Insurance service Nexus Mutual reported reimbursing around $250,000 to its users who lost funds due to the Arcadia Finance hack.
Compensation for Arcadia Finance Users
According to a Monday announcement, Nexus Mutual reimbursed approximately $250,000 to users who lost funds in the Arcadia Finance hack. The protocol was hacked in mid-July for $3.5 million in USDC and USDS on the Base blockchain, with stolen assets swapped to Wrapped Ether (WETH). Arcadia users who lost funds started filing claims on July 29 after a 14-day cooldown.
On-Chain Insurance Model
Nexus Mutual maintains a transparent claims history and enables its verification on-chain. Since its inception in 2020, the service has reportedly paid $18,256,181 worth of claims to its users. Unlike traditional insurers, which often take months to resolve claims, Nexus Mutual says most valid claims are paid within seven days. CEO of Nexus Mutual, Hugh Karp, noted that the company aims to show a more efficient claims process.
Smart Contract Risks in DeFi
While DeFi eliminates risks related to custodial intermediaries, it introduces new vulnerabilities in the form of complex smart contracts, often with significant attack surfaces. Insurance allows investors to mitigate such risks, making the DeFi space more accessible. The Nexus Mutual announcement emphasizes that the Arcadia exploit highlights 'the inherent risks associated with decentralized finance,' and users can rely on substantial coverage against smart contract exploits.
The reimbursement from Nexus Mutual underscores the growing importance of insurance services in the DeFi sphere, where users become more confident in their investments with insurance support.
