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DeFi protocols Yearn and Cover announce cessation of merger



Decentralized finance (DeFi) protocols Yearn Finance and Cover have announced today the end of a protocol merger process initiated in November last year. 

The two protocols were initially linked during a spree of a half-dozen Yearn acquisitions, mergers, or collaborations, the exact term depending on the project. The split comes as a surprise to many, given that Cover, a protocol that provides coverage or insurance for DeFi deposits, was a natural fit for yield vault provider Yearn. The teams had also collaborated in crisis situations in the past, such as when Cover experienced an “infinite mint” hack in late December 2020.

Following the hack of Yearn’s DAI vault earlier this month the team also announced that coverage from Cover would become standard across all vaults. According to Cover core contributor “DeFi Ted”, Yearn will now be moving forward independently with their own insurance offering. 

Both teams confirmed that users can continue to purchase coverage for Yearn deposits, and that current coverage will be unaffected.

Comments from both teams indicate that the cessation was an emotional, potentially snap decision — one rooted in potential conflicts of interest related to Cover’s new protocol, Ruler.

Emotional responses

In a since-deleted Tweet, Yearn founder Andre Cronje weighed in in the split, portraying it as a breach of trust:

“Personally, this was very sad to see. I had very high regard, trust, and faith in the Cover team. Lesson learned. Wont trust them again.” 

He’s since followed up with another, similarly cryptic Tweet: 

DeFi Ted told Cointelegraph that the two teams had recently met to discuss providing coverage for Yearn’s vaults, and the Yearn representatives reached out shortly after to reveal they would be building their own insurance/coverage offering. 

Ted added he was personally “a bit blind sided” by the decision, which he says was given with four hours notice prior to the Yearn announcement on Twitter. On official social channels Cover team members characterized the split as a “difference of opinion,” and likened it to a romantic relationship in which both parties discover that they’re “better as friends.”

“Honestly feel a little lost right now sir,” said Ted.

A core Yearn operations contributor declined to comment.

Can’t fork and be friends

Some community members have speculated that Yearn’s decision is related to the launch of Ruler Protocol, a lending solution from core Cover contributors that kicked off a liquidity mining program this week. The Yearn ecosystem already includes one lending platform, CREAM Finance, and core contributor “banteg” has hinted on Twitter that the team isn’t appreciative of competitive overlap from collaborating teams:

Ted confirmed to Cointelegraph that the split is related to Ruler, but said that there’s “no conflict” between the various protocols, and instead that there was concern from Yearn about the Cover team “running two projects.” 

“In fact, we have a great relationship with Leo and CREAM, don’t be surprised to see us do something with them,” he said.

The price for Cover’s native governance token, $COVER, has plummeted on the news, down 35% to $605 at the time of publication.

Nonetheless, Ted and other team members say they remain resolute in building, and that the split is just another chapter in what has been a tumultuous history featuring multiple forks and re-launches. 

“The COVER journey has definitely been unique.”