Recovery One - Community governance for depegged tokens

Community Announcements
335

Stephen’s back from burning man?

Anyways, I will let my prior criticisms of this reckless plan stand and ultimately, this is what I say about it:

And its true because if this doesn’t work, we wait until the 3 years to get the locked funds out or take whatever death spiral rONE turns into as it continues to be redeemed for less and less tokens to maintain the 30% redemption rate getting arbed and dumped. The fact you will continue to defend this reckless idea just shows that this is all a gamble to you and I hope you win that gamble. It offers very little more than ONE under Stephen’s plan other than a slight potential to increase parity without another 1-2B in inflation.

With this, significant additional risk. Since even taking ONE monthly, the users would have 30% parity back in one year as well as could easily stake with validators for 10% APR or other staking options. The upside is considerably higher in the other proposal.

You want to gamble and profit off the victim’s compensation, be my guest. But don’t call it a community proposal.

I hope this gamble works. Even betting it all on red wins 50% of the time but I highly doubt rONE will maintain its value whatosever under this plan and will likely just be a death spiral. The 15% APR will not make up for a 50%+ loss on the rONE which might be paid at $300 only to awaken the next day worth $150. New people redeeming will get double the rONE as those the previous day and the death spiral will result.

Then its staking - bagholding - just to get back to what you received while waiting for a locked bag in 3 years. Then it will all unlock at once which will be billions being dumped. Which Harmony doesn’t even have a runway to survive that long so it really just makes no sense, Jack.

Everyone knows there will be no management changes so I really don’t need a bunch of smoke blown over it. Stephen owns the Harmony Foundation and has the only voting power and Giv already explained that the only way management changes is if the entire chain is hard forked.

I don’t know many validators who even support this at all so I’ll be curious what kind of voodoo governance you guys come up with to rubber stamp it.

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336

Are they really separate if one manages the other? It’s two PARTS of a whole. How can you converse about one and not the other practically simultaneously?

Look at the over 300 comments - while much of the conversation goes to the detail of the financial plan(s), the underlying issue is of TRUST.

As an example - we have a 3 year runway, we are told. How will that be managed? Given current constraints, what is the focus on cost management/reduction?

So, logistically, you may be able to separate the conversations - but you can’t make the problem go away without addressing both at once.

Business Plan 101- Strong team. Strong financials.

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You guys honestly don’t think that everyone else whose not waiting for the bag to unlock is going to wait until the big unlock day of 1+B ONE tokens unlocking? That’s another massive assumption here is that it will even maintain $0.0264 by the time that event hits. Its not fair to consider the R1 proposal is a guaranteed 66% parity value in 3 years. That’s actually a significant risk as well that it even maintains $0.026 with only 3 years of runway. That could very easily result in sub-$0.01 ONE when the victims finally get it which could reduce the parity received under the R1 plan below 50% after all is said and done with the same inflation. Its shifting all the risk onto them to wait. And everyone else knows the billions of ONE are coming unlocked. We all know what happens in that situation with Jewel, Viper, you name it. You really think people won’t sell before they know billions will come unlocked? People track unlock day like clockwork obviously. So now the affected users wait until that day and they better hope ONE is anywhere near $0.026. Under Stephen’s proposal, they get that ONE starting now and can already go stake it for 10+% which only secures the network. Everybody needs to rally behind ONE because it will increase 1) victim’s compensation, 2) validator rewards, 3) treasury cash impact, 4) grant funds available, 5) happy hodlers making money, and on and on and on. Incentivize ONE with everything. This is off target. Yes, they can rage quit and take whatever that amounts to but again, I think that will result in a death spiral.

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When analyzing what happened, harmony, we must ask a number of important questions: Can harmony survive the attack of creditors? How much cash do you have in the treasury? What is the amount and structure of its public debt? When a crisis occurs, will you meet the repayment obligations? What is the fate of auditors young and old? Does Harmony think reduce width ONE? What is the rate of currency inflation?
Once again thanks for all the suggestions

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Just want to clarify that users are free to redeem at any point in the three years, the only stipulation is the funding from the linear minting model, where newly minted ONE are sent to the governance contract (outlined here) and available to fund any redemptions.

So we are not expecting users to wait for the full 3 years in actuality, we expect many users to exit earlier on or to use defi in the interim period, as ONE hopefully regains value. Recall that although rONE will have a price in defi, it will also concurrently be redeemable for a % of ONE, up until the final day that it is 1:1.

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What is the rONE redemption %? That’s the linear penalty withdrawal? I’m confused how that’s sustainable. If other unaffected wallets can buy up depegged assets and mint an unlimited amount of rONE to redeem so long as the arbitrage trade is profitable, how would you ensure there’s enough for actual hack victims to redeem since the minted ONE is limited? If rONE does increase in value, wouldn’t the redemption run out since so many people would buy and redeem up until they can profit from this and wouldn’t that reduce the amount available. Not sure what contract you were referring too on github do you have a section of the proposal or a chart?

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babakajone,

Thank you for your questions about mechanics. You ask great questions and we understand you are confused. Here are details to remedy your string of logic and questions. I’ll set aside all rONE utility and Defi use cases and start with the Deflationary Burn Mechanics.

rONE - Deflationary Burn Mechanics

As rONE is redeemed, rONE is burned and rONE supply decreases.

  • rONE starts at 66% parity. (That means rONE is back by ONE to give backing, value).
  • A depegged asset mints rONE.
  • The snapshot date of depegged assets value is 6/23/2022.

rONE is built to have multiple exits. It’s built to reward long holders vs short-term holders and give holders multiple choices. rONE is built with multiple burn mechanics throughout the 3 years. Simply put, the more early exits, the more deflationary burn mechanics come into play and ultimately burn more of the ONE supply.

The initial exit has $3M exit liquidity at (50% parity) within 30 days of mint. That initial exit is limited to $1000 per wallet (at 50%). This approach focuses on smaller wallet holders. Those who choose to exit during 30 days engaged the deflationary burn mechanics.

The following exits of rONE can be redeemed at any time during the 3 years. We expect holders of rONE to act and take partial redemption throughout the 3 years constantly engaging the deflationary burn mechanics. At each redemption, the rONE is burned from supply leaving a large allocation of ONE to be burned at year 3. The first redemption of rONE to ONE is 33% (starting at 3 months). The final redemption rate increases from 33% to 1:1 (rONE to ONE) by year 3.

rONE is built to provide choices and utility to its holders. The mechanics are built to smooth out sell pressure, to put in play deflationary burn mechanics and limit a larger allocation of ONE to be sold at any point.

We fully expect a majority of rONE to be staked and unstake, used in Defi in liquid staking products, and as collateral. The other holders that want to sell rONE can in the market, or holders can redeem rONE for ONE (burning rONE) and reduce rONE supply. That choice to redeem rONE : ONE will engage the (deflationary burn mechanics).

These mechanics support long-term investors and also give short-time investors options through multiple means however redeeming rONE early engages the deflationary burn mechanics. There is a limited amount of rONE.

Babakajone. keep the questions coming, thank you for sparking great engagement and we look forward to sharing more details.

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Yes, but its locked. And the 66% is based on maintaining a $0.0264 price by that unlock date in 3 years. Harmony only has 3 years of runway and everyone will know of this unlock so there’s legtimate headwinds. Stephens Proposal will pay ONE monthly starting now so while users still have exposure to ONE’s price, its not at the end of the 3 year runway with potentially billions unlocking on the same day for a rush to the exit to maintain this 66% parity. Its a misleading figure.

Does this $1,000 per wallet redemption limit include people who never got hacked but go now and buy 1,000 1USDC at $0.09, exchange it for approximately $300 in rONE and then redeem for $150 in ONE. That would net them a profit of almost 60% and they were never hacked, giving at least some of the amount of this $3M exit liquidity to profiteers and not victims.

Why burn this and not add it to victim’s reimbursement amounts at the end? Is that possible? Burning seems to be a complete waste of money although does reduce inflation.

33% of what? rONE’s market price in the liquidity pool?

Also, where does this $3M come from? So in addition to grants, governance, exit liquidity, this is sounding more like a $4-5M up-front ask?

Thank you, I feel most if not all my questions have been answered which I appreciate.

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babakajone,

  1. Initial mint is 66% parity and the price of ONE will be locked. The initial lock price however is not set as this is still a proposal and a negotiation process. (Time is the factor that continues to affect the ONE price). Li, stated Harmony has a 3-year runway under current market conditions. Current market conditions are a macro recession and a crypto bear cycle that has been present for a year and a half. The initial proposal was rejected because it lacked utility and deflationary mechanics and was a simple inflationary printing of ONE without creativity. As Jack mentioned this new community proposal from an inflation perspective is “an improvement over the initial proposal from @stse,” and we are “leveraging creative ways to recover $100M in lost funds here”. This plan rewards long-term investors and pays staking rewards to have more immediate exposure to ONE’s price. As stated, before rONE provides multiple exit options that reduce rONE supply with deflationary burn mechanics that reduce ONE supply.

  2. No, to take action in the Initial Exit an individual has to have held depegged assets and continue to hold depegged assets. The initial $1,000 per wallet redemption limit (at 50%) within 30 days of the mint date, has a snapshot date for depegged assets value and hold the date, 6/23/2022. Once again, to partake in the initial exit holder must continue to hold depegged assets from the snapshot date to in initial exit date. The smaller wallet holders who choose to exit during 30 days engaged the first deflationary burn mechanic.

  3. The initial proposal 4.97B ONE lacked choice and deflationary burn mechanics. Yes, as holders of rONE choose to exit/redeem a large allocation of ONE will burn at year 3. Burning ONE increases the value of ONE. If depegged assets holder Stake for 3 years they will experience the utility of rONE and the deflationary burn mechanics on rONE and ONE supply.

  4. The first redemption of rONE to ONE is 33% (starting at 3 months). The mechanics: rONE is backed by ONE. The minting of new ONE back rONE. Holders of rONE can redeem rONE for ONE starting month 3. As earlier stated, rONE is back by ONE, and those individuals who chose to redeem do a partial redemption during the 3 years.

  5. As outlined in the proposal for the $3 million for Initial Exit from Harmony Treasury. Jack referenced the community proposal as “it’s a mix of Treasury funds and 2.4B ONEs minted over 3 years”.

Thank you for the great questions.

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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.

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23/6 snapshot is worthless as it doesn’t capture any defi user such as myself who had majority of USDC in tranquil lending and moonrobots OIL/USDC LP pair (and it’s a huge fvcking amount).

Not to mention that every single user I know/talk to already took everything and run when it was above 0.5, the less fortunate after that and some even now. If you were to reimburse only those who at the same time meet the following:

  1. had 1assets in the wallet (and nowhere else) at the time of the hack/snapshot
  2. still hold the very same assets without moving them to this day

then you can reimburse yourself and a couple other ‘real victims’ if there are even any which is obviously laughable.

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babakajone,

We believe Harmony will be functioning in 3 years.

Your last post is a bit confusing. You compare two proposals that have two different outcomes. You reference the secondary proposal that reimburses 50%. It’s best not to compare 50% reimbursement to 100%. Also, rONE rate is not yet been set.

The initial proposals from Harmony printed billions of ONE. Both had quick distribution, increased sell pressure without deflationary balance in a macro recession, and a crypto bear cycle without much buying support.

To answer your other questions:

  • rONE can be minted for 1 year from mint date.
  • Yes, users can buy depegged assets in the market and mint rONE (within the 1 year) to sell at a profit. We expect some supply/demand forces to come into pay which will provide additional exit choices to rONE holders.
  • Our goal is recovery of depegged assets, and the strengthening of the Harmony ecosystem through a community governed action.
  • A repeg can only happen with new bridged assets into the Harmony ecosystem.
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Seems like Harmony using its extremely limited Treasury to guarantee people who weren’t even affected by the hack a guaranteed triple up at the expense of rONE holders (they would dump rONE after minting) is a pretty unfair use of those limited assets, no?

Why would anyone buy unpegged assets beyond the 30% of parity value they can get from rONE minting though? So it doesn’t repeg it, just brings it to its rONE value so people can profit to tunes of who knows how much off the Treasury funds in the rONE pool.

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Thank you for the feedback.

babakajone, the answer below answers your questions above. Initial exit is used to incentivize small community holders. Snapshot date of 6/23/2022.

Proposal 15, influenced the early exit of rONE, capped per wallet to incentivize small community holders. Snapshot date of 6/23/2022 to effectively serve the majority. Increased early exit redemption (50% parity) within 30 days of mint. The raised partial redemption rate to 33% after 3 months from the initial mint date. Proposal sections, “The Recovery Token Mechanics" & “How To Redeem rONE”.

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Commitments to the Community

The Recovery One community proposal takes a multi-faceted approach. Some of the community ideas, suggestions, and proposals are being incorporated into Harmony’s larger recovery strategy and will work together with the Recovery Token. The other ideas we considered as commitments sought by the Recovery One Foundation on behalf of harmony community.

Below is the list of commitments to the community that validators, developers, ecosystem partners, and the 16 community proposals are seeking from Harmony. We ask that the Harmony foundation accept;

  • Commitment to a long-term working relationship with Recovery One Fdn.
  • Commitment to gather roadmap feedback from Recovery One Fdn.
  • Commitment to release a State of Treasury summary and to maintain a transparent and secure treasury.
  • Commitment that bridges be non-custodial.
  • Commitment to sell BAYC and use those resources for ecosystem growth.
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350

This is the redemption though. Is there also the option to freely go and sell minted rONE on a dex? Or you can only get out by this redemption process.

The Tranquil Proposal had this in there so at least $1M of this was proposed for that. Giving any smart speculator who never even got hacked but buys under $0.30 on the dollar a triple up in ONE selling rONE minted. The liquidity pool proposal here was from Harmony’s Treasury to pay for those profitable trades? Not even going to help the victims at all who have held all the way down to $0.10 on the dollar waiting.

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Could we perhaps modify this point to allow them the option to open the old bridge in some kind of limited form so people can get the tokens are still there? I know there’s a new partnership and all which is excellent for the future of defi on Harmony. But I still don’t fully understand what that means, when the community will be able to redeem their tokens, or who is even going to be taking action here exactly.

Maybe something like: “Commitment that future bridges be non-custodial and Harmony prioritizes allowing redemption of the unaffected assets, or sets up a smart contract allowing people to swap the unaffected assets to be burned in exchange for ONE at the proper market rate of both the asset and ONE in a timely manner.”?

@babakajone

I think the old plan might seem to have less risk because it has less variables. And the rONE plan is more dynamic and flexible, so without having a clear vision of what it will look like years from now it’s harder to analyze than the old plan. But we can conclude something simple like it will have more variables than the old plan. So if you consider them roughly equal and compare them in a vacuum, then having more variables might make rONE seem like more of a risk and more of a gamble. But if you look at the context and intent of the old plan, and then consider that the variables in what will eventually be rONE will be more akin to diversification rather than being single points of failure, I think eventually you’ll find that a community driven plan focused on restoration and growth like rONE is much less risky than the old plan.

If you consider the old plan in context, discussing it is almost a moot point since it was so thoroughly rejected by the community that even if the team decided you’ve convinced them and they’re going to put the old plan to a vote tomorrow, I can’t imagine anything but the same result. Part of that is the old plan isn’t really a plan at all, but what I suspect is just what the legal team allowed them to put forward. To that end some people thought it was intentionally put forth to be rejected, or that the $0.02 thing was so strange that it implied the team wanted to leave the project. Now personally like I mentioned, I don’t take such a pessimistic view, again I think even the $0.02 thing was likely a result of legal telling them they absolutely can not talk about higher prices, or imply future returns and such. But they had to put something forward because the community demanded it and was getting impatient, so that was the best they could do under strict legal conditions.

But it’s still not as much of a plan as it is an admission of defeat due to circumstance, and the thing is all that does is signal to the market that there’s going to be a consistent level of inflation where even if the team does a fantastic job doing things to grow the ecosystem, there’s this plan set in stone where all these people are getting monthly payouts that are unbounded in dollar terms. Which is where I see a huge advantage of having a more dynamic and flexible plan like rONE, because growth can lead to having options like taking deflationary actions against the supply of rONE(and therefore the future supply of ONE). Not something you can do with the old plan at all, and therefore much riskier as I see it.

One recent crypto example can be used as a good example of a very bullish catalyst that might be in the cards for ONE in the future would be something like the narrative that’s recently pushed LUNC up to being one of the top coins in crypto. From what I can tell it’s mostly been driven by rumors related to events that would end up burning some significant portion of the supply. Since rONE’s original plan is to restore defi on Harmony and repeg the assets there are potentially many cases here where those goals are achieved before the need to use all the rONE up in doing so. So now we can have cases where deflationary mechanisms or large burns that can be turned in to marketing events become possible. Not something that would happen with the old plan.

There are so many other positive scenarios that can result from a plan like this that I could go on forever really. And I do think having the ability to pivot certain parts of various plans and recalibrate other variables in the future actually make avoiding a lot of negative outcomes much more likely as well. I think in general people will get a more favorable opinion over time, because there are a lot of misconceptions about how things will likely turn out. It’s easy to get the idea like people will be locked into rONE, because despite my belief that the intention from the beginning was always for it to be liquid and that liquidity will be provided to some extent, since the rONE team hasn’t been funded yet they can’t just give numbers or specifics yet. And the general perception that there will be a big unlock in 3 years I think is far from guaranteed as well, but it’s not something anyone can say for an absolute fact yet since the worst case still has to be considered.

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You have my support and confidence. The community plan is finally coming together. When can we vote?

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Very true, and its fair enough. This could absolutely work and be better than simple inflation with no other plan but there are many issues some of which are very critical risk to the victims already outlined here.

I don’t think it will be known until the end of the 3 years. I also don’t think the other proposal was all and all a clear cut better option even though this proposal is mostly the same inflation that everyone rejected - distributed differently. Mostly to partner projects which have conflicts of interest already shown and also to profiteers at Harmony’s expense. They do not care that these limited funds will be redirected to non-affected traders. I will estimate about ~$10M in leakage in this fashion but would happily take a free triple up from Harmony’s treasury so I can’t complain.

I think its time to move forward with something either way because its not going to be perfect given the scale of the losses and every day is another day of opportunity cost.

Hope you are right that this works to pay people back as much as possible and ends up better than having just received the ONE directly.

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The Ethereum merge is happening soon. The Harmony recovery is underway?

Is there a way to join this momentum for change? Wen vote? Timing seem right.