Cryptocurrency insurance service Nexus Mutual compensated its clients who suffered losses in the recent Arcadia Finance attack.
According to Cointelegraph, Nexus Mutual has compensated users who lost funds due to the Arcadia Finance attack with approximately $250,000. The protocol was attacked in mid-July on the Base blockchain, resulting in a loss of $3.5 million in USDC and USDS, with stolen assets converted to WETH.
Attackers directly transferred funds from user accounts. Arcadia users began filing claims on July 29 after a 14-day cooling-off period. In partnership with Base blockchain coverage vendor OpenCover, Nexus Mutual has currently compensated $250,000.
OpenCover CEO Jeremiah Smith stated that there is no zero risk, either on-chain or off-chain. He pointed out that decentralized finance (DeFi) insurance significantly changes the state of the industry: 'It's not just about compensating affected users; it's also proof that DeFi is ready.'
On-chain insurance accelerates payouts
Nexus Mutual maintains a transparent claims history and supports on-chain verification. Since its establishment in 2020, the service has paid out over $18.25 million in claims.
Compared to traditional insurance, which usually requires months to resolve claims, Nexus Mutual states that most valid claims can be paid within seven days, thanks to the transparency and verifiability of blockchain data.
Nexus Mutual CEO Hugh Karp stated: 'Many people have had poor experiences with traditional insurance claims processes, and we want to show a better way.'
Smart contract risks still exist
Although DeFi reduces the risks associated with custodial intermediaries, it introduces vulnerabilities from complex smart contracts. These complexities are easily overlooked before problems are exposed. A recent case involved the SuperRare (RARE) token staking contract being attacked, resulting in a loss of approximately $731,000. Analysis found access control vulnerabilities in the smart contract that allowed anyone to modify user contract balances.
Nexus Mutual pointed out that the Arcadia attack highlights 'the inherent risks of decentralized finance,' but investors can now mitigate these risks through insurance, making the industry more accessible: 'Nexus Mutual offers extensive coverage for smart contract vulnerabilities and related risks, enabling forward-thinking institutions and seasoned investors to confidently allocate capital in the DeFi space.'
