In the proposal posted via the protocol’s community page, Harmony developers revealed that over 14 different asset classes worth close to $100 million were stolen from 65,000 wallets.
The Harmony protocol has been the subject of backlash as the firm announced a hard-fork proposal which will see Harmony mint up to 4.9 billion of its native tokens, ONE, to reimburse victims of the $100 million Horizon Bridge hack in June.
The proposal was, however, met with severe backlash from members of the community, with most members voicing worries that the asset would experience inflationary pressure and lose value as a result of the large-scale issuing of new tokens.
Harmony had gone silent for almost a month following the hack before popping up with the proposal via a blog post and inviting people to vote on potential fixes.
In the proposal posted via the protocol’s community page, Harmony developers revealed that over 14 different asset classes worth close to $100 million were stolen from 65,000 wallets.
The blog post also noted that the hack led to “the accruing of uncollectible loans” across various DeFi protocols that Harmony participates in. The devs blamed traders for taking advantage of the situation to borrow ONE with no intention of paying them back.
Additionally, according to the blog post, the hack caused “the accruing of uncollectible loans” across several DeFi protocols that Harmony uses as the developers accused traders of using the opportunity to borrow ONE without any intention of paying them back.
The developers also stated that an immediate reimbursement would be impossible given the current situation of their treasury, which may indicate a variety of things, few of which are positive.
The Harmony team revealed that it has “worked tirelessly to brainstorm and develop paths towards reimbursing” victims and offered to do so in tokens to be minted following a hard fork.
The company added that the inflationary idea might be implemented by either completely compensating users for the value of their stolen tokens at some point in the next three years or by compensating users for only 50% of the value stolen.
The first option offers an estimated 100% compensation with a minting of 4.97B ONE, which equates to a 3-year monthly emission of 138M tokens ($2.76M using the price of $0.020). Over the course of three years, newly minted coins will be gradually introduced into circulation.
The second option calls for a 2.48B ONE minting, which translates to a 3-year monthly emission of 69M ONE tokens ($1.38M at the price of $0.020), or an estimated 50% reimbursement. Over three years, newly minted tokens will be gradually put into use.
The company’s team is awaiting community feedback before moving forward, but initial responses already appear to be extremely negative, with the majority of the comments on the community page or on Twitter expressing serious concerns about the concepts.
Shwaver, a community member, expressed his displeasure with the proposal, stating that it would end up driving builders away from the Harmony eco-system.
“You’ve done this completely backward. To afford the repayment, you need to first reestablish a stable ecosystem, e.g., repeg or alternative, so projects have a reason to build here, people have a reason to make long-term investments, etc.,” he stated.
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