It really isn’t an improvement though.
Stephen’s printed 2.5B at $0.02 for the 50% reimbursement.
Stephens: User who lost $1,000 receives $500 worth of ONE paid monthly for 3 years, at $0.02 which is 25,000 ONE. They start receiving it today monthly and can go stake on validators, pools, or any other dex which is plenty of creative options. They will receive it while the chain is still functioning, still has a runway, and capture the most upside possible if ONE increases from now for the entire 3 years from each monthly payout without a massive unlocking event at the end. The 4.9B was a 100% reimbursement so that same user received 50,000 ONE paid monthly under the second option.
rONE: User who lost $1,000 receives $660 worth of ONE at the end of three years at $0.0264 which is also 25,000 ONE locked. But also 30% of parity value, $300 in rONE. As long as rONE maintains its DeFi price and ONE is equal to or greater than $0.0264, it will be superior because the parity value in total would be higher than 50% with the same 2.5B printed. If not succesful, the parity reimbursement could fall below 50% even though 2.5B is still printed.
The improvement is not to inflation or parity necessarily unless these assumptions are met given the much higher price of $0.0264. 66% parity at $0.0264 is the exact same as 50% parity at $0.02. But they also receive the 30% parity value in rONE under this proposal which is the key difference except for the fact that under the R1 proposal, there is some treasury utilization to back this up and under Stephen’s, I did not see the same $5M treasury allocation. It was all printed. If they added the same $5M Treasury allocation used to justify this entire plan to that proposal instead paid to victims 100%, it would be even better with far less risk.
Given all the exit liquidity is treasury funded, that represents really the only “improvement.” Harmony is willing to deploy $5M of their treasury for this and not Stephen’s. This is the source of the only advantage of an additional several million in exit liquidity which is also easy to profit from and dillute even if you were not a victim.
Even though there is a smart barrier to redemption, users can buy depegged assets and mint rONE to sell at a profit which were not affected by the hack, correct? This is stated as one of your goals, attempting to repeg these assets. By trying to “repeg” its simply providing this limited exit liquidity to traders and subjecting the pool to even more selling pressure than real hack victims, right? So its a worse use of $5M than sweetening the pot of Stephen’s. Anyone can mint rONE and sell it at $0.30 on the dollar and the algorithm will print more rONE to maintain this so long as depegged assets trade under that amount in DeFi even though they cannot redeem it under a penalty withdrawal?
Its a “loophole” in this plan. A user could go buy $100,000 of 1USDC right now at $0.10 for 1M 1USDC, mint $300,000 of rONE and dump rONE after minting it into a DeFI liquidity pool on Tranquil Finance, right? Lowering its price so the next redemption has to mint more rONE to adjust. And this wallet does not need to be included in the snapshot to mint rONE and dump it just to redeem it. I am happy to see they can’t redeem under the 50% redemption but they can limit the liquidity available and will have a constant selling pressure.
So its simply unknown how many of those swapping out are actually hacked or just bought up depegged assets until they reach about $0.30 on the dollar. This isn’t a repeg, its just going to suck money away from the liquidity and to savvy traders but will stay capped at whatever the 30% value is redeemedable in rONE. The attempt to repeg assets is only giving these people the chance to profit at the expense of the rONE liquidity pool (Treasury funds). Its simply more direct to allocate whatever this is to improve Stephen’s further.
I hope you include a snapshot limitation on rONE minting as well. If only affected wallets can mint rONE, it would save millions that is going to go to traders but not repeg the assets fully anyways. Eventually, depegged assets would reach 30% parity in minted rONE with whatever profits siphoned away from victims. It will probably be done by bots. This is going to be a massive selling pressure anytime the depegged asset prices are lower than 30% parity value obtained by minting. Many unaffected wallets will siphon this off.
Harmony could simply allocate that same $5M Treasury ask + 2.5B ONE to Stephen’s to improve it and ultimately it would be very similar without as much risk as I’ve already voiced and faster payment which allows victims to participate in the entire 3 year runway instead of being pushed all the way to the end of the road for the lion share of the compensation.
The proposals print the same amount in these scenarios 2.5B, however, under Stephen’s, parity value is at a lower price of $0.02, we take less risk that the chain survives a full three years, and the unlock price is maintained after a massive unlock and the risk that rONE actually works and doesn’t just enure to the benefit of unaffected wallets speculating in and swapping it.
While I understand the ins and outs of the proposal, I still don’t see it as superior unless every rosy assumption is spot on. I hope it works for the sake of my own losses in this incident and if there was actually a vote of ONE holders, I’d still vote for the other proposal with the same $5M Treasury ask to go 100% to the victims and at least mitigate some of the risk. I hope ONE holders even have a snapshot vote in this “community solution” which has not taken place once in this process.