Nexus Mutual has launched the Custody Cover program for hack victims, one of many such solutions to launch in the DeFi industry recently.
On Dec. 2, decentralized insurance platform, Nexus Mutual, announced the launch of Custody Cover, a coverage solution for hack victims.
The insurance fund protects users who contribute funds to a decentralized organization, who are then compensated in the event of an attack.
Nexus Mutual Offering Crypto Proctection
There are two conditions that permit claims. The first condition covers the assets if the user loses more than 10% of their funds. The second is if the user’s custodian prevents withdrawals for more than 90 days.
The team already has several custodians for users to purchase cover, including Celsius, BlockFi, Nexo, inLock, Ledn, and Hodlnaut.
Custody Cover is Nexus Mutual’s second product, the first being the Smart Contract Cover. The offering is what the team says will be one of many to help users protect against exploits. Calling the products building blocks for the broader DeFi ecosystem, Nexus Mutual expects it to aid newcomers to the space.
A number of projects have received insurance funds in recent weeks, stemming from the multitude of hacks that have occurred. Most notably, Yearn.finance and Cover Protocol announced a merger that would see the two projects share development resources.
DeFi Continues to Be a Target
The proliferation of insurance protocols is a response to the numerous hacks that have occurred in 2020.
Most of these exploits have been flash loan attacks, which take advantage of centralized data feeds to manipulate prices. Chainlink founder Sergey Nazarov has said that he expects flash loans attacks to increase both in number and sophistication.
The largest flash loan attack in terms of value was Harvest Finance, which lost $24 million. Stablecoin initiative Origin Dollar lost $7 million in mid-November, while Compound Finance lost $100 million a week later.
The increasing number of attacks has spurred these insurance solutions. Cover Protocol is one of the most high-profile arrivals, launching on Nov. 20. The project has already executed a claim for the Pickle Finance hack.