Hi All,
First Off this idea has received a lot of back lash on the Harmony discord as people seem to be under the impression that since a lot of people took a “hair cut” that the bridge does not need 100% of the stolen tokens back. While the amount of tokens may have changed we do need 100% of the wrapped tokens in LP’s and wallets on chain restored on behalf of all bridges.
To get my point-of-view out of the way, ANY tokens in liquidity pools and wallets and smart contracts must be backed 1:1 to avoid a bank run. All bridges collectively must have a 1:1 ratio. One thing to keep in mind is that the other bridges provided some exit liquidity for quiet a lot of the tokens bridged via the Harmony Bridge.
My suggestion is when the team starts to make a plan to restore the peg they start twap BUYING the wrapped tokens directly from the pools on chain with protocol ONE and burning them, while this would cause a temporary down trend in the price of ONE, it raises the price of the on chain wrapped tokens and would take what ever wrapped tokens purchased out of circulation making the amount required to fund the bridge less. This also gives people a option to take a 50% loss while restoration is in progress (which sucks, but is still better than 75% loss we sit at right now)
And while the price is below peg it allows the protocol to get more for their treasury than directly buying on Ethereum. This also allows the whole protocol to benefit from the de-pegged tokens rather than just a few users who decide that purchasing de-pegged tokens is a safe bet.
For those who do not know Time Weighted Average Price buying allows for the protocol to get the best possible price without slippage and also allows users and bots to exit at various price points along the way if they please. This is typically done with protocol owned code but can be done by DCA’ing via multi-sig manually.
As for everyone who is going to reply “TERRIBLE IDEA, TAKE ADVANTAGE OF THE PEOPLE WHO TOOK A LOSS.” the majority of damage is done (we are 80% down in stables) and many people have exited. If you have any hope for a recovery then someone is going to make a lot of $$ off of these tokens returning to peg, and why not let the protocol make the best of the situation. Even if the protocol only saves $1,000,000 by doing this, that is major progress when the debt is so large.
The difficult part of this is that liquidity has dwindled to very low levels. Buying even $1 million dollars of wrapped assets is going to to come at an extreme impact. Up to a certain amount that impact is still considerably cheaper than purchasing 100% of the tokens on Ethereum. 100,000 usdc can be purchased at 10% impact on DFK, 5 BTC is 25% impact, and 75 ETH is also ~25%.
Any way I hope the best for all parties, I am posting here not to interact with users but to possibly have this idea relayed to the core team as it does not seem that any productive convo comes from the discord amongst all the spam and fud. I find it hard to believe with the amount of negativity that goes on in the discord that any core team even try’s to read discord. I wish the best for all and hope this idea gets some consideration from core team.