Black Thursday claims

Kayleigh Petrie
Mar 20 · 4 min read

We recently had an influx of claims after the MakerDAO market activity after ETH saw a dramatic drop in price, losing 30% value in approximately 24 hours.

This, plus a rapid increase in gas prices put stress on the Maker Protocol, the community, the Maker Foundation, and the Ethereum DeFi ecosystem as a whole.

The Nexus Mutual community had a wide range of opinions on whether smart contract cover should protect users against this particular incident. The Nexus Mutual cover wording offers cover against smart contracts being used in an unintended way. However member interpretations of ‘unintended way’ vary.

It becomes the heart of the discussion that every bit of code does what it is written to do, but whether it was intended to do that is still open to interpretation.

Some members found it hard to accept that the incident was even related to smart contracts at all.

Members discussed that in light of the fact only certain MakerDAO users with CDP vaults lost funds, whether a claimant had actually lost funds could potentially influence their vote. (Although in order to make a claim a member does not have to prove loss of personal funds.)

When it became clear that the Claims Assessor votes were going against paying out for this event, Hugh Karp wrote to the community to suggest ways around this issue. In theory this would provide a way for claimants to demonstrate loss of funds to members in order to try and influence their discretion. No member, board member or team member has any additional influence on voting. However this proposal was generally rejected by members, even if they agreed in principle to pay out to those who lost money; because there was no realistic way or inclination to demonstrate proof.

Some members saw the declined claims as limitations of the Nexus Mutual system whereas others saw the previously paid out claims (for the bZx event) as evidence to the contrary.

Ultimately, although the discussion was ongoing, members made their votes based on their own research conclusions and every claim for this event was declined by member vote.

  • All 16 claims raised were rejected.
  • In total 99.96% of votes rejected claims and 0.04% accepted
  • $2,218,270 was staked to decline.
  • $786 was staked to accept.

Throughout this situation we have received some great feedback and are working to make some subsequent changes to address the issues raised. Before doing so we will hold some indicative voting in our Discord channel to get community steering and then follow up with full governance votes. This includes:

  • Changes to the current time limits on claims voting. To include voting velocity period, minimum vote period and max vote period.
  • Changes to the cover wording document to be more explicit and remove ambiguity around certain issues.

Note: On the Nexus Mutual tracker claims 20 and 21 still show as pending, although voting has officially closed. This is because the corresponding cover expired after the claim was submitted, but before the voting closed. This is an edge case we haven’t addressed. We are aware of the issue and it will be fixed in the next smart contract upgrade once we’ve completed the current audit.

Nexus Mutual

A people-powered alternative to insurance.

Kayleigh Petrie

Written by

Recently hiked the 2650 mile Pacific Crest Trail from Mexico-Canada. Attempting to navigate real life. Head of Engagement at Nexus Mutual.

Nexus Mutual

A people-powered alternative to insurance. A blockchain based mutual platform. Built on Ethereum.

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