In a candid open letter, the lead contributor of Cover and Ruler Protocol, “DeFi Ted,” announced the protocol will close its virtual doors in the near future, citing a mass developer exit as the primary reason for the project’s conclusion.
Launched earlier this year, the Ethereum-based decentralized finance (DeFi) insurance marketplace enabled users to stake Cover tokens as collateral and receive insurance payouts if their assets in other DeFi protocols are hacked or rug-pulled.
In December 2020, the Cover protocol suffered a catastrophic exploit when a hacker minted 40 quintillion tokens, stratospherically increasing the token supply and effectively rendering the project valueless, a hypothesis confirmed with the consequential 97% price plummet.
In a drastic turn of events becoming more commonplace in the market, the hacker consciously returned the funds, and attached the stern message, “Next time, take care of your own shit.”
Despite the compassionate return of funds, serious damage was inflicted on the protocol both in terms of tokenomics value and cultural reputability.
After being lauded as one of seven protocols acquired by leading DeFi aggregator service Yearn.finance late last year, joined by the likes of SushiSwap and Cream Finance, just four months later, the protocol announced an embarrassing divorce to the merger following a calamitous conflict of interest issue with Cover’s new protocol, Ruler.
Related: Decentralized insurance could save DeFi from contagion, according to ShapeShift report
In the recent release, DeFi Ted assured investors of the presence of a token compensation package, writing:
“After discussing with the remaining team and finalizing plans moving forward it made sense that the remaining treasury funds be evenly dispersed to token holders.”
Block 13,162,680 has been designated as the snapshot moment to calculate the treasuries funds for even dispersal across the protocol’s token holders.
Ted also issued a plea to all token holders to withdraw their assets at the earliest convenience as the protocol will no longer be able to sustain the platform’s user interface.
Cover’s token has fallen 8.6% since the announcement from $233 to $213, while trading volume surged as investors rushed to the call of withdrawing their funds.
Decentralized finance alternatives such as Nexus Mutual will naturally seek to capitalize on their competitors’ downfall. The protocol is currently proposing an evolution of the current legal entity by removing the stringent Know Your Customer requirements to interact with the platform.
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