Last night, the DeFi world staged another unexpected and wonderful drama: DeFi insurance project Cover Protocol was attacked, which caused its tokens to be issued in a huge amount. Hackers successively cashed out on DEX such as SuShiSwap and Uniswap, which directly led to the price of token COVER. It started to plummet from around $800, during which it plummeted, rebounded, and then plummeted with news reversal.
Later, “white hat hackers” followed up with additional issuances, and they simply hit it to the end, and immediately transferred the cash profits worth 4374 ETH to the YieldFarming.insure (predecessor of Cover Protocol) address, which objectively made a certain degree of remedy . Subsequently, the DeFi insurance agreement Cover protocol officially released a solution, indicating that it is planning to launch a new COVER token, which will be distributed based on the data before the additional attack.
The wonderful collision of “problem teenagers” and “DeFi geeks” who dropped out
The predecessor of Cover Protocol today is SAFE (also known as yieldfarming.insure). SAFE pioneered insurance policy mining (insurance + mining). Participating in its liquidity mining can get SAFE token rewards, which triggered the market after its launch. s concern.
However, the two founders of SAFE later had a conflict. On September 16, one of the founders, chefinsurance (screen name, still a college student), issued a document accusing the project member AzeemFi (screen name) of being dishonest and maliciously selling the price worth millions. The US dollar token caused SAFE to plummet. At the same time, chefinsurance believes that AzeemFi will fork Yieldfarming.insure, saying that he is controlled by this member. It is recommended that you keep your eyes open and protect yourself if you invest in AzeemFi projects.
At this time, AC’s ambitious “DeFi cross-border mergers and acquisitions” were beginning to emerge. As the most controversial “geek” in the DeFi world, AC contacted chefsurance (screen name), and under AC’s mediation, before Azeem, who had a dispute with him, is willing to withdraw completely.
In addition, chefinsurance (screen name) immediately dropped out of college, received the AC funding of 25,000 US dollars (and 5 ETH) and BlueKirby.eth funds, and devoted himself to the new project. And this new project is Cover Protocol:
On September 18, the SAFE project team published an article as the “COVER protocol” stating that due to the immature launch of SAFE before, the team decided to rebuild a new protocol, the COVER protocol, which allows users to fully decentralize and expand Buy and sell insurance based on anything on the platform.
Later, through a simple design similar to binary options, the Cover agreement opened a new direction to DeFi insurance, refreshing the entire market, and its pool of funds quickly sprinted from several million US dollars to tens of millions of US dollars, becoming a decentralized insurance. The best.
SAFE->SAFE2->COVER, next, COVER2?
When we count the process from SAFE to Cover, we will find that the corresponding token has actually undergone multiple “replacements”.
1. SAFE->SAFE2
At the beginning of the start of the Cover Agreement, no COVER was issued, but SAFE2 was still maintained. On September 26, SAFE launched the SAFE2 contract migration plan with a duration of 5 days, allowing holders to convert SAFE tokens to SAFE2, and the conversion will be carried out at a ratio of 1:1, aiming to protect SAFE token holders due to the current ongoing Inflation shock caused by liquidity mining.
SAFE2 does not conduct liquidity mining, and the maximum supply will remain at 52689. After the COVER protocol is initiated, SAFE2 will be converted into COVER tokens.
2. SAFE2->COVER
Starting from November 20th, the migration plan of SAFE2 tokens to COVER began, in which 1 SAFE2 was converted to 0.5 COVRE. The Token supply of COVER was 90,000 in the first year, 10,000 in the second year, and halved every year thereafter. There are 160,000 COVER tokens.
3. COVER->COVER2?
The official solution after this additional issuance attack is to issue new COVER tokens in the form of snapshots. COVER will once again be migrated to the new “COVER2”. After last night, Cover will also be divided into “real Cover” and “fake Cover”. .
However, even if the official launch of a solution corresponding to the “re-issuance of coins”, the follow-up specific details of compensation will definitely vary according to the specific rules of each stakeholder.
Therefore, “re-issuing the coin” is just a start to the finishing touch, and it does not satisfy all users who suffer losses, but it is currently the relatively best choice.
“Cover is a completely worthless governance token”
After this additional issuance attack, the official Cover Protocol team issued an emergency statement to advise investors not to buy COVER again. In fact, before this, the Cover Protocol officials have repeatedly emphasized that COVER (now) is a completely worthless governance token, so purchase it carefully.
The reason is also very simple. The Cover protocol currently contains four tokens:
- DAI (stable currency) represents the deposit that the market maker needs to mortgage;
- Claim rights of the insurance demander represented by CLAIM tokens;
- The rights of insurance demanders represented by NOCLAIM tokens;
- COVER token represents reward and governance token
According to the Cover Agreement design, the original SAFE insurance mining has been changed to Shield Mining. Among the four tokens: DAI is used as collateral, CLAIM represents the claim right of the insurance demander, and NOCLAIM represents the right of the insurance provider , COVER is the governance token.
Among them, 1 CLAIM token + 1 NOCLAIM token ≈ 1 collateral, if there is a claim, 1 CLAIM token ≈ 1 collateral, and NOCLAIM token is zeroed; if no claim is due, 1 NOCLAIM token ≈ 1 collateral, CLAIM tokens are reset to zero.
That is to say, users use DAI when purchasing insurance and pledge casting. CLAIM and NOCLAIM are mainly responsible for the realization of the insurance function, while the COVER token can only be used for “project governance” and does not have the ability to capture the value of the Cover network. That is to say, the price of COVER is not directly related to the status of project funds. It is mainly determined by market supply and demand prices. To put it bluntly, at least as far as the current economic model is concerned, COVER is still in the stage of “hype concept”.
Of course, there is no doubt about the value of governance tokens, but as far as the matter is concerned, COVER is a governance token. After this additional issuance attack, the decision to reissue a new token is still a direct decision by the project party, which can only show that COVER is a governance agent. The properties of coins need to be built slowly.
In contrast, I still want to praise YAM. After “24 hours of shock”, even if the currency adjustment function was urgently suspended, the YAM team initiated a community decision and made a special tutorial to help users stop mining. Mine, put the coins to vote, truly realize community decision governance.
As a firm DeFi fan (user), I believe that after witnessing this year’s DeFi future will bring unimaginable changes to the world, everyone should have stronger confidence in “DeFi will change the future”.
However, before this goal is reached, the number of tokens in the DeFi world seems to be more and more. Although sometimes “re-issuance” can solve many problems, but if only or too much relies on the “re-issuance” after the remedy, DeFi is sure Can’t reach the distance of oneself.
Finally, let us conclude with the official statement on COVER: COVER (currently) is a completely worthless governance token.
