Note: This is a proposal and draft, subject to modification based on community input. It is intended to spark serious discussions and encourage thoughtful consideration.
Introduction
The Recovery One Foundation proposes the establishment of the Bitcoin Strategic Reserve (BSR) commencing in January 2025, coinciding with Recovery Round 28. This initiative aims to balance Harmony’s immediate recovery efforts with long-term financial resilience by leveraging Bitcoin’s unparalleled store of value.
Dual Allocation Strategy
To achieve this, the following allocation will be implemented:
25% of monthly recovery funds will be dedicated to acquiring Coinbase Wrapped Bitcoin (cbBTC) to build Harmony’s Bitcoin Strategic Reserve.
75% of monthly recovery funds will continue to address Harmony’s ongoing recovery efforts, including restoring depegged assets and rebuilding the ecosystem.
Secure Storage and Governance
The acquired cbBTC will be securely stored in the Recovery One Foundation multisig wallet on Base, ensuring:
Decentralized custody: Access to the funds will require the approval of multiple trusted Recovery One signatories.
Transparency: cbBTC holdings will be visible on-chain and regularly reported to the community in recovery round summaries.
Goals of the Bitcoin Strategic Reserve (BSR)
Resilience During Market Downturns:
Diversifying recovery funds into Bitcoin via cbBTC will create a financial safety net, reducing the impact of volatility on recovery efforts and ecosystem stability.
Sustainability of Recovery Operations:
Allocating a portion of recovery funds to Bitcoin ensures the long-term sustainability of Harmony’s ecosystem, regardless of market conditions.
Strengthening Harmony’s Global Narrative:
Backing $ONE with Bitcoin creates a compelling story of trust, innovation, and resilience, appealing to a global audience of investors, developers, and community members.
Transparency and Community Engagement:
Through decentralized governance and real-time reporting, the Bitcoin Reserve will reinforce Harmony’s commitment to transparency and community empowerment.
How the Bitcoin Strategic Reserve Works
Dual Allocation of Recovery Funds
Starting with Recovery Round 28 in January 2025:25% of recovery funds (~2M ONE tokens per week) will be allocated to acquire cbBTC.
Purchasing cbBTC
ONE tokens allocated for the Bitcoin Reserve will be converted to USDC on a centralized exchange (CEX).
The USDC will then be transferred to Base, Coinbase’s Ethereum Layer 2 network, where it will be used to purchase Coinbase Wrapped Bitcoin (cbBTC).
Note: cbBTC is an ERC-20 token fully backed 1:1 by Bitcoin and managed by Coinbase, ensuring trust and transparency.
Secure Storage of cbBTC
The purchased cbBTC will be stored in the Recovery One Foundation multisig wallet on Base.
Multisig Governance: Access to the funds will require the approval of multiple trusted Recovery One signatories.
Public Transparency: cbBTC holdings will be visible on-chain and regularly reported to the community.
Integration into the Bitcoin Strategic Reserve (BSR)
The cbBTC held in the multisig wallet will form part of Harmony’s Bitcoin Strategic Reserve, a long-term financial asset governed by the Harmony community.
This reserve will serve as a stabilizing force, providing financial backing to $ONE and increasing the ecosystem’s resilience during market volatility.
Why Bitcoin? The Value of a Bitcoin Reserve
Financial Resilience
Bitcoin is the most trusted and widely adopted cryptocurrency, often referred to as “digital gold.” Integrating Bitcoin into Harmony’s ecosystem via cbBTC provides a stable asset that reduces the risk of financial disruptions caused by market volatility.
Strategic Narrative and Marketing Value
The Bitcoin Reserve positions Harmony as a pioneer in blockchain innovation, creating a compelling story of resilience and growth.
“Harmony: Backed by Bitcoin” appeals to both retail and institutional investors, enhancing confidence in $ONE as a token with robust financial backing.
Ecosystem Trust and Credibility
By aligning with Bitcoin, Harmony strengthens its reputation as a secure, resilient, and future-proof platform, attracting developers, users, and institutional partners.
Protecting Recovery Efforts in Bear Markets
Bitcoin’s stability ensures that recovery funds retain value during downturns, safeguarding Harmony’s recovery momentum even in challenging conditions.
Implementation Plan
Preparation Phase (December 2024)
Conduct community engagement via AMAs, Medium articles, and social media to explain the initiative and gather feedback.
Launch Phase (January 2025)
Begin allocating 25% of RMC funds to cbBTC and 75% to recovery efforts with the first distribution of Recovery Round 28.
Conduct the first cbBTC purchases on Base and deposit them into the Recovery One multisig wallet.
Reporting and Monitoring
Publish monthly reports on cbBTC acquisitions, reserve growth, and recovery fund usage.
Transparency and Security
Multisig Wallet Governance
The Recovery One multisig wallet on Base ensures decentralized custody, requiring multiple trusted signatories to approve any transactions.
This approach enhances security and aligns with Harmony’s community-driven governance principles.
Real-Time Tracking
All cbBTC holdings will be visible on-chain, with public tracking available through a dashboard.
Regular Audits and Reports
Monthly reports will detail cbBTC purchases, recovery fund usage, and the overall performance of the Bitcoin Strategic Reserve.
Expected Outcomes
A Growing Bitcoin Reserve: By allocating 25% of monthly recovery funds, Harmony will steadily build a robust Bitcoin-backed financial reserve.
Sustained Recovery Efforts: The 75% allocation ensures uninterrupted progress in restoring depegged assets and supporting the ecosystem.
Increased Ecosystem Resilience: The Bitcoin Reserve provides Harmony with a financial anchor, enabling it to thrive even during market downturns.
Enhanced Narrative and Market Appeal: The story of Harmony being “backed by Bitcoin” attracts global attention, fostering growth in community participation, exchange listings, and institutional interest.
Conclusion
The Bitcoin Strategic Reserve is a pivotal step toward a sustainable, resilient, and innovative future for Harmony. By leveraging Bitcoin’s strength through cbBTC, Harmony ensures its recovery efforts remain on track while positioning itself as a leader in blockchain innovation.
Please leave your feedback and together, let’s recover, rebuild, and grow Harmony into a future-proof ecosystem backed by Bitcoin.
For an in-depth review of all Recovery One Foundation initiatives, previous funding rounds, and updates, please visit Recovery One on Medium.
Great question, currently those who wrote this proposal are contradicting one another. Might be smart for matthew, kratos and friends to first align their communication and plans and provide some more details prior to going live in january .
Thank you for writing this Mathew and for taking the time to think about this.
Although I do not agree with the draft / initial plan. I would love to provide my feedback since it touches on many points that have been hindering proposals for months already.
Actually I am baffled about the fact that recovery custodians are suggesting these changes (move the reserve off to a CEX to buy BTC), while we have a functioning bridge and multisig wallets on our very own chain. Wouldn’t it attract more total value locked if we held that our own?
Furthermore; I do believe it’s unwise to leverage our recovery assets onto another speculative asset. The initial recovery mandate and discussion on this forum also heavily discussed these options, only to refrain from said tactics due to the ‘highly speculative’ nature.
Areas for Improvement:
1. Risk Assessment
Provided document lacks a comprehensive risk analysis. While it highlights potential benefits, it doesn’t adequately address potential downsides or mitigation strategies.
I strongly believe this should be one of the core features of this proposal. It’s all about risk management and providing set scenarios would clarify a lot.
There’s no discussion of potential regulatory challenges or market risks associated with converting ONE to cbBTC.
In this post you wrote a CEX wallet to have the cbBTC stored on. This goes directly against h1 ethos of decentralizing web3 but also poses more unneccesary risk. Why not have the cbBTC stored onchain on the harmony network itself? (Bridge using Layerzero / coinbase bridge)
Who is going to oversee what to do with these assets? Currently the RMC just does things without any oversight/ transparency / input from community to make decisions known and active.
2. Technical Details
The implementation specifics are somewhat vague. More technical details would increase confidence in the proposal.
The exact process of converting ONE to USDC and then to cbBTC needs more granular explanation. What routes are being explored? Will you guys TWAP / buy all at once? Many specifics are missing here.
3. Governance Specifics
While multi-signature wallet governance is mentioned, the document doesn’t specify:
Who exactly are the “trusted Recovery One signatories”?
What are the specific criteria for being a signatory?
What happens if a signatory becomes unavailable?
What happens if signatories do not agree with the strategy followed?
Will h1 core team be willing to collaborate on this?
4. Financial Projections
The document lacks concrete financial projections or modeling.
One could easily provide an estimation with monthly funds with upper BTC price boundaries and lower.
5. Community Involvement
The proposal mentions community engagement, but the mechanisms seem limited to AMAs and social media. Community engagement so far is mostly about ‘bull posting’ with very little actual engagement of those who are actively / actually involved with harmony onchain.
More robust community voting or input mechanisms could enhance the proposal’s legitimacy. I am missing any sort of resemblance to a voting mechanism here, snapshot would be an initial step to measure ‘community interest’ ? Currently, this ‘proposal’ is being framed as being set in stone and set to go live on january, I strongly believe it will be smart to refrain from these statements to improve clarity and transparency.
6. Comparative Analysis
No comparison with alternative strategies or why this approach is superior to other potential recovery methods.
See the other incentives that also lack any comparison / simulation to expected results vs real results (an excellent example is Burn Initiative Expansion, speaking about the improved burn mechanism that actually has 0 details on how it’s planning to execute like stated)
Lacks benchmarking against similar initiatives in other blockchain ecosystems.
7. Potential Improvements to Language
Some sections use promotional language that could be more objectively framed.
Phrases like “pivotal step” and “future-proof” might be perceived as overly optimistic. Let’s refrain from using buzz words only to create more interest and lets start communicating factual data.
If the strategic reserve is something that you want to continue working on, i’ve created a simple plan for an onchain reserve.
Under what conditions would we sell the BTC? I think it’d be good to at least have some of guideline for selling.
I agree with 4MCrypto about not using a CEX. If we don’t keep it in defi, who is accountable?
This strategy is counter the HIP30v2 proposal that allocated staking funding to the RMC, so I think it would be fair to have a HIP vote on this change.
From HIP30v2:
Recovery Multisig will hold tokens from the network emission and transfer them to fund burn partners for depegged assets every month.
Recovery Multisig follows strictly the operations of the current burn.
Recovery Multisig continues to hold tokens from emission after the recovery is completed – until further Snapshot proposals.
Recovery Multisig is a 5-out-of-7 Harmony’s Gnosis Safe with elected custodians.
This is possibly a short-live hype based on mstr rather than a long-term truth, the narrative could easily switch back to “If you want BTC, just buy BTC”, especially if mstr tanks:
I want to also point out that this strategy, at it’s core, is minting and selling ONE every month.
edit: If we’re going to redirect ONE from recovery I’d much prefer it went into the ONE defi ecosystem
Wasnt the bridge hack due to an attack on multisig signatories? Why would we not implement a dao to manage this reserve with transactions to be approved only under voter approval?
Doesnt the recovery wallet accumulate over time and is distributed to recovery partners monthly? The amount would fluctuate between 0 and a few hundred thousand dollars instead of a steady accumulation. Once the account gets a high value it could be tempting for the custodians. Another reason for a dao.
We should not take money away from recovery efforts until people are made “whole”. Burning at a rate of 0.2 on eth locked at 1100 and btc locked at 20000 is a joke. Recovery funds should be used on recovery until peg is restored and the program should only be improved on, not the opposite. Thats what was voted on.
Great additions @GoodTimesBrad , some guidelines will at the very least provide some structure and points to work from.
With regards to point 2, let’s try to keep a h1 member in this multisignature as well?
I fully agree that this would require an HIP.
With regards to point 4; Amen brother, I believe that dumbly following the masses won’t help that much. For all those who hype up the bitcoin strategic reserve, multiplechains already do this partly as part of their strategy to extend their runways / foundation funds
Agreed, buying BTC and enabling it onchain would do much more
The proposal calls for a recovery partner to manage this. I think creating a new recovery partner called the “Harmony Community: Strategic Bitcoin Reserve” is a good place to start.
Recovery One is a community-led organization that facilitates community-driven actions. We are facilitating this serious brainstorming session with the intention of crafting the best possible proposal to bring to the community for a vote. This proposal likely involves adding a new Burn Partner to replace Tranquil.
CEX to BTC
The proposal can be amended, but the framework is as follows: R1 would allocate ONE tokens from the round allocation and use them to purchase cbBTC. R1 has followed a similar process for the Recovery Exchange over the past two years.
Risk Assessment
We welcome a deep dive into the risks. R1 is facilitating this proposal, and this idea will only be ready for implementation with community input and support.
H1 Ethos
There has been discussion about a Harmony partnership to create a bridge from Base to Harmony via LayerZero. Ideally, we aim to bring cbBTC to Harmony.
Technical Details
We welcome input and suggestions as we develop this idea further.
Governance
I believe a vote would be required to add a new recovery partner. This would necessitate a larger snapshot vote. The details of the “Harmony Community: Strategic Bitcoin Reserve” should be included in this future snapshot vote.
Financial Projections
We have created detailed financial projections for the recovery timeline. Additionally, we support detailed projections on the value of this reserve and the optimal timing for its use.
Community Involvement
We welcome additional AMAs, votes, and tools to gather community input. All of this will contribute to a better proposal and future planning.
Comparative Analysis
A long-term assessment of BTC growth versus ONE token growth is essential. These assets don’t have to be mutually exclusive; in fact, they may become more correlated if we establish a Strategic Bitcoin Reserve (SBR) or possibly a Stablecoin Reserve like Tron did during the bear market to protect its chain.
I like your plan, and we can incorporate much of your framework into the final proposal! Thank you.
Selling BTC should have clear guidelines to ensure transparency and accountability. I also agree that keeping funds in Harmony DeFi aligns better, and we need a bridge from Base.
However, I disagree that this proposal diverges from HIP30v2. The RMC sends funds to recovery partners each month. We used to have three founding recovery partners. The SnapShot vote we would need is specific and limited to approving a new partner and determining how that partner is structured, that would answer the point above, the guidelines would be set from day 1 and be narrow and specific.
I don’t think a HIP vote is necessary. Harmony could facilitate a snapshot vote, including ONE holders and validators. This vote would be focused and specific—a simple Yes or No decision on adding a new recovery partner, potentially named the “Harmony Community: Strategic Bitcoin Reserve.”
Refer to my earlier comments for thoughts on the proposed structure. I also greatly appreciate your suggestions—they align well with promoting accountability and decentralized governance.
Pretty dumb idea. If I wanted to invest in Bitcoin, I could do it myself (and I have). The recovery foundation should focus on cleaning up the depegged assets as quickly as possible. Investing in bitcoin would just drag out the recovery and add volatility to the process. Given the (wholly unjustified) runup in the price of ONE recently, Harmony should probably be using the ONE in its own treasury to buy depegged assets and burn them.
Actually, now that I have had time to ponder the proposal, I think it is worse than a dumb idea. I think it is a breach of contract. It is essentially reducing available recovery funds by 25%, with no promise to add them back in any specified time frame. Honestly, if this goes forward, I think I would explore legal remedies, as it is an explicit and intentional breach of a promise to depegged assetholders.
Unless I have misunderstood you. A HIP vote is 100% required for this proposal to move forward as it changed the parameters of a previous hip vote. Albeit not a protocol code change but a change nonetheless.
This is what was approved for HIP30, I would say it clearly says Recovery strictly follows operations of current burn (3 partners at the time) and then goes on to say un til further Snapshot proposals.
I feel it would be a really bad move to buy BTC at the top and have 3rd party hands involved in the management of funds on other chains.
If you recall, that’s exactly how we got here. Do we really want a 2nd black swan event?
Are there any reports on how much usage recovery programs have had month over month anywhere to review? At this point it doesn’t seem like many people care if we complete recovery or not and are ready to move on but I would love to see some time based data on actual redeptions.
Rather than dumping 5-10m $ONE every month on the market, wouldn’t we be better just burning that as well?
Any type of “vote” you should be doing first is with those who were affected by the hack and if they are willing to accept adding another year to their full recovery
Why choose this proposal instead of the one made by easyone if their opinion aren’t considered?
And yes this proposal require a full new vote has is changing the conditions/“contract” made in HIP30v2, you can’t pass this as a new partner
Has for the proposal itself with having loops outside of the network and being controllable by a few ya…doesn’t give me sense of security especially when money corrupts anyone and we don’t have a KYC on you to know who you really are
So prove me that you first have the support of those affected and give me security on this proposal to even consider it but the selling pressure is also something i dont like
Edit: Dont take this the wrong way, i fully know the benedicts of the proposal could bring and the publicity etc but i first would like to know the opinion of the affected because easily this could backfire and Harmony ONE create once again really bad publicity because of them if their opinion is not considered. Has my remark of security, like easynode mention i dont to risk another black swan event
In order to support this proposal, we’d need to see the following:
How this accelerates recovery, including best/worst case scenarios.
How security will be maintained across multiple exchanges/wallets.
Language that states that once recovery is complete, emissions will revert back to staking by default. If the community wants to continue funding the BSR with emissions after recovery, a validator snapshot vote must be held.
.