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⛑ Yearn Recovers Amid $1.7M Claim Drama
Here’s what we’re covering:
Yearn Finance restored its yDAI vault and paid back hack victims
DeFi user and ArmorFi wrestle over $1.7M insurance claim
Spartan Group’s new DeFi fund
AirSwap enables token-based governance
and more :)
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TLDR Yearn Finance, the yield aggregator protocol which suffered the first major hack of 2021 last week, has restored its yDAI vault and returned $9.7M in DAI funds to users who were affected by the attack.
HACK COMPENSATION Yearn minted the DAI used to compensate hack victims with a MakerDAO vault using Yearn’s native token, YFI, as collateral. Yearn plans to pay off the debt through fees generated by the protocol. Yearn plans to pay off the debt through fees generated by the protocol.
INSURANCE CLAIMS 16 insurance claims, issued with insurance protocol Nexus Mutual and seeking payout for the Yearn hack, have been filed since the Feb. 4 attack. Of the 16, 12 have been accepted for payouts worth ~$2.1M and 3 worth $223K remain pending, though it’s anticipated that they will be accepted.
YFI & TVL The YFI token has recovered losses of as much as 12% since the hack, and is now trading at around $33k, near its pre-attack levels. The $650M locked in Yearn has also been steady on the week, moving less than a percentage point according to DeBank.
TLDR Last week’s Yearn Finance hack has a DeFi user wrestling with insurance protocol ArmorFi over a $1.7M claim.
Twitter user kferretcrypto, who bought a claim provided by Nexus Mutual, an insurance protocol, in September, tweeted on Feb. 6 that the Yearn hack triggered a 1,000 Ether payout (or about $1.7M), by ArmorFi, an insurance aggregator protocol, in which he staked his claim. ArmorFi disagrees.
SO WHAT The conflict highlights the risk of interacting with early-stage DeFi platforms, where rules are just being laid out. The emerging nature of the space means that both users and project teams will sometimes have to wade through uncharted territory as procedures are more clearly defined.
WHAT’S THE ISSUE The user says the token he holds entitles him to an insurance claim payout, the project says it doesn’t, and that the funds from the claim should go to their own Treasury to pay other users who do have the correct token.
SPECIFICS The crux of the issue lies in whether the staked token, called an arNFT, ArmorFi’s non-fungible ERC-721 token wrapper for Nexus Mutual claims, provides coverage to the staker, in this case kferretcrypto, or to ArmorFi’s treasury reserve.
DOCUMENTATION “At the time I staked my arNFT,” kferretcrypto told The Defiant, “the documentation (ArmorFi’s) did not reflect the current working product at all.” Because of this, the cover purchaser decided to rely on ArmorFi’s co-founder’s Azeem Ahmed’s comments in the project’s Discord channel, in which Ahmed allegedly stated that users retain coverage even after staking.
The project documentation now says that “staked arNFT do not provide coverage to the user who staked them.”
OLIVE BRANCH kferretcrypto has offered $100K to benefit Armor members who would have suffered staking losses, while Ahmed offered 500K in Armor tokens, worth ~$500K at the time of writing, to the claim’s purchaser.
TLDR The Spartan Group has announced the launch of its $50M Spartan DeFi Venture Fund. The group has raised $30M of their targeted $50M. Investors include bankers and finance industry veterans who want to see DeFi succeed as the future of finance.
PAST INVESTMENTS Over the past two years, the Asia-based advisory board and crypto fund has backed a number of highly successful DeFi projects. These include early investments in $MKR, $AMPL, $LINK, $SNX, $KNC, $YFI, $AAVE, $NXM, and $BAND, as well as recent investments in $ALPHA, $1INCH, $FIDA, and dYdX.
INCENTIVES AirSwap has outlined a formalized proposal process to identify, specify, and implement new projects. This includes built-in incentives for proposal authors (who earn AirSwap tokens when their proposals are accepted by the community), voters (who earn reward points for participating) , and developers (who can receive compensation from the AirSwap token treasury for taking on projects accepted by the community).
“Just as anyone can create a Uniswap trading pair or a Balancer pool, anyone can deploy a no loss prize pool with the PoolTogether Protocol. No loss prize games are one of the most popular consumer financial products in the world combining a chance to win prizes without risking your deposit. Currently over $100 billion is saved in no loss prize games by tens of millions of people globally.”
“All prize pools share the same three key characteristics 1) no loss 2) the ability to withdraw funds at anytime and 3) chance to win prizes. Prize pools are differentiated with 1) the token you deposit 2) the yield source generating the prize 3) the way the prize is distributed.”
“Twitter CFO Ned Segal has said that the social media giant is considering whether to add bitcoin to its balance sheet. In an interview with CNBC on Wednesday, Segal said if Twitter employees and vendors ask to be paid in bitcoin, then the company may consider investing in bitcoin as part of its treasury,” The Block reported.
“Today, open-source blockchain platform Celo announced it had raised $20 million from the sale of its native token, CELO (formerly Celo Gold), to venture firms including Andreessen Horowitz, Greenfield One, and Electric Capital. Those funds will help Celo provide developer grants, integrate new products, and build out the ecosystem with apps like Valora, a mobile phone-based remittance system, which launched on its platform today,” Decrypt reported.
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🧑💻 ✍️ Stories in this newsletter were written by Daniel Kahan and Owen Fernau, and edited by Camila Russo. Videos were produced by Robin Schmidt and Alp Gasimov. Podcast was led by Camila and edited by Alp.
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