COVER Protocol to Update Tokenomics After Receiving Backlash from the Community
- So, the new lease on life is not really working out well for SAFE.
- The token price dropped nearly 170% in the past 24 hours to under $100, only to find its ground just above $150 today.
- This severe drop in the token price has been the result of the latest update shared by the rebranded COVER protocol.
Over the weekend, Cover protocol, originally called SAFE, shared its tokenomics with the community that the maximum supply of COVER tokens will be 160,000. The token generation will start on Nov. 20.
While 1% will be vested to the treasury, 12% of the COVER supply will go to the team. But what the community is finding problematic is the “significantly diluted early supporters of the project.”
Out of the 87% COVER token supply allocated to its community members, only 12% goes to original SAFE token holders “who backed the project,” with 90 days vesting period.
70% of the new supply is to be earned through shield mining in a new yield farm that is to be launched in the following 12 months.
“Early supporters of COVER ( SAFE holders, not farm and dumpers) are now diluted by 5.8x,” noted Jason Choi of crypto fund the Spartan Group. He added,
“Was hopeful that COVER Protocol could be a viable addition to DeFi insurance, but the team's repeated reckless decisions suggests otherwise. Still Nexus Mutual's market to lose.”
The COVER protocol aims to “allow anyone to buy coverage on anything.” It is basically insurance coverage on smart contract risk.
The crypto community had questions for all the prominent advisers of the project, including YFI’s Andre Cronje, FTX CEO Sam Bakman-Fried, @bluekirby — who was involved in the Eminence.Finance $15 Million rug pulling, NFT project Off Blue chaos, and YFI dump and has now disappeared after making millions — and others.
Around the mid of September, SAFE enjoyed a pump after its revival as the COVER protocol. More importantly, it was the names of these advisors that had the community excited about the project again following the initial setback of inexperienced developers and early dumping.
To clear his name from the COVER debacle, Sam said he has “no idea” what' is happening with the project and that he is “not involved in any of the decision making.”
In response to the heavy criticism, the COVER team shared its intention behind the new tokenomics was to “ensure users who participate in the product directly benefit the most” which they say will “benefit the product in the long-term.”
But they acknowledged that the proposed plan has neglected the existing supporters and “reached out to ALL our advisors” and is now working on a revised tokenomics plan that will be released shortly.