Harmony Proposes Minting Billions of ONE Tokens to Reimburse Hack-Affected Users
Layer-1 blockchain Harmony has proposed to mint billions of its ONE tokens in order to reimburse the victims of the Horizon bridge hack that saw around USD 100m of user funds stolen.
The Harmony blockchain would have to hard fork and increase the supply of ONE to mint new tokens. The team said reimbursement would be in the form of ONE tokens and span a three-year period due to the treasury's limited ability to provide immediate reimbursement.
In a blog post, the Harmony team put forward two working options and asked for the community's feedback.
The first option is "an estimated 100% reimbursement" that proposes minting ONE 4.97bn, which equates to a 3-year monthly emission of 138m tokens, or around USD 2.76m, using the token price of USD 0.020, they said.
The second option is "an estimated 50% reimbursement" that suggests minting ONE 2.48bn over a three-year period, which translated into a monthly emission of 69m tokens, worth around USD 1.38m using the token price of USD 0.020.
"The amount of ONE distributed will be based on the USD value of tokens lost across impacted wallets from the time we perform a snapshot," the team said.
They added that, from the snapshot forward, the distributions will be made based on the number of pre-calculated ONE tokens, not based on their fiat-currency value.
This means that affected users would receive a specific amount of ONE based on the snapshot disregarding the token's price. Some users argued that this "doesn't make sense," suggesting that it should change based on market value.
"The reimbursement should be at least based on current market value each month and not .02. So if One goes to [USD] 1. You just reimbursed [USD] 4 billion+ to those that lost [USD] 100 million," one user said, while another wasn't as optimistic about the price, saying: "if ONE goes to [USD] 1 I'll give you my mother."
Many users, however, criticized the team for wanting to "print money" out of thin air, arguing that they would be driving the price down for others in the community as "more supply usually means lower prices."
Arpit Sharma, another community member, noted that minting billions of new tokens could crash the price of ONE.
Some users also criticized the team's decision not to use treasury funds. "So your letting the investors/users pay the depegged and reimbursement? This will destroy the chain and investors will opt out not waiting for that amount of time," one Twitter user said.
However, the team said that they decided against using the treasury "in the interest of the longevity and wellbeing of the project as reimbursing from the treasury would greatly hinder the foundation’s ability to support the growth of Harmony and its ecosystem."
As reported, in late June, a hacker exploited a vulnerability in Harmony's Horizon Bridge, which allows token transfers between the Harmony network and Ethereum (ETH), Binance Chain (BNB), and Bitcoin (BTC), to steal USD 100m worth of different crypto assets in late June.
At 7:41 UTC on Wednesday morning, ONE was trading at USD 0.0198, down 2.5% in a day and 23.5% in a week. It also dropped 14% in a month and 95% from its all-time high recorded in October 2021.
- ONE Drops as Harmony's Bridge Hacked for Almost USD 100M
- ONE Keeps Trending Lower while Harmony Offers Hacker USD 1M in Bounty for Return of Funds
- Top 7 NFT Scams to Look Out For
- 7 DeFi Risks You Should be Aware of According to CoinShares
- Decentralized Music Platform Audius Identifies Source of USD 6M Exploit, Says it Applied a Patch
- NFT Hackers Attack: Influencer Zeneca and Platform PREMINT are the Latest Targets