Japes and scrapes in decentralized finance are all too familiar in this freest of free markets.
Another decentralized finance protocol takes a punching. This time it’s DeFi insurance project Cover protocol, whose token plunged by 80% after its protocol was exploited for $3 million ETH. Then the hackers sent some of the money back, attaching to the transaction the message, “Next time, take care of your own shit.” Ooft!
Cover protocol is a peer-to-peer insurance marketplace. Deposit the decentralized US dollar-pegged token, DAI, as collateral, and Cover will issue you with claim tokens, whose value is determined by the risk of your investment. If you buy coverage from a protocol that gets hacked, Cover will…cover you.
A visual explanation of how $COVER works: pic.twitter.com/uKaxFdsLp8
— Cover Protocol (@CoverProtocol) December 28, 2020
How cruel, then, that Cover itself was exploited today when someone used an “infinite mint” bug to claim several millions of dollars worth of ETH. The hacker minted millions in fake tokens, used them to provide liquidity to Balancer protocol, then redeemed the staked tokens for Cover tokens, which they then dumped on exchanges. Rinse and repeat.
The exploit did not affect Cover protocol, however, which “is working perfectly,” according to @Luciano_vPEPO, a self-described “$YFI maximalist.”
just to be clear:
this does not affect the protocol (which is working perfectly), the exploit only affects $COVER price
— Luciano (@Luciano_vPEPO) December 28, 2020
But it crashed the price of $COVER, the token that acts as the backbone of the platform, which fell by $731.48 to $26.59 today—a drop of close to 100%. And several exchanges, including Binance, have paused trading for the coin.
Grap Finance, another DeFi protocol, took responsibility for the exploit. Grap is short for Grape, the project’s theme; you farm “wine,” which appears to be limited edition NFTs. The Grap Finance deployer gave the money back to Cover, saying, “Next time, take care of your own shit.” Grap Finance’s Twitter account said it took “No gains.”
Next time, take care of your own shit.@CoverProtocol @chefcoverage https://t.co/ks94ucdoRQ
1. No gains.
2. The Obtained Funds from LP has been returned to COVER.— Grap.finance (@GrapFinance) December 28, 2020
Grap’s community appears to support the exploit. “Grap Dev is mega chad,” said Anis, a member of Grap Finance’s Telegram group. “Grap rekt cover it’s tru,” confirmed VZ Reality, another member.
“Pity about the holders but oh well,” said VZ. “If it wasn’t GRAP someone was gonna do it. Cover is lucky actually,” sniffed Jim Silva. When Moon added that “Cover deserved it for naming itself ‘cover’,” and TrevMatic! posited that “COVER should be eternally grateful for GRAP.” Grap’s token has increased in value by six times since the exploit, the consequence of a listing on cryptocurrency exchange MXC.
So, exploiting a DeFi protocol and bankrupting token holders makes you a rich mega chad, huh? Decrypt has been going about this all wrong.
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