COVER has been gaining serious hype throughout the past few months, despite its turbulent beginnings. What started as “SAFE” ultimately became COVER following some contentious battles between the early developers.
COVER ultimately was adopted by the Yearn.finance ecosystem and grew under Yearn founder Andre Cronje’s guidance. It secured a coveted Binance listing early on and saw some massive upside.
However, its promising growth dissolved overnight, with a lethal minting function exploit causing the cryptocurrency’s price to collapse towards zero, with its liquidity all but being dissolved.
The lack of liquidity and the fact that multiple different parties exploited this function drove its price towards zero. Although it has recovered from its lows, its limited liquidity on Uniswap and other AMMs makes it nearly untradeable for those looking to buy or sell with size.
The largest exploiter was able to cash out roughly $3.2 million before liquidity dried up, causing them to burn the remaining tokens that they gained overnight.
Another exploiter returned the tokens they took, but the damage done to the token has been catastrophic, and the COVER team has warned against users purchasing tokens.
COVER Price Collapses Following Lethal Minting Function Exploit
Overnight while the COVER development team was asleep, a few malicious hackers discovered a way to essentially mint infinite tokens, allowing them to clear out the liquidity pools and place endless selling pressure on the token.
This caused its price to collapse from pre-exploit weekly highs of over $1,000 to lows of nearly $40 on Uniswap before it found some buy-side pressure.
At the time of writing, it is currently trading down 75% at its current price of $217. Although it has rallied from its lows, the lack of liquidity and uncertainty about the token’s future makes it a highly speculative play for traders.
Hackers Made Away with Millions via the Exploit
Multiple parties were involved with the overnight COVER exploit, with one group of white hat hackers returning the funds they took, while others moved to clean out the liquidity pools before burning the rest of the tokens.
One analyst spoke about this exploit, explaining that nefarious users could stake their tokens, un-stake and claim, and continue doing this on repeat.
“COVER exploited: tl;dr infinite minting bug on their incentives contract. Stake > unstake + claim > re-stake > repeat.”
The same analyst further added that this exploit has not impacted the COVER protocol, but rather just the token’s price.
“Just to be clear: This does not affect the protocol (which is working perfectly), the exploit only affects COVER price.”
The token’s future remains unclear at the moment, but the COVER team has since patched the exploit.
Featured image from Unsplash.