TL;DR Breakdown

  • Cover Protocol hacked, looses $3m, token price drops 80 percent
  • Hacker merely use “infinite mint” to steal token
  • Grape Finance claims responsibility for hack as they return hack proceeds

Cover protocol, a Decentralized finance insurance project platform, had a yuletide to be happy and sad about after a white hat hacker breached their security to the tune of $3 million.

The DeFi platform was lucky as the hacker returned the stolen funds, but the exploit did a little damage as Cover protocol token plunged by 80 percent after the hack. It fell from around $731.48 to $26.59 today Exchanges also including Binance, paused trading of the token.

Cover is a peer-to-peer insurance marketplace. When users deposit DAI, the decentralized US dollar-pegged token, as collateral, Cover issues claim token on such deposits. The value of the token received is dependent on the risk of investments.
“If you buy coverage from a protocol that gets hacked, Cover will…cover you.

How white hacker exploited Cover protocol

The insurance protocol was hit after the hacker used an “infinite mint” bug to claim several millions of dollars worth of ETH. The hacker minted fake coins and used them to provide liquidity to Balancer protocol, then redeemed the staked tokens for Cover tokens, which they then dumped on exchanges.

Reportedly, the hack didn’t affect Cover Protocol, but the price of COVER. The protocol continues to work perfectly, a Twitter user said.

Hacker exposed

Grape finance, another DeFi, exposed itself, saying it perpetrated the hack. After the hack, The Grape Financer deployer returned the money to cover, saying, “next time, take care of your own shit. They also said they took no gain.

The DeFi space has been subject to many hacks believed to be because of its deregulated characteristic. Some projects in the space are susceptible to vulnerabilities without recourse.

This post was last modified on December 28, 2020 10:28 pm