Decentralized Insurance Protocol Coverage Holds Vote to Cover Pickle Hack


In what could be an important step towards the maturation of the decentralized insurance space, a claim was filed yesterday with the DeFi Cover insurance protocol over Pickle Finance’s $ 19 million Dai hack – and up to now, the majority of users want to see a payment happen.

According to the claim on Cover’s website filed on November 21, there were 99 votes at the time of publication, throwing around 9,800 COVER tokens – over 99% of responding tokens – behind a ‘yes’ vote to pay holders of the coverage concerned. Ivan Martinez, technical advisor for Cover, said on Twitter that in the event of a vote, the complaint will be forwarded to its Claims Validity Committee “to decide whether it is valid for payment or not.”

Although the hacker escaped with around $ 19 million in Pickle user funds, Cover clarified that not every payment was going to cover the entire loss. In an interview with TBEN, Alan, a semi-anonymous developer and principal of Cover, said that after CVC approval, “all PICKLE CLAIM token holders will be able to exchange 1 CLAIM token for 1 DAI”, assuming the Claims Validity Commission, or CVC, approves 100% Payment to cardholders, as Alan expects.

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There are currently over 340,000 Pickle CLAIM tokens in circulation, where they trade in secondary markets for $ 0.90. Alan pointed out that this could lead to “arbitrage opportunities” for traders who expect the proposal to pass.

Pickle’s claim is one of the first test cases for a decentralized insurance protocol using a blockchain snapshot to vote on coverage. As many players in the crypto space have been affected by hackers taking advantage of exploits since the DeFi boom began, the response on social media has been favorable to payment, but also skeptical.

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Many are worried about what Cover will decide because yesterday’s Pickle attack did not use a flash loan attack – a common tactic for hackers targeting DeFi protocols – but rather a maligned tool some claim. looks like more of an exit scam. Hackers were able to exchange funds between a malicious copy contract and Pickle’s vault – called the cDAI jar – which led users to notice that the jar had been emptied.

Under Cover’s guidelines, the project says it will pay for claims for exploits or certain attacks against smart contracts – specifically referring to flash loan attacks – resulting in “material loss of funds from the smart contract, or the contract system. smart with funds transferred to another. address that the original owner (s) do not control or the funds are permanently irrecoverable. ”

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Whatever Cover’s final conclusion, its decision will have ramifications for the DeFi community. In addition to Pickle Finance, hackers have targeted several DeFi protocols this year, resulting in the loss of millions of funds, from Harvest Finance, Value, Akropolis, Cheese Bank, and Origin, to name a few. A solid selection of insurance protocols such as Cover can help mitigate the fallout from such attacks.

Said Alan de Cover:

“I think DeFi coverage is essential for the massive adoption of these protocols. Some of these protocols that people are creating will change the financial industry for good, but as we are particularly early, there are many attack vectors. , and many more unknowns. Our job is to allow users to experiment with game-changing protocols while remaining protected from the risks of exploitation. “

Voting on Pickle’s claim will end on November 23 at 11:59 a.m. EST.


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