Bugs Fixed: Saving $200m in DeFi Cover
Since the discovery described here in early October… We report on what happened next and how yNFTs can now migrate to fully functional arNFTs with Armor.fi
All yNFT coverage now works as expected when migrated to a new arNFT on https://armor.fi/dashboard — just click Swap!
Once the bugs came to our attention we had to decide how to proceed to ensure users did not lose coverage.
Andre suggested a migration of yNFTs to Armor.fi as we are already building a new product to provide DeFi cover.
To complete this set of fixes…
Nexus Mutual needed to update their smart contracts for migrated yNFTs to claim payouts through Armor.
While we finished arNFT and worked on the full new product suite…
Nexus Mutual’s team was hard at work on implementing these updates.
They had to get governance approval too, which takes more time for NXM token holders to vote the updates into mainnet.
The proposal came to a vote, and after allowing time for users to agree to the update, it passed.
Now Armor’s arNFT interface allows fully functional claims payouts for all successfully migrated yNFT tokens.
DeFi applications and protocols are some of the most attractive targets to hackers that have ever existed. The (largely open-source) software can give hackers instant, very large, payouts that can easily be made untraceable.
We’ve seen enormous hacks on many different protocols recently and have been made painfully aware that users need the best protection possible.
The Smart Cover System
Armor’s Smart Cover System will allow you to protect funds held on all the popular and new DeFi protocols in case of hacks in an easy, self-adjusting, pay-as-you-go manner.
Our system detects any changes in your balance on supported protocols, and prompts you to adjust your plans accordingly.
Users are charged by the second for the exact amounts protected on each protocol so you’ll never pay any more than necessary.
If a platform you then hold funds on is hacked, and your claim is approved, you will be compensated for losses.
Features and Highlights
Flexible Smart Cover System
If a user uses Nexus Mutual directly, they cannot cancel and refund un-used coverage, they cannot re-sell it and they cannot expand or reduce the covered amount.
If a user uses NFT tokenized coverage, they cannot change the properties of the token, and when it’s no longer needed, they have to re-sell it on secondary marketplaces.
Armor is a smart cover brokerage built on Nexus Mutual.
It pools coverage, automatically manages expiries and cover re-allocations upon fund transfers and exchanges, and the only thing a user needs to do when they act on balance changes is approve a new recommended coverage combination to be billed on a new streamed pay-as-you-go plan.
KYC-less and Permissionless
Nexus is faced with a significant barrier to adoption by requiring KYC. Armor fulfills this obligation through the DAO and thus dramatically expands the total addressable market. As a result any user on Ethereum gains the ability to protect their assets across all eligible DeFi protocols.
Pay-As-You-Go Asset Coverage
Instead of buying static chunks of coverage and needing to micromanage cover amounts, expiries and being stuck with coverage you don’t need when you move your assets between protocols… Armor enables users to continue their usual routines and habits without interruption.
When a user makes changes, Armor’s Smart Cover System detects it and recommends a new combination of coverage which a user can approve and adjust to a new pay as you go streamed billing schedule to ensure assets are always protected.
Cover Multi-Wallet Balances
Armor tracks user balances across multiple wallets which is a basic OpSec requirement for a lot of crypto investors. As a result users do not have to manage cover separately for different wallets.
Instead all chosen wallet balances are pooled as one and can be covered and paid for from a single wallet of the user’s choice. This is an important feature for power users who typically manage assets of a higher aggregate value and will increase revenue generated through premiums.
One Stop Protocol Cover Shop
When a DeFi protocol wants an insurance-style solution available to protect their users, they will typically seek to set this up with Nexus Mutual as the underwriter, the base layer for DeFi asset coverage.
Armor vaults retain a liquid reserve of NXM tokens ready to stake on newly added protocols to bootstrap their availability based on demand signaled by users. This will assure there is always enough cover to meet demand through Armor’s simple and user friendly interface.
Fully Collateralized Coverage
All cover is underwritten by Nexus Mutual who has a stringent risk policy with a proven track record plus deep capital pool availability to ensure assets are protected in case payouts are required.
Profits are made by correctly pricing risk under what the cover buyers price it at, and charging a premium to take on that risk.
Chain-Verified Claims Process
When a claim is submitted to Armor, it will trigger a review process where withdrawals are limited and governance will investigate and determine whether or not a claimable hack took place.
If one has occurred and user funds are affected, then governance may proceed to submit the claim through to Nexus Mutual’s claims process. Armor token holders will also participate in Nexus Mutual’s process for claim approvals and payouts as a proxy mechanism for the NXM delegated to the ArNXM vault.
When a payout is confirmed, they will be received to Armor’s payout treasury then distributed to an airdrop faucet for affected recipients to claim their payout from.
Regarding the complete Armor product suite… smart contracts, website dApps, audit information and next steps will all be announced soon.