Harmony proposes minting billions of ONE tokens to pay back hack victims

Harmony proposes minting billions of ONE tokens to pay back hack victims

Blockchain Featured Technology
July 27, 2022 by Kofi Ahmed
80
Harmony’s core team has proposed a hard fork to mint billions of new harmony (ONE) tokens.
Photo by Colton Sturgeon on Unsplash

QUICK TAKE

  • Harmony’s core team has proposed a hard fork to mint additional ONE tokens.
  • The team wants to mint new tokens to reimburse victims of a June exploit on Harmony.

 The proposal is part of the plan to reimburse victims of its bridge hack last month.

Harmony is a proof-of-stake (PoS) blockchain that presents itself as a faster and cheaper Ethereum alternative. ONE token is used as the native asset to pay for transaction fees on the network.

In June, a hacker stole $100 million worth of crypto assets locked on the Harmony-run Horizon bridge on Ethereum. Since then, victims have asked for a refund.

On Wednesday, the team suggested the community should fork the Harmony network and mint a fresh supply of tokens to initiate the reimbursement process. “This proposal will require a hard fork of the Harmony blockchain as it will increase the supply of ONE tokens,” the proposal stated.

Billion-dollar choices

The latest proposal gave community members two options to decide how much tokens to mint.

The first option is to mint 2.48 billion ONE tokens ($49.6 million), which the team claimed would be enough for 50% compensation to victims at the current market price of $0.02 per ONE token. 

The second choice is to mint 4.97 billion ONE tokens ($99 million) enough for full compensation to victims.

The team argued that it shouldn’t spend the treasury funds for hack reimbursement, saying that it wanted to protect those assets for growth and ecosystem plans. It said, “We decided against using the foundation treasury in the interest of the longevity and wellbeing of the project as reimbursing from the treasury would greatly hinder the foundation’s ability to support the growth of Harmony and its ecosystem.”

Judging by comments on the governance forum, it appears that the community is largely unhappy with the proposal, primarily due to the inflationary impact of the minting of new tokens. Many argued that this would be detrimental to its price.

“DO NOT MINT MORE! This will really screw those who are staking. Did we not learn about inflation? When you increase the supply, the price does not follow,” said one commentator.

Currently, ONE’s total supply is 13.1 billion tokens. This means that if the plan is approved, the team would inflate ONE’s supply anywhere between 19% to 38% over the next three years. After the proposed plan of action is executed, impacted wallets will have to claim their tokens every month over the three-year period. 

Source: TheBlock

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