40 Quintillion COVER Tokens Minted in DeFi Insurance Protocol Exploit
The price of COVER nuked about 85% in a single candle. Binance has suspended trading for the token.
Peer-to-peer coverage marketplace, COVER is exploited today with an infinite minting bug in their incentives contract. The protocol was audited by popular blockchain security company Peckshield in October.
“Grap Finance: Deployer” minted a whopping 40 quadrillion COVER tokens on Dec-28-2020 12:02:04 PM UTC.
40,796,131,214,802,500,000.212114436030863813 ($1,116,749,084,477,140,000,000.00) — is the total value created.
While this does not affect the protocol, it obviously tanked the price to $21 from $850. The COVER price is getting crushed and is currently down 97.5% while trading at $35.33.
"Hello, I'm a cover investor. I've lost 20000 USD on it. Can you compensate me properly, because I want to return my credit card? If you can, I'll thank you very much"
— EtherText (@EtherText) December 28, 2020
Reportedly, “the Cover team couldn't shut off the minting promptly since they were asleep.”
“Seems like it's not a white hack transaction since it was followed by selling,” noted Banteg, core developer of DeFi project YearnFinance.
Last month, Cover merged with Yearn whose creator Andre Cronje said Cover will become the backstop coverage provider for not only Yearn but for the entire DeFi space.
The insurance protocol had about $56 million in TVL (total value locked) before the exploit which has now declined to $35.4 million.
Cryptocurrency exchange Binance responded fast and suspended “trading for all COVER trading pairs… to protect Binance trading users.”
Meanwhile, another crypto exchange, Huobi, which does not have trading for COVER available on its platform, “blacklisted” all the addresses involved in the hack.
This is not the first time the Cover protocol has gotten under hot water. Initially, the project had issues at the time of its launch, when it was known as SAFE. Then the protocol received backlash from the community for its tokenomics of the rebranded COVER protocol which was later resolved.
Cover Protocol Update
In what appears to be a white hat attack, the attacker, Grap.Finance sold $3 million worth of COVER tokens for ETH and returned all the money to Cover and burned the rest of the 40 quintillion tokens minted. These returned funds will be handled through a snapshot of the LP token holders.
The funds were returned with a special message from Grap.Finance — “Next time, take care of your own shit.”
This actually helped the GRAP token pump a mind-boggling 2,877% to $0.322051.
Meanwhile, Cover Protocol is investigating the incident and “exploring providing a new COVER token through a snapshot before the minting exploit was abused” while cautioning people not to buy the token.