Decentralized Insurance Protocol Cover Takes Vote To Cover Pickle Hack

Decentralized insurance protocol, Cover takes votes to cover Pickle hack. A claim was filed yesterday with DeFi insurance protocol, Cover, following the $19 million Dai hack of Pickle Finance. So far, it seems like the majority of users want to see a payout happen.

According to the claim on Cover’s website filed Nov. 21, there have been 99 votes at the time of publication throwing roughly 9,800 COVER tokens — more than 99% of respondent tokens — behind a “yes” vote to pay out affected coverage holders. Ivan Martinez, a technical advisor for Cover, said on Twitter that should the vote pass, the claim will move to its Claim Validity Committee “to decide if it’s valid for a payout or not.” 

Although the hacker withdrew some $19 million in Pickle User Funds, Cover clarified that any payout would not cover the full amount of the loss. Semi-anonymous and core Cover developer Alan said in an interview that after CVC’s approval, “all PICKLE CLAIM token holders will be able to redeem 1 CLAIM token for 1 DAI,” assuming that the Claim Validity Committee, or CVC, approves a 100% payout to holders, as Alan expects.

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

Many are worried about what Cover is going to decide, because yesterday’s attack on Pickle did not use a flash loan attack, which is a common tactic for hackers targeting DeFi protocols. Rather, the attack used a maligned tool that some claim is more like an exit scam. Hackers were able to swap funds between a malicious copycat contract and Pickle’s yield-bearing vault—called the cDAI jar—which led users to notice that the jar had been emptied.

Under Cover’s guidelines, the project states it will pay out claims from exploits or certain attacks on smart contracts — specifically referencing flash loan attacks — resulting in “a material loss of funds from the smart contract, or smart contract system with funds either moved to another address which the original owner or owners do not control or the funds are made permanently irrecoverable.” 

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