Why I haven’t been covering recent exploits
You might have noticed that I didn’t cover the $6m Value price feed exploit on the 17th. I also didn’t cover the Origin attack where a 70k Eth flashloan was used to manipulate spot price.
This isn’t out of some desire to shape a positive narrative around DeFi. Those who’ve followed this blog from the start will know my early criticism of Harvest, and subsequent coverage of their $24m ‘incident’.
The reality is I have lost all interest in these headline makers. Especially when the exploit would have been avoided if the protocol had just been using ChainLink.
Just a few days before the incident Value were touting their protocol as highly secure, has a tweet ever aged so badly?
Thankfully Value is now turning to ChainLink for robust oracles. But it still feels too little too late.
I know, we’re all completely desensitised to these events now. When protocols have $1b of assets under management, $6m and $24m exploits start to feel inconsequential.
But they’re really not. This is real people’s money. Gone. Forever.
It’s not just oracle exploits. A huge variety of things can go wrong in DeFi, and it’s always retail investors who gets burned.
Risk minimisation is a core reason I got involved in PieDAO, as indices reduce your exposure to these events with a balanced portfolio. But even that’s not enough.
Yam to The Rescue.
Thankfully, Yam are as fed up as I am.
The good news is that they’re actually going to do something about it.
Umbrella is a new insurance platform from the community that would offer protection for DeFi users across the whole ecosystem.
The system will offer a permissionless insurance pool creation process that will enable a wide range of coverage options.
DeFi users will be able to access specific protocol coverage, paid out by a chosen arbiter in the event of an incident.
Coverage providers are incentivised to participate through protection pools, with a percentage of their stake being sold for coverage when required.
You can read the litepaper here, and stay up to date directly via the Yam website.
So far the community are estimating 35% completion, so keep an eye out for Umbrella in the near future.
I’m glad to see efforts such as Umbrella take centre stage, and hope that this wild west stage of DeFi will soon be a thing of the past.
As always, if you want to get involved in the Yam community head over to their discord.
They’re a friendly bunch.