All is well when it ends well
As you may know, Nexus Mutual recently upgraded to V2 and with this came a lot of changes and opportunities.
Since Ease is one of the largest underwriters in Nexus through our arNXM product, we now manage our own coverage syndicate on the Nexus V2. You can check out the Ease Risk Rubric here:
https://ease.org/learn-crypto-defi/get-defi-cover-at-ease/ease-defi-cover/the-ease-risk-rubric/
We also want to be completely transparent with our community and officially disclose the details of an incident that transpired during this update.
Not Without Incident
Starting March 9th, the Nexus Mutual team were performing their major upgrade to V2.
arNXM was not scheduled to be upgraded for its V2 until a few days after Nexus Mutual V2 was live, so that we could finalize our testing with their live systems. We didn’t anticipate that this upgrade would cause immediate problems with balance recognition on the smart contract, but the arNXM vault began to read the amount of NXM it had staked as 0.
Because of this, the conversion rate for wNXM:arNXM suddenly became ~1:10. Exploiters were quick to take advantage of this and began minting arNXM at the 1:10 rate and selling on dexes. They minted ~9.2k arNXM at these rates, resulting in a loss of ~8k wNXM from the arNXM vault with users being diluted ~5% of their wNXM value.
Within a couple hours we’d noticed the price change. We initially thought it was just a visual bug related to the NXM price drop, and thought some bots had just gone haywire. We purchased arNXM to bring its price back up but, upon realizing the dumping was still occurring, we discovered the actual source and immediately took down the arNXM contracts.
We’ve attempted to contact the exploiters but have had no luck in reaching them.
All is Well when it Ends Well
This has since been taken under control. We’ve upgraded the arNXM contracts so this is no longer an issue. We’ve arbitraged the price back to around parity so that will not be occurring any more.
Thankfully we eat our own dog food and have been purchasing coverage to protect ourselves against these unforeseen incidents. We have active coverage from Nexus Mutual for $750k, which should be able to easily cover a buyback of the lost wNXM.
We will be submitting a claim for the DAI amount required to buyback the lost wNXM and repay the vault, and once that claim is paid out we will return the arNXM vault to its previous conversion. Please do not withdraw from the arNXM vault until we have replenished it with wNXM or you will incur a 5% loss.
Ease has never let down its community and we certainly won’t allow an incident of this kind to ruin our reputation. As always, you can count on us!
We would also like to express our gratitude to our community for remaining calm and confident during this whole upgrade. Special thanks to those of you who reached out to us with helpful information!
What to Expect in the Future
We’re looking forward to the opportunities the Nexus V2 presents for underwriters. Although we had a bumpy transition, we’re glad we can now devote ourselves to becoming the biggest syndicate on the Nexus ecosystem.
With this completed and finally live, we can fully commit ourselves to launching Ez-Farming on Ease. You can check our preliminary announcement here: https://ease.org/ez-farming-is-near/
