After a series of flash loan attacks where DeFi protocols lost $100M in damages, Yearn acquired Cover Protocol to provide decentralized insurance. The project pays out claims from exploits or certain attacks on smart contracts, using a the Snapshot voting tool to decide coverage. The claim will move to its Claim Validity Committee (CVC) to decide the validity of a payout.
The move highlights the need for more insurance alternatives after a string of flash loan attacks. This merger will now provide coverage for the DeFi and extended Yearn ecosystem; Curve, Sushiswap, Aave, Balancer, Pickle, Harvest, Ren, Cream, and more.
Synergies to Expect
Cover will be able to provide a wider range of coverage and accept more types of collateral, as well as expanding to other addressable markets. This allows CLAIM token to become collateral and borrowable asset. In turn, Yearn gets coverage for its vaults, reducing the risk of its product
Continual Cover: Cover is releasing a model for constant coverage which allows coverage seekers to have perpetual protection, without expiration. This is in contrast to current solutions which requires active management and have a fixed expiry.
Cover v1.1 enables other protocols to create their own coverage. This allows autonomy to other communities to stake and protect their own systems, with no additional overhead.
Signals for Institutional Coverage
The merger occurred over the Thanksgiving holiday weekend, where the price of $COVER had a 37% increase, starting at $278.56 up to $383.43 on Saturday of the announcement. This comes off an all-time low of $208.70 and an all time high of $598.27. This acquisition shows an important step towards the maturation of the decentralized insurance space and institutional need for coverage.