ARC: Harmony Recovery

Hi @rlfin. This solution is designed more as a mechanism to “reconciliation” the way Aave works with a situation like the current one, with assets depegged but progressively increasing in value. The objective is not trying to be optimal arbitrage-wise, but providing a relatively technical clean solution to the Harmony/Recovery One team.

As we proposed time before, another strategy currently and always available (with some small change on the freezing status) is for the Recovery One team to 1) supply ONE getting aONE, which will allow other aONE holders to withdraw 2) liquidate positions with unpegged assets collateral and WONE, that way getting that collateral, that if their program works, will go back to peg over time 3) withdraw the WONE deposited on step 1).

We didn’t see symptoms of being interested in this approach, so this extra solution is just an alternative, which will price even more explicitly the confidence in the recovery program combined with the time exposure in the form of a discount.

From the perspective of the protocol, it is clear that the sooner liquidations happen, the better. But if they are not happening means that the price of those depegged assets is not aligned with the price of liquidation.