XG177

[TEMP CHECK] AAVE V3 Harmony Recovery ONE Proposal

Voting ended about 2 years agoSucceeded

Title: [TEMP CHECK] AAVE V3 Harmony Recovery ONE Proposal

Author: [@mbarret3 & @Selvy & RecoveryONE & R1Ambassador]

Created: 2023-12-03

Summary

This proposal addresses the bad debt incurred by the Aave protocol on the Harmony network due to the Horizon Bridge exploit in June 2022. It proposes a solution to remove the bad debt and compensate AAVE holders by creating a fund and allowing token exchange.

Motivation

To gauge community sentiment regarding a proposal to offer a resolution for those affected by the June 2022 Horizon Bridge hack.

Context: In June 2022, the Horizon Bridge hack resulted in the exploit of Harmony’s ERC Bridge, leading to a loss of approximately $100 million. This hack caused an excessive printing of assets like 1USDC and 1USDT, devaluing them significantly. Opportunists exploited this by buying these devalued assets at a discount and depositing them into Aave. Despite the devaluation, Aave maintained a 1:1 price ratio for these assets post-hack, allowing users to borrow ONE and drain it completely from the protocol. As of today, 55.42M ONE has been drained from Aave V3 Harmony, bringing the market to a standstill. So we would ask Harmony to add a fund of 5,542,000 ONE and Aave to add 5,542,000 ONE.
Impact: Aave currently holds bad debt of approximately $751K due to this exploit. The lack of immediate action by Aave to adjust pricing variables after the hack exacerbated the issue.

Specification

This proposal suggests bad debt removal approach

Bad Debt Removal: Create a fund 10% (5,542,000 ONE) from Harmony Recovery ONE and 10% (5,542,000 ONE) from AAVE treasury. * Use this fund so that Aave holders can withdraw their deposited tokens in exchange for 20% of their original deposit value.

Implementation: Aave DAO governance will vote on this proposal. If approved, a smart contract will be deployed to facilitate the token exchange and fund creation.

Next Steps

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Snapshot vote

Disclaimer

This proposal is not without risk and does not guarantee a complete resolution of the bad debt issue. The Aave community is encouraged to carefully consider the potential benefits and drawbacks before voting.

Copyright

Off-Chain Vote

YAE

1K AAVE0.2%

NAY

538.91K AAVE99.8%

ABSTAIN

71.7 AAVE0%

Quorum:169%

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Discussion

[TEMP CHECK] AAVE V3 Harmony Recovery ONE Proposal

Timeline

Dec 08, 2023Proposal created

Dec 09, 2023Proposal vote started

Dec 12, 2023Proposal vote ended

Feb 03, 2026Proposal updated

Motivation

To gauge community sentiment regarding a proposal to offer a resolution for those affected by the June 2022 Horizon Bridge hack.

Context: In June 2022, the Horizon Bridge hack resulted in the exploit of Harmony’s ERC Bridge, leading to a loss of approximately $100 million. This hack caused an excessive printing of assets like 1USDC and 1USDT, devaluing them significantly. Opportunists exploited this by buying these devalued assets at a discount and depositing them into Aave. Despite the devaluation, Aave maintained a 1:1 price ratio for these assets post-hack, allowing users to borrow ONE and drain it completely from the protocol. As of today, 55.42M ONE has been drained from Aave V3 Harmony, bringing the market to a standstill. So we would ask Harmony to add a fund of 5,542,000 ONE and Aave to add 5,542,000 ONE.

Impact: Aave currently holds bad debt of approximately $751K due to this exploit. The lack of immediate action by Aave to adjust pricing variables after the hack exacerbated the issue.

Specification

This proposal suggests bad debt removal approach

Implementation: Aave DAO governance will vote on this proposal. If approved, a smart contract will be deployed to facilitate the token exchange and fund creation.