AAVE V3 Harmony Recovery ONE Proposal

Could @bgdlabs assist here please? Recoveryone is trying to reach out to the community, it would be nice to have the community actually replying. Thank you

1 Like

Hello @boubou158.

We are technical service providers of the DAO, so at the current stage of the proposal (TEMP CHECK Snapshot is next for our understanding), it is not our role to support. There are other engaged entities of the community like ACI (@MarcZeller ) which can guide the proposer through the governance procedure: temp check, ARFC, and AIP.

Once/if the proposal passes the ARFC Snapshot, we can of course support the proposer on the technical matters, same as with any other community contributor.

1 Like

Thanks for the clarification. We value your insights and anticipate your support post-Snapshot vote. @Selvy will lead this, and Recovery One Foundation will amplify it on social media for greater impact and engagement.

2 Likes

I’m not sure if you’ve seen it, but The Defiant recently published an article about this process. As we continue with the recovery, I expect more media coverage to highlight the efforts of the community, Aave, and Harmony in rectifying the situation.

The Defiant Article: Aave Assets Still Stuck Over a Year After $100M Harmony Bridge Hack

2 Likes

Hope can Recovery One Foundation push this issue soon to more media !

1 Like

Something for the ONE community to consider.

2 Likes

next step… “Have a consensus vote for snapshot - Next Step”

Snapshot

Votes are recorded off-chain, and it’s not currently possible to trigger on-chain effects or protocol changes with the vote results. Because of this, Snapshot votes are most useful for “soft governance” - the process of gauging community support or opposition to a protocol change before putting it up for an on-chain vote.

@bgdlabs, we have a question regarding the voting process in Aave governance, as we are not fully familiar with it. (We want to ensure we are following the process correctly).

Our next step is ‘Have a consensus vote for snapshot - Next Step.’

At this stage, do we need to possess 1.6k AAVE tokens now, or is it necessary to have the 1.6k AAVE only at the time we publish a final vote?

Hello, @mbarret3 . For questions and support regarding the pre-technical phase, we recommend you to get in touch with ACI (@MarcZeller ), another service provider of the DAO, as guiding on those steps is part of their engagement.

hello @mbarret3

the only thing you need to do is a standard TEMP CHECK, once that’s published, I will handle the rest.

here’s the framework:

1 Like

Title: [TEMP CHECK] AAVE V3 Harmony Recovery ONE Proposal

Author: [@mbarret3 & Selvy/RecoveryONE & R1Ambassador]

Date: 2023-12-02

Summary

This proposal addresses the bad debt incurred by the Aave protocol on the Harmony network due to the Horizon Bridge exploit in June 2022. It proposes a solution to remove the bad debt and compensate AAVE holders by creating a fund and allowing token exchange.

Motivation

Problem Statement

In June 2022, the Horizon Bridge hack resulted in the exploit of Harmony’s ERC Bridge, leading to a loss of approximately $100 million.

This hack caused an excessive printing of assets like 1USDC and 1USDT, devaluing them significantly.

Opportunists exploited this by buying these devalued assets at a discount and depositing them into Aave.

Despite the devaluation, Aave maintained a 1:1 price ratio for these assets post-hack, allowing users to borrow ONE and drain it completely from the protocol.

As of today, 55.42M ONE has been drained from Aave V3 Harmony, bringing the market to a standstill. So we would ask Harmony to add a fund of 5,542,000 ONE and Aave to add 5,542,000 ONE.

Impact

Aave currently holds bad debt of approximately $751K due to this exploit.

The lack of immediate action by Aave to adjust pricing variables after the hack exacerbated the issue.

Specification:

This proposal suggests bad debt removal approach

Bad Debt Removal:

Create a fund 10% (5,542,000 ONE) from Harmony Recovery ONE and 10% (5,542,000 ONE) from AAVE treasury.

Use this fund so that Aave holders can withdraw their deposited tokens in exchange for 20% of their original deposit value.

Implementation

Aave DAO governance will vote on this proposal.

If approved, a smart contract will be deployed to facilitate the token exchange and fund creation.

Disclaimer

This proposal is not without risk and does not guarantee a complete resolution of the bad debt issue. The Aave community is encouraged to carefully consider the potential benefits and drawbacks before voting.

Next Steps

Get community feedback on TEMP CHECK

Snapshot vote

Copyright

Copyright and related rights waived via CC0.

Thank you, @Selvy. @MarcZeller, we want to clarify that neither the Recovery One Foundation nor our R1 Ambassadors are in possession of Aave tokens. Is it necessary for us to have Aave tokens to initiate the first temperature check?

I’d like to point out that for the proposed solution, the Recovery One Foundation will provide the ONE tokens.

This is in the context of HIP30v2, which is Harmony’s network evolution and the redistribution of ONE tokens. Specifically, the divide of the annual emission of 441 million ONE tokens into two parts: 75% is allocated for staking rewards, and the remaining 25% is earmarked for recovery purposes. Of this 25%, the allocation will be managed by a Recovery Multisig and allocated to the recovery burn partners.

Link: HIP30v2: Harmony's Network Evolution and Token Redistribution

2 Likes

yeh I suggest you redo a topic with that now, and let the governance process take it’s course

with the ACI we’ll handle the rest.

1 Like

@MarcZeller Okay, done. Thank you, sir. Here is the link to the new topic. Thank you to the Aave community, Selvy, and the R1 Ambassador for your efforts in resolving this situation. The Recovery One Foundation is looking forward to facilitating this solution.

1 Like

You’re most welcome! I’m so glad to be involved with this proposal and I’m confident that this proposal can make a real difference. It’s a win-win for everyone: bad debt gets removed, Aave holders get compensated, and Aave and Harmony emerges stronger than ever. :blue_heart:

So there is only written about adding ONE, so this would not have an affect on the negative debt locked LINK?

Also why only adding each $50k? The revenue of AAVE on Harmony in 2022 was $73.1k why not using this?
A 80% cut is quite a lot, so I would suggest at least a 15% from AAVE and 15% from Harmony!

3 Likes

Hi @Selvy

Hi Selvy,

First, thanks so much for your proposal to this issue

Second, Harmony agreed split 441M ONE tokens annual emission: 75% for staking rewards and 25% for bridge recovery. So why not use part 25% for this issue on AAVE ( mean more than 5mil One to your proposal. Eg: 10 - 15 or can 20mil One ) because i think AAVE community cant agree add for more One

Thank for read to my post,

We appreciate your suggestion for a larger contribution to address the Aave bad debt, but the current exchange rate is 10% based on market determined price.
That is what we are asking 10% from harmony and 10% from Aave with 20% in total.

I appreciate your initiative. However here we are not talking about deppeged assets but native coins affected by the hack. I don’t see why the deppegeg assets exchange rate should apply here. Especially considering that:

  • users are stuck since around 18months without any alternatives possible (on the other side, users with deppeged assets could sell their deppeged assets at a loss whenever they wanted)
  • harmony emptied the incentives fund, making it impossible to withdraw the accumulated rewards anymore and affecting the users even more by doing so.
    I would expect at least a gradual recovery of the bad debt and not a single shot 20% solution. Starting by 20% until X% with funds added every monthes for a maximum reimbursement.
1 Like

100% agree with boubou, you cant partially compensate One holders with only 20% after 18 months :-1:

1 Like