Harmony Offered To Reimburse Users By Minting New Tokens

Harmony offered to reimburse the hack victims by minting new tokens but the community is seemingly not happy about the proposal. Why is that, we find out today in our cryptocurrency news.

A month has passed since the bridge exploit that saw Harmony lose $100 million worth of ETH and the decline of the Whitehat offer for the return of the funds. As a result, the developers started looking for other ways to reimburse the community for the lost funds. The response however mirrored the solution that was found by Luna developers. Harmony offered a hard fork and a print of 4.97 billion OP tokens to be paid out to the community members in the past three years.

The reimbursement proposal is posted and available for feedback. We encourage the #HarmonyONE community to read and engage in conversation with each other and the core team.

Thank you for your patience as we work to move forward together as ONE.

Link: https://t.co/9q7dlSrAvW

— Harmony 💙 (@harmonyprotocol) July 27, 2022

After a month of being radio silent, harmony addressed the community via a blog post and asked them to vote on the possible solutions. The developers argued that with the current state of their treasury, an immediate reimbursement will be impossible which can mean a few things. With more than 14 different asset classes stolen from 65,000 wallets worth $100 million, Harmony offered to reimburse the community in OP tokens to be minted in a hard fork.

The idea could be carried out by reimbursing the users fully for the value of the stolen tokens in the next three years or by indemnifying 50% of the value stolen. The first option is an estimated 100% compensation with mining 4.97B ONE token which equates to a 3-year monthly emission of 138 million tokens. The minted coins will be brought into circulation in the 3-year period. The second proposal is an estimated 50% reimbursement with the minting of 2.48 billion ONE or a 3-year monthly emission of 69 million ONE tokens. The minted tokens will be brought into circulation in a 3-year period.

The blog post stated that the hack led to accruing uncollectible loans on various DefI protocols which Harmony takes part. The developers blamed the traders for taking advantage of the situation to borrow the ONE tokens with no intention to pay them back. The situation led to a loss of liqudity beucase of the supplier’s funds being drained so the developers feared that this could lead to the project being removed from Defi protocols. The statement ignored the issue which was that the exploit was due to inadequate coding and that the users of the platform should not be expected to foot the bill.

For example, the developers stated that they opted for inflationary tactics in the interest of the well-being of the project. But the first part only noted that the proposed solution would be an inflationary measure and continued by affirming that the reimbursements will not happen at once in order to prevent market disruptions.