Repeg Proposal - A GameFi solution? 💙

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Hi guys,
Harmony Rachael here, aka The Harmony Savior, aka The100MillyFilly.

The major pitfall with every proposal up until now has usually revolved around the unappealing consequences associated with printing a shit tonne of ONE token over a very brief time period. The problem with this is that if you’re a ONE token holder you’re being made to foot the bill to resolve a problem that you may not even be impacted by. Why on Earth would you vote for a proposal that hinders your bags massively to save someone else’s? Game theory would dictate that no rational thinker would choose such a strategy. Every proposal that involves such dilution is one that is destined to fail from the outset.

TL;DR, (please read though :joy: - also might be worth taking a quick look at MOBOX ecosystem to have a good idea of what my vision is)

- Harmony/community uses treasury funds to build out gamefi suite
- Custodians of unpegged assets have exclusive ability to stake assets to farm keys/NFTs
- Farming period is temporary and ends when assets repegged
- Proposal to be used in conjunction with other obvious funding methods: redirecting burnt tx fees, validator rewards, buy back/burn of unpegged assets.

Benefits of this proposal

1. Provides the team with the ability to prolong the period needed to raise sufficient funds to repeg the assets officially - keeping custodians of unpegged assets reasonably happy in the meantime. There is also the potential for there to be no repeg necessary at all if product is built well enough.

2. Unpegged asset holders encouraged to stay engaged with the community and don’t jump ship the moment their assets are repegged.

3. Treasury funds utilised in a much more productive way. Rather than outright buying assets- Harmony ecosystem instead derives utility from gamefi suite eternally.

4. Provides utility to unpegged assets - meaning there is a chance the unpegged assets, rather than repeg value in a traditional sense, may begin to mirror value as farming weights directly correlated with $ values (as if they were true to peg). There is even a chance the assets become overpegged :thinking: i.e. the utility derived from exclusive access to farming NFTs is believed to be more valuable than assets pegged equivalent.

5. If we decide unpegged assets are to be staked in LP format (x unpegged asset/one) then we may provide the opportunity for the team to buy/burn discounted unpegged assets. This would allow the team to buy in more significant size with much lower price impacts than other existing LPs across other protocols. Meaning the team would need significantly less than $100m to back assets on the ETH side.

6. Allows for temporary distinction between bridged assets on the Harmony chain. I.e. legacy (hacked assets) can be kept separate from newly bridged (trustlessly I hope) assets until the time comes to remerge assets when legacy assets can be fully backed once again. This means the rest of the Harmony ecosystem can continue to operate, as if nothing happened, once the trustless bridge is up and running.

So where does that leave us? We need a proposal that repegs the $100m hole whilst keeping ONE holders on board.

We need to create utility for the unpegged assets. What I am proposing is for the Harmony team (could also be community initiative) to build out a suite of games similar to that of the ecosystem built of by the Mobox team on BNBchain. I understand the Harmony team are reluctant to use the treasury funds to directly reimburse the funds lost in the horizon bridge hack, but this solution would provide a way to use treasury funds in a much more productive way. A way that can potentially plug the $100m whilst also creating a vast amount of utility for the harmony community at the same time.

What is Mobox and how do the unpegged assets fit into the equation?

Simply put, Mobox is a gamefi ecosystem whereby players could stake assets (single asset or staked in an LP) in order to earn keys. These keys would open chests to unlock NFTs that could be used across their suite of mobile games. These mobile games would utilise these NFTs as well as consume ONE token itself on in-game upgrades. These games would be seasonal competitions in nature whereby most progress within the games would reset weekly, fortnightly, or monthly (depending on the game you were playing).

What I propose is that we build a similar ecosystem making use of the unpegged assets. We would follow a similar roadmap in which we would allow unpegged asset custodians to be the exclusive liquidity providers. This means that only those who staked unpegged assets could farm the keys to unlock the NFTs to the gamefi ecosystem. Key farmers could sell their keys/open chests and subsequently sell their NFTs if they so desired. We would of course run this farming period for as long as necessary. I.e. the amount of time needed to raise funds to fully repeg the $100m problem.

Why is Harmony uniquely positioned to overcome traditional gamefi ‘Ponzinomics’?

The problem you find with most gamefi ecosystems, including Mobox, is that they do not create their own value and rely entirely on the minting of new tokens to keep players incentivised to compete with one another. Those that have committed to limited supply models and do not create value are constrained in their ability to incentivise players for the long term and are therefore doomed to fail (hence ponzinomics).

Harmony is uniquely positioned in that it is its own stand-alone blockchain - meaning you require the token for multiple other reasons. Most notably to pay for tx fees. In addition to this Harmony tokenomics are such that they are ever inflating. We could redirect x amount of new supply from validator rewards and commit them to gaming rewards. This way the games can remain eternally competitive for as long as the chain has active users.

This is not a post to iron out all the gamefi details right now. Rather a repeg post that stresses the need to utilise unpegged assets temporarily for us to buy enough time to slowly raise funds to repeg. In doing so we also use the treasury funds in a much more productive way. Whilst also offering the more impatient a chance to cash out at potentially higher prices than the current ~0.1:1. Maybe if the gamefi development looks appealing enough, owners of the unpegged assets may be able to cash out for more than 1:1 (one can only dream).

To play devil’s advocate, if the Harmony team builds out an epic product then it could be the case that the repeg may not even be necessary. Providing the farming period for unpegged asset holders is deemed to be fruitful enough on its own.
The promise of an eventual peg whilst following this proposal however would of course be the most ideal outcome for the users.

I would love to hear all feedback. Good or bad, but please try to keep it as constructive as possible.

If I’m not on boarded to see out my vision and this proposal does go ahead then please consider leaving a donation - unpegged assets welcome. How else am I going to farm keys and NFTs? :wink: :joy:

0x5469B8F9fB1633aa161D1c4D66bD0C631d771cCa
one1235m370mzce659sar3xkd0gvvvwhw8x2drfhzu

Much love :blue_heart:

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A pretty interesting idea.

My concern is the time and money that would be required to build it from scratch and the community potentially growing impatient while waiting. There’s also the (lack of) trust issue, and I can see community comments like, “They’re going to spend my reimbursement money on a game?” I don’t believe the Harmony team should build this. They should remain focused on the protocol.

However, perhaps there are games already on Harmony that would be willing to incorporate the unpegged assets into their games as part of a “stake-earn-play” component. How exactly that might work, I have no clue.

I do like the idea of staking the unpegged assets, and I think it needs to be mandatory in order to receive a “full” reimbursement (my reasoning briefly explained below).

{CLICK HERE} for some additional thoughts (ramblings) on reimbursement, the re-peg, staking unpegged assets, and a few ideas that could be utilized

To be blunt, without a loan or VC infusion I’m not sure any recovery plan will work. The only way to repay affected users would be to mint upwards of 5 billion coins, which was the original proposal that the community hated. There have been some good ideas floated by the community, but even combining the best ideas over a 3-year time frame, at ONE’s current price of $.023, they would only account for a fraction of the lost funds. Inflation would still be required to cover the majority. Even if everybody is reimbursed in ONE and the massive inflation doesn’t dump the value of the coin, it wouldn’t necessarily return the peg.

And I strongly believe Harmony must return the peg. If Harmony flatly refuses to re-peg like they did in their original “proposal”, then I question how viable Harmony’s defi future will be. Also not sure why anyone would ever bridge their assets to Harmony ever again, either. Harmony said they are putting the trustless bridge on hold because of the lack of trust at the moment. Now imagine that trust if Harmony never restores the peg. This goes for current and future projects willingness to build on Harmony as well.

But if Harmony does re-peg, which it must, it presents another issue where users could continuously sell as the peg is gradually restored. Mass selling could possibly knock the peg back down and prevent it from ever fully returning. To mitigate that, I think holders of unpegged assets should have to “stake” them in order to qualify for reimbursement. Stakers wouldn’t be able to take advantage of buying/selling the (hopefully) rising peg. And the longer you stake, the more “complete” your reimbursement becomes.

I would incorporate this “staking” process into the ideas by Shwaver (tweets) and/or @eddnorris (see “Alternatives”).

The downside is that there isn’t a “gamefi” aspect to it that would keep holders engaged, like you were suggesting.

Ideally, all affected users would have their original assets returned to their actual value. Having a 1ETH holder wait 3 years to receive “full” value of their assets (at a 2022 valuation) in the year 2025 is its own can of worms. What if ETH is worth much more in 2025 than it is currently? These holders would be hit with another loss. Maybe it would be best to have all unpegged non-stablecoin assets be swapped into unpegged stablecoins, like @Kvasir says here. I would assume you’d need to setup a portal where the swapping of non-stables into stables burns the non-stable assets, automatically helping to restore the peg of non-stables?

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I share the same concern in terms of time and money this project would take. I don’t think people can see it as “they’re going to spend my reimbursement money on a game” though. They would be spending it on the Harmony protocol. This gamefi suite would become synonymous with the Harmony ecosystem. I also believe they could achieve a sufficient solution with significantly less $ input going down the gamefi route. I.e. $10m worth of treasury spends achieves $10m worth in repeg. Whereas I think $10m spending in gamefi project could achieve a much greater multiplier. I think at this point it is quite clear that the Harmony team’s treasury is not sufficient for a full repeg outright. Even if it was I imagine it would slowly kill the project overtime if it meant there being no funds left for other ambitions going forward.

Unfortunately I don’t think community led projects/games already on Harmony would be able to deliver the product we need this to be. Problems including:

  • Not enough funding to build AAA product. If we want to this to be a sufficient solution we need to create enough feasible utility for unpegged asset custodians. This product needs to be good. If it is good enough then there may not even be a need to repeg at all.

  • Incentives of community funded projects don’t fully align with unpegged asset holders. Lets be honest a new project would create a new token and would want that to be the token that reaped the benefits- not saving unpegged asset custodians, to which they have no obligation towards

  • Ponzinomics as mentioned in previous post. Games cannot survive long term unless they can create their own value. ONE is perfectly positioned. I also think it provides opportunity for Harmony to reinvent itself and jump on a likely :fire: trend in the upcoming bull run.

I fully agree that printing ONE is not a solution that could ever work. At least to the extent as what was proposed initially. There would be a self fulfilling phophecy - people dumping ONE tokens in the belief that every other person is also dumping. It could lead to a death spiral in price. It also provides no incentive for unpegged asset custodians to stick around. They get their repeg and they jump ship.

I also agree that the next proposal needs to exclude any mention of an option or de facto outcome of there being no reimbursement. This outcome would slowly kill all defi on Harmony chain. No one would ever trust bridged assets on Harmony.

The requirement of some sort of staking mechanism and incentive scheme to unpegged asset holders to buy time is definitely something we can both agree on also :+1:

You raise an interesting point with regards to the fluctuations in value we will experience with unpegged assets over the duration we require to repeg the assets. This for sure needs serious consideration. Do we take all values to be their $ equivalent at the point of the hack? There could be a serious risk of some assets becoming ‘out of reach’ of a repeg over a 3 year period. A $100m problem becoming a $200m problem for eg. Building out a gamefi suite and chasing the likely popluar trend in the next bull market could be a good roadmap to take though if we want to achieve greater gains than those at risk of this volatility worry.

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