Nexus Mutual Pays $250K to Arcadia Finance Hack Victims in Base Chain Insurance Milestone

Nexus Mutual Covers Arcadia Finance Hack Victims With $250K Payout

Nexus Mutual has sent $250,000 to users hit by Arcadia Finance’s $3.5 million exploit last month—one of the first major insurance settlements on Base, Coinbase’s growing Ethereum Layer 2 chain. The money gives victims some relief while they wait for Arcadia’s own reimbursement plan, which could take weeks to materialize.

The hack happened on July 15 when attackers found a way to drain stablecoins straight from user wallets due to a smart contract flaw. Stolen funds were quickly converted to wrapped Ether, leaving little chance of recovery. Nexus Mutual, a decentralized insurance provider, started reviewing claims after its usual waiting period and finalized payouts this week for users who’d bought coverage through OpenCover, a Base-focused platform.

A Stopgap Before Arcadia’s Plan Kicks In

Arcadia Finance has been working on its own solution—something involving “Recovery Tokens” that victims can eventually swap for USDC. But the process is slow, requiring users to stake tokens or trade them later. Nexus Mutual’s payout, though smaller than the total losses, at least puts real ETH in people’s hands now.

It’s not the first time Nexus Mutual has stepped in after a DeFi disaster. Since 2019, they’ve paid out over $18 million across 37 incidents, including big claims like the $5 million TribeDAO hack in 2022 and Euler Finance’s $2.3 million settlement last year. This one’s smaller, but it’s notable because Base is still new to DeFi. The fact that insurance worked here—quickly—might matter more than the dollar amount.

Two Ways to Handle a Hack

Arcadia’s approach is different. Their Recovery Token system tries to keep users engaged with the protocol, offering rebates and staking rewards over time. It’s clever, but not everyone wants to wait or jump through hoops. Nexus Mutual’s payout, by contrast, is just cash with no strings attached.

Hugh Karp, Nexus Mutual’s founder, tweeted that trust comes from “time and consistency.” That’s probably true, but right now, victims might just care about which option gets them money faster. For some, Nexus Mutual’s payout did exactly that.

Still, $250,000 doesn’t cover the full $3.5 million loss. Arcadia’s plan might fill the gap eventually, but it’s unclear how much users will actually recover. For now, the takeaway is simple: insurance in DeFi is starting to work, even if it’s not perfect. And on Base, that’s progress.