An individual has successfully exploited a flaw in the Cover protocol’s smart contract, allowing him to forge 40 trillion COVER tokens. The token’s price quickly collapsed by over 90%, from $ 700 to $ 50 in just 2 hours.
Crypto’s Jerome Powell Takes on Cover Protocol
New blow for decentralized finance (DeFi). Cover Protocol , a peer-to-peer insurance protocol, has been exploited by a hacker. The attacker managed to find a critical flaw in the protocol’s smart contract . He thus discovered how to create unlimited COVER tokens.
Like the United States Federal Reserve (FED) and the dollar, the attacker printed an astronomical amount of tokens, injecting the markets with the equivalent of 40 trillion COVER tokens (exactly 40 796 131 214 802 500,000 tokens):
Hack Cover Protocol
According to our colleagues at Bitcoin Bank, the attacker would have managed to sell the equivalent of $ 3 million in COVER tokens through 6 transactions on 1inch , an aggregator of decentralized exchanges. There followed the full absorption of the token’s liquidity, causing a sudden drop in its price.
In a completely unexpected move, the attacker returned the funds to Cover Protocol with the following message: “ Next time, take care of your own shit ”. It would seem that another protocol called Grap.Finance is behind this attack:
Nevertheless, in the space of 2 hours and 20 minutes, the course COVER fell more than 93% , from $ 740 to $ 50 at its lowest point. On Binance, COVER / BUSD pair volumes hit $ 32 million as of this writing.
A few hours after the attack, Binance also ended trading and deposits of the COVER token:
One more attack on DeFi
It should be noted that the Cover protocol has recently been absorbed by another protocol, Yearn.Finance . Banteg, one of the developers of Yearn.Finance, urged all protocol users to withdraw their cash as soon as possible, even if it is already too late.
This major attack follows those against Warp Finance ($ 7.7 million) and Pickle Finance ($ 20 million). All of these attacks are the result of flaws in the protocol or in the smart contract itself.
Although these DeFi protocols are generally audited, it seems that critical flaws still slip through the cracks, much to the delight of hackers. These kind of fortuitous events prove once again that the industry is far from mature enough to be adopted by the masses.