ARC: Harmony Recovery

Please see my comment above on the reasoning for not including LINK in the proposal. If this one works, copypaste it and replace ONE with LINK.

The last proposal was quite rough, but nobody else seems to be willing to do any work, so we’re stuck with me :) I’d love for someone to help out

I agree, Harmony doesn’t care for ONE’s stuck in AAVE, and AAVE won’t do anything without a proposal. That’s why we’re here. Would have been great if these organizations actually got together and solved it.

That’s not a bad idea, but obviously harder to implement (and longer). + I believe any kind of timed contracts are complicated to implement, since we can only use block time. (and Harmony might not have stable block time)

How about a compromise simpler “exchange” protocol for swapping aONE for ONE 1:1, or even use an existing DEX that allows for exchange rate setting (like Uniswap). This would be better than the original idea, since AAVE gets to keep aONE, as you said.

  • @caseygaETH :pray:, Lead Protocol Engineer and Researcher, @harmonyprotocol

A recent response from a Harmony Team member,
A bit standard boilerplatey, but atleast acknowledging the situation, and pledging to help if an agreeable solution is found.

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I don’t think I misunderstood but looks like you misunderstood several things.

  1. @ThunderingTias said “Last proposal was rejected partially because it was too broad” and I explained that it’s also because there in the proposal there was a rONE allocation but not here or on Harmony forum was anything mentioned and also Harmony team or Recovery ONE Team didn’t confirmed that.

  2. you saying “For the accrued interests, let’s not forget that huge APY got displayed on AAVE during a month. Many users, with no idea of what was happening, ended up being exit liquidities for others by depositing due to high attracting APY. Accrued interests represents no more than 10% at maximum IF you had aWONE before and after the hack. For the one who deposited in the middle, its much less. Also, as said, people are stuck since 10months, could not do anything and were not able to exit when ONE price was much higher. Hence, I agree that this could be discussed only if full aWONE is exchanged for ONE.”

This also applies 100% to aHarLink

Guys we are all sitting in the same boat and would really be great if we work together on one complete solution and get a treasury location from Harmony. It feels like the same situation like last July when Recovery ONE had some backdoor negotiation with @bgdlabs and didn’t told us the full story and even lied about facts. If you are not familiar you can read it on the Harmony Forum. But there we go why was AAVE excluded from the Recovery Program and Tranquil finance got support and money?

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Hello everyone,

I am Matt Barrett, the Executive Director of Recovery One Foundation (R1), and I am writing to introduce myself. Our organization, R1, is committed to supporting the recovery of depegged 1Assets and strengthening the harmony ecosystem. As Aave has been affected by the Horizon Bridge attack, we would like to assist and help facilitate a solution for 1Asset and ONE tokens in Aave.

Logan (aka Pioneer) has been in communication with this group in the past regarding potential solutions to address the aftermath of the attack. We have also seen some plans being proposed and taken action on by the Aave community to address the issue.

Today, I am reaching out to offer my assistance and help facilitate a solution that both communities can agree on. We would like to include Aave in the recovery plan.

Thank you for your time and attention. We look forward to hearing your thoughts, feedback, and practical solutions that we can put into action, ideally soon.

Best regards,
Matt Barrett
Executive Director
Recovery One Foundation


…for both Aave and Harmony communities.


Thank you @mbarret3 . I filled the form.

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Our pleasure. Thank you! We will try to facilitate some feasible solutions.

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Another month in the books, ready for some results.

Filled the form as well, hopefully we can have a more productive discussion.

Is there a point to attempt the proposal again, or will Aave work with Recovery One?

From the technical side, we would like to present to the community a solution that could move forward on at least a partial recovery, depending on the will of the Harmony/Recovery One team.

Currently, the Harmony recovery program seems to be progressing quite slowly, with less than 10% of the assets depegged burned after ~10 months (~2% of depegged assets burned by the recovery exchange and ~4% of depegged assets burned by modulo), so we think it makes sense to consider options targeting a partial recovery.

The objectives of the following technical solution are:

  1. Provide a mechanism for Recovery One (or anybody else) to provide liquidity of ONE and LINK to the affected users.
  2. Reduce or completely remove the outstanding debt on the Aave v3 Harmony pool.

The solution: decaying oracle

The current Oracle price for depegged assets, following how Chainlink works, is based on the global market price of these assets, not the one applying to Harmony-bridged ones.

Pricing of depegged assets is impossible, because:

  • If you believe they will re-peg they should be priced at current oracle price minus a discount for the recovery time.
  • If you believe they won’t re-peg, they should be priced at 0.

There’s no “correct” way to approach this pricing problem, but it is possible to use the oracle as a mechanism for partial recovery.

We propose to introduce a decaying oracle that will continuously discount the price of depegged assets based on time, from the current Chainlink price, till a minimum value (e.g. 5% of the current price) after a predefined amount of time (e.g. 3/6/12 months). During that period, any address will have the option to liquidate these assets at an ever-growing discount. The repayments injected by liquidations will provide holders of ONE and LINK liquidity to withdraw.

The currently liquidatable users can be found on the chaos-labs risk dashboard.

This solution should align perfectly with the ethos of the Recovery One Team: if believing in a re-peg, they should have a clear incentive to liquidate as early as possible, as the debt consists mostly of wONE tokens. Also, by liquidating depegged assets with wONE, the Recovery One Team will remove depegged assets from the market, while at the same time providing wONE liquidity for hack victims.

Important to highlight that the mechanism of Aave liquidation itself assures really optimal compensation to affected users, as they receive “directly” the liquidity via the aTokens, without any secondary market mechanism like the one used on the general Harmony recovery.

Liquidating only at a higher discount and later will implicitly price the confidence in the recovery by the recovery team.

Additional considerations

  • The liquidation bonus of all collaterals should be set to 0 as the discount on the oracle price already acts as a liquidation bonus.
  • Even if rates are minimal at the moment, the aave-v3-core now provides a zero interest rate strategy that should replace the existing interest rates of all assets on the harmony network.
  • The Aave DAO Harmony treasury currently holds around 50k USD in assets. The depegged assets should be burned, following the recovery program. These ~2m aONE and ~700 aLINK should be considered a loss and will never be withdrawn.
  • The Harmony team stopped the liquidity mining shortly after the hack, as incentives didn’t make sense. They also pulled the funds though, which essentially means users can no longer claim their previously promised rewards. Therefore we think it would be reasonable for them or the Recovery One Team to compensate those users, as technically those rewards belong to them.
  • At the current moment, and without good certainty on the Harmony recovery program, we don’t think any new deployment of Aave should be considered, as there could be technical risks.

It is important to highlight that even if we can help with the technicalities of this proposal, same as with other cases like asset listings, the proposal (Snapshot in this case) should come from the Harmony/Recovery One team or community members.


Why would I want to pay WONE to liquidate a user to get some depegged USDC at an increasing discount if I can already get those USDC at a 95% discount in most DEXes? We’ll have to wait until the decaying oracle price is at a 5% of current price, say in 12 months or more?

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.

Why is this an “alternative” approach? This approach would be easiest for aOne holders, so it would be great if we could do just that. That’s what my first proposal was asking to do.

Good afternoon, everyone! Happy Sunday! The AAVE team has requested that we post the AAVE and Harmony community submissions here. At the request of the submitters, I have removed the name, organization, email address, and Telegram username information from this data. Everything else is included.

Here’s the link to access the submissions: AAVE Forum: Recovery One - Community Feedback & Solutions Form (Responses) - Google Sheets

I’ll organize these better next week, but I wanted to share them as soon as I could. Thank you for your feedback, creativity, and time.

Hello just putting my postion here. I lost around 4 million Harmony coins during this unfortunate event that took place. I am writing this here so I can have it logged in. Hopefully one day can get my coins back and back on staking woth Harmony. Thanks.

Should we still fill out this Google Spreadsheet? Or post it here in the forum?

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Please share your thoughts here. We greatly appreciate input and community feedback!

We should list the potential plans, and vote on them, choose the top two, then run the top plan by the Harmony team and recovery one, if it passes their approval, submit for a vote by AAVE, if the plan passes that, great. If not, we have a secondary plan or we can further refine the top plan depending on critiques recieved during the process.

The questions I have:

Will Harmony supply the One liquidity themselves (by depositing One)? Would Harmony prefer to supply liquidity in installments?

It seems based off of the R1 model of recovery, they prefer installments.

Would AAVE be willing to supply liquidity to speed up the withdraw/deposit proceess and receive subsequent installments directly from Harmony/R1?

The deppeged assets can go to whomever is willing to supply the liquidity. Although, reminder, the longer the process takes the closer those assets are getting to re-peg.