DeFi Insurance in action: After the C.R.E.A.M. Finance Hack, what happens next?
iTrust.Finance exists to help you navigate the DeFi seas as easily and safely as possible — keeping you informed on important developments along the way. In the wake of the C.R.E.A.M. Finance hack, the DeFi cover mechanisms at Nexus Mutual have already kicked into gear. In this short update, we’re going to explain the status quo, how it relates to iTrust.finance users, and what happens next.
The C.R.E.A.M. Finance Hack: What happened?
On 27 October, 2021, at 13:54 UTC, the C.R.E.A.M. Ethereum v1 markets were exploited and liquidity was removed. The attacker was able to remove approximately $130m USD. The official post mortem provided by the CREAM protocol team is found here:
https://medium.com/cream-finance/post-mortem-exploit-oct-27-507b12bb6f8e
Additional analysis has also been provided by:
- Banteg tweet: Understanding Cream exploit
- BlockSec: Initial Analysis of the CREAM Finance Attack
- C.R.E.A.M. Finance Exploiter’s Transaction: Etherscan
- Igor Igamberdiev tweet: Creamdotfinance
- Mudit Gupta: Analysis of the $130m+ Cream hack
- SlowMist Analysis: Cream Hacked Analysis
Covering Losses: Nexus Mutual’s cover process kicks into gear
Since their mandated 72-hour cool-down period expired on 30 October, 2021, Mutual members who had previously purchased CREAM V1 Protocol Cover have been able to submit their claims.
You can read more about the claims process for Nexus Mutual policy holders here.
Claims are already being paid out to policy holders, saving them from horrendous financial losses:
Hopefully, between the relief provided by successful claims and ongoing efforts from the C.R.E.A.M team to locate the attackers and regain the stolen funds, end-user losses can be kept to a minimum.
However, the attack provides a timely reminder of the importance of obtaining cover for your assets if you have locked any funds in DeFi smart contracts. Stay safe out there!
“I stake my $NXM and/or $wNXM in iTrust.Finance vaults — what does this mean for me”?
Any payouts to Nexus Mutual policy holders who were victims of the C.R.E.A.M. hack will cause a burn of some of the tokens staked in Nexus Mutual.
iTrust.finance currently has two vaults which stake in Nexus Mutual; The Index and the Strategy Vaults.
Stakers in the iTrust.Finance Strategy Vault
Thanks to the Risk Analysis Processes which we use to determine the ‘lower risk contracts’ staked against by our Strategy Vault, iTrust.finance users who stake their $NXM or $wNXM in that vault will not be impacted by the token burn in any way.
Stakers in the iTrust.Finance Index Vault
The iTrust.finance Index vault backs the contracts that are available for cover on Nexus Mutual, sharing the reward and also the risk.
To date the vault has suffered a burn of 407.98 $NXM tokens on Nexus. Usually, this would therefore impact the tokens of users staked in the iTrust.finance Index Vault.
However for the week ending the 1st November the Index vault generated 240.32 $NXM in rewards. The iTrust team will donate the remaining $NXM in order to make up the difference and negate the burn to date.
This means, at this current time, (2nd November 2021) we have been able to prevent anyone who stakes their $NXM or $wNXM on iTrust.Finance from losing any of their original stake through the C.R.E.A.M related token burn.
This is of course a dynamic situation though, and not all claims on the Nexus Mutual cover have been completed.
We will continue to monitor and send further updates in due course.
About iTrust.finance
iTrust.finance seeks to improve efficiency and usability in the DeFi Market. Maximising cover capacity and accruing token rewards for stakers in the DAO; increasing the overall market value of the underlying insurance protocol.
On launch, iTrust’s unique application will offer a host of yield-maximising staking options for Nexus Mutual ($NXM) holders and crucially, wrapped Nexus Mutual ($wNXM) token holders alike. With other insurance protocols to follow.
Website: https://www.itrust.finance
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Twitter: https://twitter.com/iTrustFinance
