After the COVER smart contract experienced an infinite minting attack on 2020/12/28, a large number of minted COVER tokens (greater than the COVER circulating supply) were bought by arbitrageurs on decentralized exchanges and deposited on Binance, causing the price of COVER to decrease at an alarming rate, and resulted in many Binance users experiencing significant losses. In the days following the attack, Binance has kept in close communication with the COVER Protocol team to discuss various compensation possibilities for our users involved. However, as the required compensation amount was too large to adequately recompense all affected Binance users, the COVER team was unable to provide any funds beyond their original compensation plan.
After reviewing the latest compensation plan from the COVER team, we realized that a large number of Binance users who bought COVER on Binance after COVER’s proposed snapshot time at 2020/12/28 8:11:06 AM (UTC) would have their tokens become worthless. In response to this, Binance has decided to proceed with a plan that upholds our core principle of protecting our users.
In addition to the compensation plan from the COVER team, Binance will utilize the Binance SAFU Fund to recompense a total of $10,107,505 USD (distributed in 8,171,634.10 BUSD and 2,581.16 ETH) to affected and eligible users, with the details listed out below.
As described in COVER’s compensation plan, the COVER team will take a snapshot of all COVER balances at an Ethereum block height of 11541218, 2020/12/28 8:11:06 AM (UTC) (“ETH Snapshot Time”) and distribute a new COVER token at a ratio of 1 COVER-old = 1 COVER-new. We will also incorporate the time that COVER trading was halted on Binance, 2020/12/28 12:40 PM (UTC) (“Trading Stop Time”) into our plan:
- For Binance users who did not trade COVER: If a user’s COVER balance on Binance at the ETH Snapshot Time was equal to their balance at the time of the Trading Stop Time, then this user will receive COVER-new at a 1:1 ratio based on their COVER-old balance at the ETH Snapshot Time.
- For Binance users who bought COVER after the ETH Snapshot Time: If a user’s COVER balance on Binance at the ETH Snapshot Time was lower than their balance at the Trading Stop Time:
- This user will receive COVER-new at a 1:1 ratio based on their COVER-old balance at the ETH Snapshot Time.
- For each user’s net purchased COVER amount, Binance will compensate users out of pocket with the price that they originally purchased the COVER tokens for in either ETH or BUSD. This compensation will be covered in full by the Binance SAFU Fund and totals $10,107,505.79 USD (consisting of 8,171,634.10 BUSD and 2,581.16 ETH).
- For Binance users who sold COVER after the ETH Snapshot Time: If a user’s COVER balance on Binance at the ETH Snapshot Time was higher than their balance at the Trading Stop Time, this user will receive COVER-new at a 1:1 ratio based on their COVER-old balance at the Trading Stop Time.
- Binance will not make any additional compensation for users that only deposited tokens between the ETH Snapshot Time and the Trading Stop Time.
- COVER-new will assume the COVER ticker going forward. COVER-old tokens will be renamed as COVEROLD on Binance.
- Binance will complete the distribution of COVER-new, ETH and BUSD to all affected and eligible users as part of the compensation plan after receiving the new COVER token. A further announcement will be made once the distribution is complete.
- Withdrawals for COVER-old will be closed after this announcement. Withdrawals for COVER-new will open once the distribution is completed.
- Binance will determine whether or not to open trading for COVER-new at a later date.
- Compensation plan released by the COVER team
- Post-mortem released by the COVER team
- Binance Will Suspend COVER Trading and COVER Deposits
- Notice Regarding the Delisting of COVER-Old and Upcoming Distribution of COVER-New
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