Euler Finance Exploit | March 2023
Total claims paid
A total of $2,389,227.88 was paid out for Euler Finance Protocol Cover Claims V2 0, 2, 3, 4, 5, 6, 7, 8, and 11.
A total of $1m was paid out for the Sherlock Excess Cover Claim V2 10, where Sherlock paid out on their Euler Finance coverage and their Excess Cover offset the payout by 25%.
On Monday, 13 March 2023, Euler Finance was exploited for $197m. After this exploit occurred, claim assessors discussed this loss event in the Mutual's Discord server. Because Nexus Mutual is a discretionary mutual, members participate in the Claims Assessment process and review the validity of claims submitted after a loss event occurs.
Members reviewed the information available in the days after the exploit, while Euler Finance Protocol Cover holders waited for the 72-hour cool-down period to pass before submitting claims. Claim assessors discussed the event and determined the Euler Finance exploit was covered under section 1.1 of the Protocol Cover wording.
The Community team released a Euler Finance claims filing guide, which provided information for those who planned to file a claim, as well as information about the active covers and the Claim Assessment process. The Community team also shared the Euler Finance Claims Tracker, where members could track the status of Euler Finance claims throughout the assessment process.
Filed claims and outcomes
Nine Euler Finance Protocol Cover claims and two Sherlock Excess Cover claims were filed, and those claims were reviewed and voted on by claim assessors. As stated in the section above, claim assessors had determined this was a covered event. Once it has been determined that an event is covered, claim assessors review the validity of claims to determine:
- Did the member have active cover at the time of the exploit?
- Did the member provide proof of loss?
- Did the member request a claim amount that matched their actual loss?
For more information on each claim, review the sections below and the Nexus Mutual Claims Dune dashboard.
Claim assessors reviewed and approved Claims V2 0, 2, 3, 4, 5, 6, 7, 8, and 11. Assessors also reviewed and approved Claim V2 10, the Sherlock Excess Cover claim.
The claims included proof of loss, which showed the affected addresses where the members suffered a loss. Each approved claim also requested a claim payment that reflected their actual loss amount.
|Claim V2 0||Claim V2 2||Claim V2 3|
|Claim V2 4||Claim V2 5||Claim V2 6|
|Claim V2 7||Claim V2 8||Claim V2 11|
Claim assessors reviewed and denied Claim V2 1.
Claim V2 1 was the first Sherlock Excess Cover claim, which requested a claim payment that did not factor in the $500,000 deductible included in the cover wording. The Sherlock team filed another claim, Claim V2 10, which claim assessors reviewed and approved after the request claim amount factored in the deductible.
Euler Finance reimbursement
Members who filed a claim and received a payout agreed to the following terms:
By making a successful claim and receiving a payout (i.e., reimbursement) from Nexus Mutual, you agree to send your eToken and dToken balances to the Nexus Mutual DAO Treasury (0x586b9b2F8010b284A0197f392156f1A7Eb5e86e9) on Ethereum mainnet. In doing so, you give rights to any potential reimbursements from Euler Finance—including any reimbursement tokens that the Euler team may decide to distribute in the future—to Nexus Mutual once your claim has been approved.
The Community team has been working with members who redeemed their claim payment for Euler Finance and the Euler Finance community, so reimbursement is returned to the capital pool.
Euler Finance reimbursement to affected users
On 11 April 2023, the Euler Labs team shared an update with their community indicating they were opening reimbursement claims at 2:00 UTC, per the updated redemption plan shared on the Euler Finance governance forum.
For affected users who received a claim payment from Nexus Mutual, a disclaimer was presented in the redemption user interface that read:
According to the Nexus Mutual DAO Community team, you have previously redeemed a claim payment of [#######][ETH/DAI]. They have requested that you transfer the right to reimbursement for up to the full value of [#######][ETH/DAI] to the Nexus Mutual DAO treasury address, as per the following agreement.
To discuss, please email [email protected].
Response from Euler Finance claimants
Once reimbursement was made available to Euler Finance users, the Community team reached out to the nine members who redeemed a claim payment from Nexus Mutual for the Euler Finance loss event and provided instructions on how to return their claim payment to the Nexus Mutual DAO treasury.
Afterwards, eight of the nine members responded and said they would return their claim payments to the Mutual since they experienced no material loss after claiming their reimbursement from Euler Finance.
The member who redeemed 199.6 ETH for Claim V2 #4 emailed the Mutual and indicated they would not return their claim payment.
The DAO Community team and the Foundation Legal team is in the process of working with these two members who received claim payouts to transfer the their reimbursement to the Mutual, so any future reimbursement can be returned to the Capital Pool.
To date, 12.99184203 WETH, 107.57 ETH, and 1,720,207 DAI has been returned to the Nexus Mutual DAO treasury. The member who redeemed 60 ETH for Claim V2 #11 has shared that they will return their claim payment, but needed certain documentation from the Mutual before redeeming their reimbursement from Euler Finance and returning the 60 ETH to the DAO treasury.
For DAI denominated Euler Finance claims, 99.05% has been recovered.
For ETH denominated Euler Finance claims, 32.39% has been recovered.
- Once the 60 ETH from Claim V2 #11 is returned, the ETH recovery rate will reach 48.52%
Transferring returned funds to the Capital Pool
Once all outstanding funds have been sent to the DAO treasury, the Community team will work with the DAO treasury multisig signers and send the reimbursed funds back to the Capital Pool.
When this has been completed, this section will be updated with the transaction confirming the return of funds to the Capital Pool.