In an attempt to repair the damage from the $100 million Horizon Bridge hack, the Harmony (ONE) blockchain teams have released a governance proposal that includes a hard fork and an increase in token supply. This solution was met with strong hostility from the community
Harmony proposes a hard fork to increase the supply of ONE
In an attempt to repair the consequences of the Horizon Bridge hack last June, Harmony (ONE) is releasing a proposal that includes a hard fork to allow for reimbursement of victims.
HarmonyONE founder Stephen Tse provided the community with a response and next steps on the recent proposal.
“From your suggestions and feedback above, we will create additional proposals and opportunities for everyone to engage in the process.”
– Harmony (@harmonyprotocol) July 28, 2022
This governance proposal includes the issuance of new NEBs, thereby changing the established rules by increasing the supply.
The distributed tokens would then be locked up to be unlocked month by month over a three-year period. This measure would thus avoid generating high volatility in the price.
The consequences of this hack, attributed to the North Korean hacker group Lazarus, were disastrous for the blockchain. In addition to the 100 million dollars stolen, it caused a strong imbalance in the decentralised financial applications (DeFi) present on the network.
Indeed, the exploitation of the bridge created arbitrage opportunities on lending and borrowing protocols. Traders then took advantage of the situation, borrowing large amounts of ONEs that would not be repaid, thus blocking liquidity providers in their position. The proposal therefore also aims to create new tokens to free up trapped investors.
A controversial proposal in the community
This proposal for a hard fork and an increase in ONE’s offering has been met with much discontent on the Harmony governance forum. Indeed, while inflation in the economy in general seems more than ever to be pointed out, this solution does not please everyone. And for good reason, it is tantamount to resorting to the principle of printing money, which is so often criticised.
Beyond the problem of inflation of the ONE, to which the Harmony community is hostile, another point is causing a reaction:
As validators are aligned with the growth of the Harmony channel, we hope that they will be easily persuaded that the repayment of losses will restore the trust that is key to Harmony’s success. […] If we fail to get the required number of validators to support us, we will resort to non-repayment. “
In the proposal’s discussion thread, some are characterising this clarification of the possibility of non-reimbursement as a threat. Whatever the outcome of the upcoming vote, the blockchain may face difficulties in regaining investor confidence after such events.
