ARC: Harmony Recovery


Did you read the proposal created by Aave? Here is Aave’s proposal. Read exactly what they are writing. Specifically read the part they wrote about “Pricing of depegged assets is impossible”.

The “decaying oracle mechanism” is Aave’s idea. They described how the mechanism would work. Their proposal is Submission 14- AAVE.

What we have suggested is a higher rate for Aave users. They suggest using the market rate for depegged 1assets (and you can find the current market rate here: to start and decay to 5%.

I would probably need someone to explain this to me in layman’s terms, but as long as the liquidity is available for me to withdrawl all of my assets it doesn’t really matter.

We want to clarify this. BGD is not Aave, we are a service provider engaged by the Aave DAO (the AAVE holders represented by governance) to develop technical solutions and advise with technical topics, but all decisions are on the Aave community via the decentralized governance.

The “decaying oracle” we proposed is just an additional technical idea to reconcile 1) reducing the debt on the Aave v3 Harmony instance and 2) introducing some so-called “exit liquidity” for people who supplied assets like ONE to withdraw.
It is essential to highlight that this is just another idea, as Recovery One / Harmony / any third party supplying directly liquidity (without any decaying oracle) would also allow withdrawals, but in that case, without closing the debt.

Some aspects that should be clear to the community:

  • There is no perfect technical solution; the availability of funds to withdraw depends exclusively on an external party “trusting” in the recovery of the assets used as collateral. With an entity (e.g. Recovery One) supplying ONE liquidity for others to withdraw, that entity is the one “trusting” on the recovery of assets’ price.
    With a decaying oracle, that entity is anybody liquidating, which in practice can be also the same entity as on the previous (e.g. Recovery One).
  • Supplying liquidity directly is simply better for users to withdraw, as whatever amount gets supplied can be withdrawn.
  • With a decaying oracle, as the oracle decays, the recovery rate of users just goes down because it is a mechanism to precisely “price” that recovery rate. This means that if nobody liquidates (injecting ONE liquidity) until the price is 20% of the original one, it means that nobody trusts it is worth it to hold those assets if the discount is not 80%. And the recovery by this mechanism will be 20%.

Haha, that’s exactly my position. The questions is, would this 20% be proportionally allocated to all affected users, or first-come-first-serve? I’d actually prefer the second, as I believe most owners of locked ONE have forgotten/gave up on it.

Thank you for explaining that, and clarifying you’re not “AAVE” as an entity :smiley:

So this decaying oracle mechanism doesn’t guarantee full recovery of ONE, do I understand that right? Then I wouldn’t support this idea.

Why do we even need the oracle to decay? Why not just let the price be determined by the market, and as 1assets are burned by Recovery One, and price is (hopefuly) going up, there would be people interested in trading ONE for a large amount of 1assets, expecting them to go up and price and eventually re-peg. The only issue with this plan is if nobody believes 1assets will repeg, then nobody will inject ONE…

Are there any available price charts of 1assetson which we can see their market price over the last 10 months? It would be interesting to see if they’re going up or not.

Understood. I was sent this proposal by a member of Aave and I understand now that BGD is not Aave, you are a service provider engaged by the Aave DAO (the AAVE holders represented by governance).

bgdlabs, can you connect with me on telegram? I have connected with a few individuals who have made submissions so far. I have a few contextual questions and i think we can both help move this recovery process along. Telegram: Contact @matthewtbarrett

Interesting that you’ve chosen to ignore the Harmony communities suggestions.

Your use of ChatGPT to summarize was amusing, but nonsensical.

There’s an entire forum here, why do you need people to DM you directly? What happened to transparency?

All the while the clock keeps ticking, and no discernable progress.

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Following up with this by the end of the week. @bgdlabs

Have new update on this weekend ?


@bgdlabs, Aave and Harmony community,

We appreciate your engagement and are eager to hear your thoughts on the framework we’ve proposed:

  • Each of Harmony and Aave would contribute 10% to a recovery fund. This approach would allow affected users to initially recover 20% of the funds they had prior to the hack. (Note: This rate is above current market pricing. The current rate is at 5.4% of parity for stablecoins.
  • Implement a decaying oracle mechanism. The purpose of this mechanism is to encourage the early liquidation of depegged assets, expediting their removal from Aave and thereby facilitating users’ access to their funds. Decating to 5% as mentioned by @bgdlabs.
  • The recovery process spans a period of four years. However, please note that this timeline could potentially be extended or shortened based on market conditions.

In addition to these measures, we believe it would be beneficial to consider:

  • Enhancing our security protocols. Strengthening the safeguards of Aave to prevent similar bridged-related hacking incidents in the future.
  • Increasing user education about DeFi risks. By equipping users with a better understanding of the potential risks inherent in DeFi and with every bridged asset, users will make more informed decisions and take appropriate precautions.

We look forward to your feedback on these points. Your insights are invaluable to us as we strive to make the recovery process as effective and efficient as possible.

The next step would be to draft an offical proposal. Receive feedback and then submit for a vote.

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Increasing user education about DeFi risks

Are you really going to go there? This sounds like a mean joke. ONE is not a bridged asset, the issue is AAVE not liquidating bad debt.

As for the proposal, 10% + 4 year time horizon is not enough, I think all affected users would agree. It’s already been a year as well. I think Harmony and AAVE should split it 50/50.

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Aaand back to silence. I guess we should bring back the ARC I originally made and hope to submit and get that passed. The amount of time I and others spent on this thread likely not even worth the ONE stuck in AAVE :D

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Yes, let’s keep the conversation going to find solutions for the locked funds. Our input shows both AAVE and Harmony that this issue still deserves attention. I’ll sync up with my contacts for feedback.

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What year should we expect results?


We will proceed with the following steps using our proposed solution:

  1. ARC: Review and provide feedback on the Aave Request for Comments (ARC) document, which highlights the problem, proposed solution, and potential impact on our community.
  2. Aave Snapshot: Vote on the proposal using Aave Snapshot to understand community sentiment without incurring gas fees.
  3. AIP Preparation: If the proposal garners support, prepare the Aave Improvement Proposal (AIP) and submit it on-chain.
  4. On-Chain Proposal: Pay the proposal fee in AAVE tokens to create the proposal on-chain.
  5. Voting and Execution: Participate in the community vote, and if approved, the proposal will be executed.


Tobes, could you assist me with the process? I’m aware of what BGD and AAVE’s proposed solution would be. As a Harmony burn partner, we can align with the current recovery plans and Harmony’s perspective.

Let’s try and get liquidity for everyone affected here on AAVE.

New ARC: ARC: Aave and Harmony Joint Recovery Plan Following the Harmony Blockchain Hack


Not sure in what ways I can be of assistance, we have a plan, I see you’ve made a post to get AAVE to try and implement the plan.

They, (The AAVE community), will need to vote on the plan, to start the vote you need to be an AAVE holder, or find a holder that wants to help.

As far as Harmonys contribution(s), thats really on you, i tried for months and your response here is the closest ive gotten to a reply other than one of the team members acknowledging that users on AAVE Harmony were affected as well.

Until you posted here I had all but written off any direct help from the Harmony side and my proposal was to get AAVE to buy 100% of our debt with the knowledge Harmony is slowly buying back all debt through the recovery process and they would eventually be reimbursed, which the size of the debt compared to the size of their reserve is miniscule, so even if they bought 100% from us the holders, and even if it takes Harmony 4 years to buy it back, the whole thing would be negligible to them.


Another month gone and nothing to show?

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It’s been more than a year now. I gave up on Harmony and AAVE to do the right thing. If they wanted to, they would have.