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.
Proposed Bitcoin Strategic Reserve (BSR) On-Chain Implementation:
- Wallet and Governance Structure
- Create a dedicated Harmony multisig wallet with 5-7 signatories
- Signatories composition:
- 2 Recovery One Foundation members
- 2 elected community representatives
- 1-2 independent blockchain experts or harmony one core team members
- Require 4/5 or 5/7 signatures for any transaction
- Quarterly rotation of community representatives via transparent election
- Fund Allocation Mechanism
- Maintain the original 25% allocation model
- Convert 25% of monthly recovery funds to cbBTC directly on Harmony’s DEX
- Use a transparent, on-chain TWAP strategy for Bitcoin acquisition
- TWAP Acquisition Strategy
- Implement an automated, on-chain TWAP mechanism
- Split Bitcoin purchases into:
- 4 weekly tranches
- Consistent time/day for predictability
- Uses Harmony’s native DEX or a cross-chain bridge like Layer Zero
- Target: Acquire cbBTC or wrapped Bitcoin directly on-chain from base chain
- Transparency Mechanisms
- Public dashboard tracking:
- Funds received
- TWAP purchase details
- Current Bitcoin reserve value
- Wallet transaction history
- Monthly community reports
- Open-source smart contract for acquisition logic
- Real-time on-chain tracking
- Risk Mitigation
- Set price circuit breakers (max/min purchase prices)
- Implement gradual acquisition to reduce market impact
- Diversification clause: If Bitcoin volatility exceeds X%, pause acquisitions
- Regular community governance votes on strategy adjustments
- Technical Implementation
- Utilize Harmony’s native bridges
- Smart contract to automate:
- Fund conversion
- TWAP purchases
- Transparent logging
- Integrate with existing Harmony multisig infrastructure
- Community Oversight
- Quarterly community governance votes
- Public telegram & discord channel for real-time updates
- Snapshot voting for major strategic decisions
- Full transparency of all wallet activities