Just recently, the Cover Protocol became victim to one of the cyber-hacks that took place on its mining contracts. Following the recent hack, Cover Protocol, which is a peer-to-peer coverage market, has made an announcement for its users that were affected by the hack.
The Cover Protocol has announced that it will be launching a compensation plan for the affected users that will take place at the earliest. It confirmed that the users that the firm aims to compensate are the liquidity providers and the token holders. These were the users who were directly affected as a result of the hack.
As the first step of handling the problem, the team at the Cover Protocol took a snapshot that showed block height at 11,541,218. As per the Cover Protocol, this was the last transaction block before the hacker started exploiting the platform.
The firm also confirmed the names of the liquidity providers whose users it will be compensating for the exploit. The firm revealed that liquidity providers include SushiSwap, Balancer, and Uniswap. The Cover Platform has confirmed that it will be compensating the affected with COVER tokens. Each liquidity provider will be receiving COVER tokens based on their shares and liquidity contribution to the platform.
The firm also confirmed that the liquidity providers SushiSwap and Uniswap will also be receiving a share of the Ether (ETH). The firm revealed that these Ether (ETH) were transferred back by exploiters that have been titled ‘white hat’.
The Cover Protocol has confirmed that each token holder will also be receiving full compensation. The compensation amount will be based on the amount equals to the users’ wallet balance before the hack even took place.
The firm has confirmed that it will carry out the compensation process through centralized exchanges. The officials at the Cover Protocol have commented on the firm’s compensation process.
The team announced that it will acquire help from the centralized exchanges in order to award compensations to users who ended up losing their COVER from the hack.
In the meanwhile, Binance has also made an announcement for the users whose COVER tokens ended up becoming worthless as the result of the exploit.
Both the compensation plans were announced by Cover Protocol and Binance on 31st of December 2020. As for Binance, the firm announced that it will be distributing the $10 million compensation amount among the customers through Ether (ETH) and Binance USD (BUSD). Binance also announced that it will be the SAFU Fund platform that will distribute the compensation.
The exchange later advised why it decided to compensate its users. As per Binance, the Cover Protocol’s compensation announcement did not cover Binance’s users who had also faced a loss due to the exploit.