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Harmony Proposes Issuing ONE Tokens To Reimburse Victims Of $100M Hack
Developers decided against using treasury funds, citing the project’s long-term viability.
Andrew
11:04 27th Jul, 2022
Frauds

Developers behind blockchain network Harmony proposed issuing ONE tokens to cover losses from the hack of its Horizon bridge product in June.

“The Horizon bridge incident resulted in the loss of $99,340,030.00 worth of digital assets across approximately 65,000 wallets and 14 different asset types,” the developers said Wednesday in a proposal posted on the protocol's governance forum. “The Harmony team feels it is important for the overall strength of the ecosystem that harms to impacted wallets are mitigated in a manner that is feasible and most viable for the project.”

The developers presented two options. The first proposes an estimated 100% reimbursement with the minting of 4.97 billion ONE, which equates to 138 million tokens a month over a three-year period. The second proposes an estimated 50% reimbursement. That would see a minting of 2.48 billion ONE, or 69 million tokens monthly over the same period.

Both proposals are based on the current token price of 2 U.S. cents, meaning the reimbursement amount would not change if the ONE price was to fall further. That level is a 95% drop from ONE’s lifetime peak of 37 cents in October 2021.

Harmony said the stolen tokens caused contagion damage in the form of uncollectible loans “across a handful of DeFi lending protocols” in the Harmony ecosystem, referring to decentralized finance.

“Failing to resolve these uncollectible loans may result in DeFi lending protocols choosing to drop support for Harmony on their platforms,” developers explained, adding that 86 million ONE will be minted as part of the reimbursement plan, and distributed to “certain affected DeFi protocols” over the same three-year period.

Community voting on the proposals will start Aug. 1 on Harmony’s governance forum and close Aug. 15. Community responses were generally negative at writing time, with users concerned about the effect of increased token supply on ONE's price.

Harmony said it chose not to use its treasury funds to reimburse users as it was against “the interest of the longevity and wellbeing of the project.”

The Horizon bridge allowed users to exchange assets such as tokens, stablecoins and non-fungible tokens (NFTs), among the Ethereum, Binance Smart Chain and Harmony blockchains.

Security firm Elliptic linked the attack to North Korean hacker group Lazarus based on the movement of stolen funds occurring mostly during Asia-Pacific nighttime hours and the attack using techniques that were “frequently used” by the Lazarus Group, as previously reported.

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