Crypto-native insurer Nexus Mutual has reimbursed $250,000 to victims of the Arcadia Finance hack, which drained $3.5 million in digital assets last month. The hack targeted user accounts directly on the Base blockchain, siphoning funds in USDC and USDS that were later swapped to Wrapped Ether (WETH).

Following a mandatory 14-day claim cooldown, affected users began submitting claims on July 29. Nexus Mutual, in collaboration with OpenCover, processed and approved the payouts, marking a significant moment for decentralized insurance.

OpenCover CEO Jeremiah Smith emphasized that no system—onchain or offchain—is risk-free. Still, he called the Arcadia reimbursements a breakthrough moment, stating, “The Arcadia payouts are not only about making impacted users whole, they are proof that DeFi is ready.”

Despite the payout, Nexus Mutual assured its community that the move had no impact on its broader ability to honor claims, with more than $100 million still in active cover. Since launching in 2020, the protocol has paid over $18 million in claims.

Unlike traditional insurers, Nexus Mutual leverages blockchain’s transparency to verify and approve valid claims in under a week. CEO Hugh Karp noted this rapid process as a crucial advantage over legacy systems.

However, DeFi’s promise comes with real risks. Just days after the Arcadia incident, SuperRare suffered a $731,000 exploit due to flawed access control in its staking contract. Nexus Mutual highlighted that smart contract complexity remains a core vulnerability.

Still, onchain insurance may be the key to unlocking broader institutional trust in DeFi by mitigating these ever-present risks.