Cover DeFi protocol token plunges 90% after attack

The Cover DeFi protocol token shed more than 90% in value after an unknown attacker exploited a vulnerability in the code and was able to mint additional tokens.

The leading developer of yEarn.Finance, known as banteg, urged users to withdraw liquidity as quickly as possible.

Remove COVER liquidity ASAP, the rewards contract has been exploited.

— banteg (@bantg) December 28, 2020

In his words, the project team failed to shut off the minting promptly because they were asleep. The blockchain recorded an issuance of 40 quadrillion COVER.

The Cover team couldn’t shut off the minting promptly since they were asleep.

We were investigating the reward exploit as pointed out by @Luciano_vPEPO when this tx happened.https://t.co/IJt1an8SbS

Seems like it’s not a whitehack transaction since it was followed by selling.

— banteg (@bantg) December 28, 2020

According to The Block, the attacker sold COVER for $5 million.

The cryptocurrency exchange Binance paused trading and deposits of the DeFi protocol’s tokens.

#Binance Will Suspend $COVER Trading and $COVER Depositshttps://t.co/cGiEX5BXlX

— Binance (@binance) December 28, 2020

Within a few hours, COVER on the Binance exchange fell from $762 to $70.13. According to CoinGecko, as of writing the token was trading at around $48.97.

Hourly chart COVER/BUSD on Binance from TradingView.

Cover Protocol — a peer-to-peer insurance market. In late November its acquired the DeFi project yEarn.Finance.

In September, a double-spend bug was identified in the SushiSwap governance mechanism, and later, due to the vulnerability, the DeFi protocol lost from $10,000 to $15,000.

Earlier, on December 18, the Warp Finance decentralized platform was attacked using a flash loan. The team managed to return $5.85 million of the $7.7 million stolen.

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