol was subjected to a catastrophic vulnerability when a hacker issued 40 quintillion tokens, so dramatically expanding the token supply and effectively declaring the project worthless, a notion that was validated by the ensuing 97 percent price drop.
This was a dramatic turn of events that is becoming more regular in the market, as the hacker consciously returned the funds and attached the severe admonition, “Next time, take care of your own shit,” to the transaction.
The protocol has suffered significant damage, notwithstanding the compassionate return of monies, both in terms of tokenomics value and in terms of cultural reputability.
After being hailed as one of seven protocols acquired by leading DeFi aggregator service Yearn.finance late last year, joining the likes of SushiSwap and Cream Finance, the protocol announced an embarrassing divorce from the merger four months later, citing a calamitous conflict of interest with Cover’s new protocol, Ruler, as the reason.
In a recent press release, DeFi Ted promised investors that a token compensation package will be available, writing:
“After discussing with the remaining team and finalizing plans moving forward it made sense that the remaining treasury funds be evenly dispersed to token holders.”
It has been decided that block 13,162,680 would be used as the snapshot time in order to compute the treasuries funds and distribute them evenly across the protocol’s token holders.
Ted also appealed to all token holders to remove their assets as soon as possible, stating that the protocol will be unable to support the platform’s user experience in the future.
Since the news, Cover’s token has dropped 8.6 percent, from $233 to $213, while trading volume has increased as investors rushed to withdraw their assets before the price fell even further.
Decentralized finance alternatives such as Nexus Mutual would, of course, aim to profit from the failure of their competitors’ business models. According to the protocol, the current legal entity will be transformed into something more flexible by removing the onerous Know Your Customer rules for interacting with the platform.
