Yesterday, Cover published an article on Medium about "Trade-in", detailing the economic model of the new Cover token and how it can be exchanged. At this point, the majority of victims can finally recover their losses.
As we all know, on the evening of December 28, the DeFi insurance project Cover had two consecutive hacking incidents in one day. Since the number of tokens was changed to unlimited issuance, the price of the currency plummeted from around US$800 to only 20. Around the dollar, almost to zero.
But can the re-issuance of coins after 8 days really win back the hearts of users? Let's take a look at the conditions for receiving new tokens.
According to official information, users who can apply for SGD include:
1. Liquidity provider of COVER/ETH pool on Uniswap;
2. The COVER/ETH pool liquidity provider on SushiSwap;
3. Provide liquidity users for the COVER-ETH pool on Balancer
4. All COVER token holders (including those held in wallets and CEX);
5. All users who hold YETI (Yearn Ecological Index Token) tokens;
6. All users who hold YPIE (an index token launched by PieDAO);
7. All SAFE2 and SAFE not migrated;
This condition seems to be very feasible, but there was a bug during this period, which caused most people to lose money after a sharp drop.
Because after the decline, there are three groups of people. The situations they face and the problems they encounter are divided into:
Those who sold all the coins in order to stop the loss after the currency price plummeted, resulting in selling at a price several times lower than the purchase price. Now they have no coins in hand and cannot perform new currency replacement operations. The losses incurred during the period can only be borne by themselves bear;
People who did not hesitate to spend high gas fees to buy coins at low prices must be secretly enjoying themselves now. They can buy and replace valuable new tokens at low prices, and they can also use the new tokens to re-mine to generate income. Happy;
At that time, I didn’t pay much attention to the sharp drop in the currency price, and I was still a long-term holder as always. Congratulations, you have escaped disaster, but this time the new token replacement operation still needs to be implemented, because the token replacement period in mining is only 90 days , be careful to turn tokens into happy beans.
However, there are still two issues not mentioned in Cover’s explanation: the price of the issued currency and how to solve the large price difference with the old and new tokens. This is the issue that investors are most concerned about at present, but there is no relevant content in this regard.
At the beginning of the launch of the Cover protocol, SAFE2 tokens were maintained until November 20, when the migration plan of SAFE2 tokens to COVER began, in which 1 SAFE2 was converted into 0.5 COVER, and the Token supply of COVER in the first year was 90,000 pieces , 10,000 in the second year, and halved every year thereafter, with a total of up to 160,000 COVER tokens.
The current secondary conversion is just to do the previous thing again, but as COVER is a governance token, the decision to re-issue new tokens after this additional attack is still directly decided by the project party, which can only show that COVER is a governance token. The attributes of governance tokens still need to be built slowly.
Although COVER made a quick fix this time, it only took 8 days to launch a new solution, but can it really win back the hearts of users? I don’t think so. The three major insurance projects WNXM and COVER have accidents one after another. Only NSURE remains stable. In the future, more projects will flood into this track to build a complete insurance ecosystem.
Insurance is a demand, but the move of COVER has brought security concerns to many users, as well as the loss of value. We still need to wait and see, and we need to be cautious in investing.
