COVER compensation plan: Officially issuing new tokens for network damage, while Binance utilizes the SAFU fund for additional subsidies.

The decentralized insurance protocol Cover Protocol was attacked on the 28th, resulting in a loss of $9.4 million. While white-hat hackers managed to recover 34% of the funds, a significant amount was still compromised. Cover Protocol has proposed issuing a new version of the Cover token and providing ETH subsidies. Additionally, the exchange Binance has offered additional compensation.

Cover Protocol Compensation Plan

The official announcement states that compensation will be provided to eligible parties based on the snapshot taken at block height 11541218:

• Cover-ETH liquidity providers on Uniswap
• Cover-ETH liquidity providers on SushiSwap
• Cover-ETH liquidity providers on Balancer
• All COVER token holders, including those on wallets and centralized exchanges
• All YETI token holders
• All YPIE token holders
• All token holders who have not converted the predecessor token SAFE2 to COVER
• All token holders who have not converted the predecessor token SAFE to COVER

It is reported that new COVER tokens will be exchanged at a 1:1 ratio for holders.

Additionally, due to significant losses incurred by COVER-ETH liquidity providers during the attack, Cover Protocol will distribute the final recovered funds of 4,441.8 4,350 + 1 + 90.8 ETH proportionally back to the affected COVER-ETH liquidity providers.

• Cover-ETH liquidity providers on Uniswap
• Cover-ETH liquidity providers on SushiSwap

Binance's Additional Compensation Using the SAFU Fund

According to a Binance announcement:

"Based on the compensation plan proposed by the COVER team, a significant amount of COVER purchased by users will become worthless. In line with Binance's principle of maximizing user protection, in addition to the official exchange plan by COVER, Binance will activate the 'SAFU Fund' to provide subsidies to users who suffered losses from buying positions on Binance after the snapshot time."

Binance will compare the project team's official snapshot time with Binance's suspension of COVER trading time (December 28, 2020, 20:40) and compensate users in four scenarios:

1. Users who did not trade: If the holdings at the project team's snapshot time match the holdings at Binance's trading suspension, they will receive new COVER tokens at a 1:1 ratio
2. Users who bought after the snapshot: A portion of the holdings at the project team's snapshot time will receive COVER tokens at a 1:1 ratio. For the net purchased portion, users will receive BUSD and ETH based on their actual trading costs, fully covered by the Binance 'SAFU Fund'. The total expenditure of the Binance 'SAFU Fund' is approximately 10,107,505 USD (including 8,171,634.10 BUSD, 2,581.16 ETH).
3. Users who sold after the snapshot: Based on the holdings at Binance's trading suspension, they will receive COVER tokens at a 1:1 ratio
4. Users who deposited before the trading suspension: For the portion deposited from other addresses after the project team's snapshot time but before Binance's trading suspension, users can withdraw at their discretion

Binance's Deep SAFU Fund, Previously Admitting Loss of 7000 Bitcoins

The last time the SAFU Fund was utilized was on May 8, 2019, as stated by Binance in an announcement:

"We discovered a large scale security breach where hackers were able to obtain a large number of user API keys, 2FA codes, and other related information; the hackers used a variety of techniques, including phishing and viruses, in this attack;

The hackers were able to withdraw 7,000 Bitcoins in this attack:
https//www.blockchain.com/btc/tx/e8b406091959700dbffcff30a60b190133721e5c39e89bb5fe23c5a554ab05ea

This transaction is the only affected transaction, impacting our BTC hot wallet which contained approximately 2% of our total BTC holdings. All other wallets are secure and unharmed, and no user funds were affected by this incident."

Despite criticism, Binance's compensation measures in collaboration with COVER demonstrate their ability to handle such situations.