What is this about?

The discussion is centered on a proposal to address the aftermath of the Horizon Bridge hack on Harmony's ERC Bridge in June 2022, which led to significant losses and impacted the value of assets such as 1USDC and 1USDT, as well as AAVE's liquidity on the Harmony network. The proposed solution, led by Mbarret3 and Selvy, suggests a 20% repayment plan to resolve the bad debt in AAVE. The plan involves creating a fund to eliminate the bad debt, enabling AAVE holders to exchange their tokens for 20% of their original deposit value. The fund would be sourced from 5,542,000 ONE tokens provided by the Harmony Recovery ONE and a matching amount from the AAVE treasury, as part of Harmony's HIP30v2 initiative. The Recovery One Foundation will supply the ONE tokens for the solution [Selvy¹, Mbarret3¹⁷, Mbarret3¹⁸].

How is the community reacting?

The community has shown support for the recovery proposal, with members like ThunderingTias preferring a 20% recovery to no recovery [ThunderingTias²]. There is a call for a swift proposal and vote, as expressed by Xhungx [Xhungx³]. The media, through Owen from The Defiant, is interested in the story and interviewing affected individuals [Owen⁴]. Technical support is being provided by bgdlabs, and ACI is ready to assist with governance procedures up to the ARFC Snapshot vote [Bgdlabs⁸]. The Recovery One Foundation has pledged to promote the proposal on social media [Mbarret3⁹]. MarcZeller has offered guidance on the governance process and is willing to manage the steps following a standard TEMP CHECK [MarcZeller¹⁶]. Ben2k has raised concerns about the proposal, questioning the inclusion of only ONE tokens and not LINK, and suggesting that the fund's contribution should be higher, proposing a 15% contribution from both AAVE and Harmony instead of 10% [Ben2k²²]. Xhungx has thanked Selvy for the proposal and suggested using a larger portion of Harmony's 441M ONE tokens annual emission, which is allocated for bridge recovery, to address this issue on AAVE. They believe that more than 5 million ONE tokens, possibly 10-15 or even 20 million, could be used for the proposal, as they think the AAVE community might not agree to add more ONE tokens [Xhungx²³]. Selvy acknowledges a suggestion for a larger contribution to address the Aave bad debt and clarifies that the current exchange rate is 10% based on market price. They state that they are asking for 10% from Harmony and 10% from Aave, totaling 20% [Selvy²⁴].

Why this is positive?

• The proposal seeks to rectify the bad debt from the hack, potentially restoring trust in the AAVE ecosystem.
• There is strong community support for the proposal, indicating a collective effort to resolve the issue.
• Media coverage by The Defiant could increase visibility and support for the recovery initiative [Mbarret3¹⁰].
• Active involvement from Mbarret3, Selvy/RecoveryONE, and R1Ambassador in formulating the proposal could lead to a beneficial resolution for all parties involved by removing bad debt and compensating AAVE holders, thus strengthening both Aave and Harmony [Mbarret3²⁰, Selvy²¹].

Why this is negative?

• Ben2k has expressed concerns that the proposal's terms may not be favorable enough for depositors, suggesting that the repayment percentage should be higher than the proposed 20% [Ben2k²²].

Next actions

The proposal is moving through AAVE's governance process, which includes a consensus vote and a formal submission. A proposal to replace all Chainlink price feeds on Aave v3 Harmony with fixed price adapters and to set interest rate strategies to zero is also being considered due to Harmony's instability and Chainlink's discontinuation of price feeds on the network [EzR3aL¹²]. The community is preparing for a consensus vote for a snapshot, a preliminary measure of community support before an on-chain vote [Mbarret3¹³]. Mbarret3 has inquired about the necessity of holding 1.6k AAVE tokens at this stage or if it's only required for the final vote [Mbarret3¹⁴]. Bgdlabs has directed Mbarret3 to reach out to ACI and MarcZeller for assistance with the pre-technical phase of their project, as ACI offers services to the DAO¹⁵. MarcZeller has outlined the steps for conducting a standard TEMP CHECK and has offered to manage the subsequent steps after its publication¹⁶. The topic should be redone to allow the governance process to take its course, with ACI handling the rest [MarcZeller¹⁹]. Mbarret3 has shared a link to a new topic regarding the AAVE V3 Harmony Recovery ONE Proposal Governance, indicating that the discussion is advancing with the governance process²⁰.