Harmony Proposes Reimbursing the Community by Minting 4.97B Tokens, Sparking Backlash

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DeFi
Harmony Proposes Reimbursing the Community by Minting 4.97B Tokens, Sparking Backlash

Developers behind blockchain network Harmony have proposed minting up to 4.97 billion in its native token ONE to compensate victims of the $100 million Horizon Bridge exploit in June.

Harmony Proposes Minting Billions of Tokens

The Harmony team has proposed a hardfork to generate more ONE tokens that would be used to compensate users affected by the recent exploit on its cross-chain bridge, according to a reimbursement proposal submitted to the network’s governance forum early Wednesday. 

The governance proposal, which provides users two options to vote for, states:

“The Harmony team has worked tirelessly to brainstorm and develop paths towards reimbursing those who were impacted by the recent hack of the Horizon bridge.”

The first option suggests a 100% reimbursement by minting 4.97 billion ONE tokens, which is about enough to compensate all impacted users at the current $0.20 market price of ONE. The second option proposes just partial reimbursement by minting 69 million ONE tokens, which would compensate around half of the victim’s overall losses at the token’s current price. Both options propose minting the new tokens gradually over three years to prevent a rapid increase in the ONE supply. The Harmony team elaborated on why it opted for this solution, stating:

“We decided against using the foundation 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. Harmony foundation is committed to continue supporting Harmony for years to come and plans to reserve the foundation tokens to facilitate this.”

Harmony Community Backlash

The proposal from the Harmony team has been met with significant opposition from the Harmony community. One of the most upvoted comments in the forum exclaimed, “DO NOT MINT MORE!” and noted that raising the ONE supply would “screw those who are staking.” Another user stated that they had waited “2 weeks for this shitty proposal & no repeg” and that a hardfork would wreck the chain’s already “small chance” of survival.

Much of the criticism appears to be focused on Harmony’s attempt to secure its treasury while asking token holders to shoulder the brunt of the hack on the basis that the project requires funding to develop. Some members of the community also seemed to detest Harmony’s “take it or leave it” stance. The Harmony team stated in the proposal:

“In the event of failure to obtain required validator participation, we will resort to “no reimbursement.”

On June 24, Harmony’s cross-chain Horizon bridge was reportedly exploited for about $100 million after a hacker gained access to the majority of the private keys managing Harmony’s multi-signature wallet (Harmony did not confirm how the incident occurred). 

Following the attack, the project launched a “global manhunt,” informing exchanges, law enforcement authorities, and blockchain analytical firms. It reportedly offered the hacker a $10 million bounty if the stolen funds were returned. Despite its best efforts, the project has been unable to track down the hacker or recover the stolen funds.

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Rony Roy

Rony Roy is an electrical engineer turned tech author in the Cryptocurrency space. He got block-chained in 2012 and fell in love with tech and its use-cases and has been writing his way through innovations in this emerging sector. Over the years, he has worked with multiple Blockchain projects and premier cryptocurrency exchanges both national and international.