Harmony unveils “Great” plan to reimburse users who lost funds in hacking attack
3 min readAlmost a month after suffering an attack that caused a theft of BRL 520 million in cryptocurrencies, the Harmony protocol released two plans to reimburse its users. However, none of the solutions pleased the user community.
One of these solutions aroused the greatest controversy, as it provides for a hard fork on the Harmony network. At the same time, the developers proposed to issue 4.97 billion native network tokens (ONE) and distribute them to community members.
The second option foresees a refund of 50% and another issuance of 2.48 billion OP, and also did not please the community. Even so, users will be able to choose between the two proposals starting August 1.
Between the devil and the deep sea
After the attack took place, the Harmony team spent almost a month without giving any response to users. Only on Tuesday (26), the team presented two refund proposals through a publication in the project forum.
Firstly, the developers dismissed the idea of a full and immediate refund of stolen funds. According to the team, the attack greatly impacted the protocol’s cash, making it impossible to make a refund in the short term.
In this sense, the two proposals estimate a period of three years for the reimbursement of customers harmed by the attack. The main difference between them is that one proposes a full refund, while the other only returns 50% of the funds.
The first option returns 100% of the stolen funds over a period of three years. To that end, Harmony proposes to issue 4.97 billion ONE, Harmony’s native token. That is, an issuance fee of 138 million tokens per month, which, given the current value of BRL 0.10 per ONE, corresponds to BRL 13.8 million.
On the other hand, the second option foresees a smaller issuance of tokens: 2.48 billion ONE, also over three years. In this case, the monthly issuance corresponds to what is equivalent to a monthly issuance of 69 million ONE, or R$6.9 million based on the current price.
In short, Harmony users felt between a rock and a hard place when having to choose between these two options. At first, they receive the full amount, but most likely the token will drop in price a lot. The second option, on the other hand, has less “inflation” in ONE, but has only partial reimbursement.
Community reaction
The Harmony team was not silent in the face of the negative repercussion of the proposals. According to the publication, the hacking attack caused a large “bad loan accumulation” in several decentralized finance (DeFi) protocols in which Harmony participates.
Developers blamed traders for taking advantage of the situation to borrow ONE with no intention of paying them back. This situation led to a large loss of liquidity due to the depletion of supplier funds. As a result, developers fear this could cause various DeFi protocols to pull out of Harmony.
The team also justified the use of inflation to reimburse users, saying that it thinks “in the interests of the longevity and well-being of the project”. According to the publication, refunds will not occur all at once “to avoid market disruptions”, such as drops in the price of ONE.
The vote between a rock and a hard place is due to start on August 1st and will likely be a hot issue until then.
