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COVER Protocol

COVER Protocol (formerly known as SAFE) is a cryptocurrency and a DeFi (Decentralized Finance) protocol built on Ethereum which allows users to buy insurance coverage on anything. The protocol announced its end on the 5th of September 2021 using its official twitter handle[2].

On November 20, 2020, Cover Protocol officially launched with shield mining and migration.
In January 2021, a new version of the COVER token was launched to be claimed by those parties affected by the December 2020 hack of the protocol. A claims portal was set up, which distributed the new COVER tokens in accordance with the compensation plan[3].

History

Initial Controversy

Alan, the anonymous founder of the SAFE project came out with an extensive Medium post shortly after SAFE’s liquidity mining pools went live alleging that a user was manipulating him to dump millions of dollars worth of the coin on the market.

That user eventually returned fire with his own blog post, asserting that it was Alan who made the mistake, not properly deploying liquidity and launching liquidity mining before the project had an actual direction.

As a result of this debate, SAFE plunged by over 90 percent from its all-time high price action $4,000 to a low of under $200.

Migration to COVER

The opening statement from the project’s lead developer, the pseudonymous founder “Alan” or “Insurance Chef,” announcing the migration from SAFE to COVER reads:

“As the creator of SAFE, I acknowledge that mistakes were made in my handling of the SAFE token launch.”

Following a price collapse that saw SAFE rose as high as $4,438 before crashing to $166 days later, the anonymous founder decided to rebrand the protocol to COVER.

The post reads:

As the initial launch of SAFE was immature, we are rebuilding the protocol from scratch and rebranding as COVER. The COVER protocol will enable users to buy and sell cover on anything, all on a completely decentralized and scalable platform.

Additionally, Azeem Ahmed, a co-founder of the previous protocol, will step away from the new project.

Andre Cronje, the founder and creator of yEarn Finance, offered a $25,000 grant along with 5 Ethereum to Insurance Chef, the co-creator of SAFE protocol. He also received an undisclosed grant from Blue Kirby, also of yEarn Finance. This allowed Insurance Chef to drop out of college and focus on COVER fulltime.

The expected launch date of the beta testing platform is November 1, 2020.

All $SAFE holders will be migrated to $COVER via smart contract. The SAFE pools that have been deployed will continue to distribute SAFE to stakers (with rewards halving every 7 days). The transfer of $SAFE to $COVER will happen after the beta and appropriate audits are completed.

SAFE to SAFE2 Migration

In September 2020, the Cover team decided to launch a SAFE2 migration contract. It allowed current SAFE token holders to convert their SAFE tokens to SAFE2 tokens. The conversion rate was 1 to 1. The goal was to protect current SAFE token holders from further inflation due to current farming. Migration from $SAFE to $SAFE2 began on September 26 and ended on October 1, 2020.

SAFE2 to COVER Migration

The SAFE2 migration to COVER tokens started on November 20, 2020. There was no deadline to claim and users received all COVER tokens at once, there was no vesting period. 1 SAFE2 was migrated to 1 COVER.

Cover Protocol Beta

On November 1, 2020, the Protocol team announced the beta launch of Cover Protocol. There was no shield mining or $COVER rewards in the beta. No redeeming fees were charged before November 20. The beta was intended to allow prospective users of the protocol to engage with the protocol before the official launch on November 20.

$COVER Token

COVER will be governed by the COVER token, a governance token that will have “no value” at launch and will be distributed through a liquidity mining mechanism “based on their net risk exposure on the platform.” COVER tokens will enable the buying and selling of insurance coverage along with providing liquidity mining incentives.

The COVER token will have a multi-year schedule, with the first-year schedule having a total of 90,000 tokens:

  • ~87% (~78,400) will be allocated to COVER community members (26% can be earned through shield mining in the first 12 months and 61% will be allocated to SAFE2 token holders, immediately at launch).
  • ~12% (10,800) will be reserved for the team, vested through the year.
  • ~1% (800) will be vested to the COVER treasury.

For every year after the first, there will be an additional 10,000 COVER minted that halves every year after. With 90% of the total amount allocated to shield mining and 10% to the treasury.

On November 20, COVER token was released and the migration from $SAFE2 started.

In January 2021, a new version of the COVER token was launched to be claimed by those parties affected by the December 2020 hack of the protocol. A claims portal was set up, which distributed the new COVER tokens in accordance with the compensation plan.

Controversies

Cover Protocol Attack

On December 28, 2020, the Cover protocol was hacked in an infinite printing scheme, causing the price of the COVER token to plunge. Hours later, Grap.Finance, a white hat hacker, claimed responsibility for the attack via their Twitter account, saying all funds had been returned. The exploiter cashed out over $4 million including about 1,400 Ether, one million DAI, and 90 WBTC. The attacker earlier created 40 quintillion COVER tokens and sold $5 million worth of them. More than $3 million was returned. Grap Finance developers revealed that they had returned all funds and made no gains. The price of COVER fell from $859 to $50 by over 95% over the 24-hour period, according to the data from CoinGecko.

On December 29, 2020, the Cover team announced their compensation plan, according to which COVER tokens holders were given new COVER tokens. Parties that were eligible for the new COVER token are COVER-ETH liquidity providers on Uniswap, COVER-ETH liquidity providers on SushiSwap , COVER-ETH liquidity providers on Balancer , all COVER token holders (holding in wallet + CEXs) , all YETI token holders , all YPIE token holders , all unmigrated SAFE2 and all unmigrated SAFE holders. For COVER-ETH liquidity providers, YETI, and YPIE token holders, the team determined the amount of COVER paired with 1 LP token to determine each address’ COVER “balance” and reward this amount of new COVER token. For those who had COVER on CEXs, the team distributed the new COVER token (1:1) determined by the exchange’s holdings. For those who had $COVER in their wallets, the snapshot determined each user’s COVER balance and reward the new COVER token (1:1).

Shield Farming

Shield Farming is a new COVER protocol feature that allows participants to farm the COVER governance tokens based on their net risk exposure on the platform. The team believes this is a fairer distribution method versus “stake farming” as it requires users to interact and be engaged with the platform rather than just idle farming using unrelated assets.

Shield Mining

Shield mining started on November 20, 2020. Over the next 6 months, there will be approximately 17,000 $COVER allocated to the shield mining program. This means there will be 654 $COVER distributed each week for mining.

  • 80% of the 654 $COVER will be allocated to the above-supported protocols (60% of the 654 $COVER will go to $CLAIM liquidity providers and 20% of the 654 $COVER will go to $NOCLAIM liquidity providers).
  • 20% of the 654 $COVER tokens will be allocated to Pool 2 liquidity providers.
  • Some pools may also be incentivized by the covered protocols, by offering their own native protocol tokens as bonus rewards.

Governance and Decentralization Plan

The Cover team aims to transition of Cover Protocol towards being completely decentralized and governed by $COVER holders. In order for the transition to go smoothly, there will be 3 phases of governance changes. Here is the draft of the 3 phases released by the team:

  • Phase I started on December 15, 2020. $COVER holders can make proposals and can vote on snapshots. Once a proposal is approved, the governance multi-sig (held by the 6 team members) will execute the proposal on behalf of the holders.
  • Phase II will be the launch of our decentralized governance system to allow $COVER token holders to submit proposals on-chain and lock their tokens in order to vote.
  • Phase III is the end goal for the Cover team - full decentralization. A comprehensive governance module will be built. $COVER holders will be the owner/admin of all deployed contracts from Cover Protocol.

Updates & Shutdown

On the 5th of September 2021, the Cover protocol announce the end of its Defi project and vision via its medium blog post[1]. The consensus was reached after the core developers suddenly left the project.
Accordingly, after the team discussed the finalized plan to move forward was that the remaining treasury funds be evenly dispersed to token holders.
Compensation was scheduled to executed be at block number 13162680, this will be used as the snapshot to distribute funds to holders from the treasury. Founders reportedly took no part in the compensation.

Team

The COVER protocol team consists of three core developers:

  • Chef Insurance (Alan) — Core Dev and original inventor of SAFE token. Full-time.
  • @kryptocucumber — Core Dev and original inventor of the product idea. Full-time.
  • @crypto_pumpkin — Core Dev and project and team governor. Full-time.

Advisors

  • Andre Cronje — Advisor
  • @0xKiwi_ — Technical Advisor
  • @teddy9423 — Industry Advisor & Community Manager
  • @DeFi_Ted — Industry Advisor
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COVER Protocol

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