The crypto-native insurance alternative Nexus Mutual has completed compensation for clients who suffered losses in the recent Arcadia Finance hacking incident.
According to an announcement released to Cointelegraph on Monday, Nexus Mutual has compensated users who lost funds in the Arcadia Finance hacking incident with approximately $250,000. The protocol was hacked in mid-July on the Base blockchain, resulting in a loss of $3.5 million in USDC and USDS, with the stolen assets subsequently exchanged for WETH (Wrapped Ether).
The attacker directly transferred funds from user accounts. Arcadia users began submitting claims after a 14-day cooling-off period on July 29. In collaboration with OpenCover, the insurance provider on the Base chain, Nexus Mutual has now cumulatively compensated $250,000.
OpenCover CEO Jeremiah Smith stated, "There is no such thing as zero risk, whether on-chain or off-chain." He added that decentralized finance (DeFi) insurance has significantly changed the industry landscape:
Nexus Mutual's Market Director Phil Johnston told Cointelegraph that this compensation will not affect the company's solvency or its ability to make other claims payments. "We still have over $100 million in insured amounts," he said.
Nexus Mutual maintains a transparent claims history and supports on-chain verification. Since its establishment in 2020, the service has cumulatively paid out $18,256,181 in claims to users.
Unlike traditional insurance companies, which often take months to process claims, Nexus Mutual states that most valid claims are paid within seven days, thanks to the transparency and verifiability of blockchain data.
Nexus Mutual CEO Hugh Karp said, "Too many people have had bad experiences with traditional insurance claims processes, and we want to prove that there can be a better way."
While DeFi eliminates the risks associated with custodial intermediaries, it simultaneously introduces new vulnerabilities in complex smart contracts, which often have a larger attack surface. Due to the complexity of on-chain systems, critical vulnerabilities can be more easily overlooked until they lead to severe consequences.
A recent case involved the SuperRare (RARE) token staking contract being attacked at the end of July, resulting in a loss of approximately $731,000 in RARE tokens. Cointelegraph's analysis revealed that a vulnerability in the smart contract—failure of access control checks—allowed anyone to modify the balance within users' contracts.
Nexus Mutual's announcement stated that the Arcadia incident highlights the "inherent risks of decentralized finance." However, investors can now utilize insurance to hedge against such risks, making the field more accessible:
Related: Legal Interpretation: White House Cryptocurrency New Regulations Clarify SEC and CFTC Regulatory Boundaries for U.S. Crypto Firms
Original: “Arcadia Finance Users Reimbursed by DeFi Hack Insurance”
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