Harmony is Planning to Inflate Its Way Out of LossJuly 27, 2022
Harmony is suggesting that it would hardfork and issue out more tokens. This will be to refund users who lost funds in the $100 million exploit it suffered. But the community is not taken the suggestion lightly.
A Bold Proposal
It has been weeks after hackers made away with about $100 million from the protocol’s cross-chain bridge. Then the layer-1 protocol project came up with the controversial plan of refunding users.
Harmony Protocol said the proposal is a way to easily compensate users who were affected by the heist. The exploit happened in June. However, the community isn’t accepting that means of refund.
The refund plan was sent to the network’s governance board in the early hours of Wednesday. The team suggested a hardfork that would let it mint ONE token that would then be used as compensation.
The proposal read that the Harmony team has brainstormed to develop a path to refund affected users. The proposal stated that a hack was responsible for the situation and it presented users with two options.
The first option suggested refunding 100% of their lost assets by minting 4.97 billion ONE token. It is almost enough to settle all affected users, based on the token’s current market price of $0.20.
The second option suggests there will be a partial reimbursement when they mint 69 million tokens. It is expected to cover about half of the total loss dictated by the token’s price.
A Case for Preservation
Both options entail minting the tokens gradually over the course of three years. It would help mitigate inflation and the pumping of too much ONE into the market.
The team further explained why it went for that solution. The proposal said it was decided against expending the foundation treasury. This was viewed to be in the interest of longevity and the network’s wellbeing.
It was deemed that refunding from the treasury might affect the foundation’s strength to support growth. Harmony’s ecosystem will also be negatively impacted in the long run. Harmony foundation plans to support Harmony for a long time and the foundation tokens are reserved for that.
The proposal has, however, been vehemently pushed back by the community. The comment not to mint more had the largest votes. Users argued that minting more tokens would adversely affect those staking.
Another user stated that the community had waited two weeks for a proposal. They added that a hardfork at this point will kill the network with its already little chance of surviving.