To refresh your recollection, in June 2022 Harmony's Horizon Bridge was exploited for approximately $100 Million halting all Bridge activities [see, e.g. Nagoda, K. BREAKING NEWS: Harmony Blockchain's 'Horizon Bridge' Hacked for $100 Million. (Accessed July 27, 2022)]. Thereafter, Harmony offered a $1 million bounty for the return of the exploited funds [see, e.g. Nagoda K. One Million Dollars Not Enough for the Harmony Horizon Bridge Hacker. (Accessed July 27, 2022)]. Almost immediately, responses to Harmony's bounty offer questioned the 'low-ball' amount of bounty offered in comparison to the amount hacked.
There was plenty of reaction from the crypto community, with many suggesting that the amount offered was too low. Others pointed out that providing bounties doesn’t solve the problem and, if anything, may even encourage hackers. 'Isn’t it funny to actually reward the hackers with $1M dollars for returning the fund when they can get away with $100M?' one commented before adding, 'even if they accept the offer, the same hackers will and again comprise another system? Problem isn’t solved'.
[Young, M. Harmony Protocol Offers $1M Bounty Following Massive Exploit. (Accessed July 27, 2022)].
As you can easily imagine, the community was correct, the 'low-ball' offer was ignored and the funds exploited were laundered. Now, Harmony is proposing a reimbursement plan for the exploit that is likewise facing criticism.
The Harmony protocol has been the subject of backlash as the firm announced a hard-fork proposal which will see Harmony mint up to 4.9 billion of its native tokens, ONE, to reimburse victims of the $100 million Horizon Bridge hack in June. The proposal was, however, met with severe backlash from members of the community, with most members voicing worries that the asset would experience inflationary pressure and lose value as a result of the large-scale issuing of new tokens. Harmony had gone silent for almost a month following the hack before popping up with the proposal via a blog post and inviting people to vote on potential fixes.
[Ansah, K. Harmony Faces Criticism after Offering to Reimburse Community by Minting Billions of Tokens. (Accessed July 27, 2022)].
In fact, the "Harmony team stated that it could not offer any solution that results in immediate reimbursement given 'the current state of Harmony’s treasury,' so it offered two options that involve minting several billion ONE tokens via a hard fork to the Harmony blockchain, which would be given to victims of the hack. The first option offered to provide an estimated 100% reimbursement via 4.97 billion new ONE tokens, while the second option estimates a 50% reimbursement with 2.48 billion ONE tokens over a three-year period" [Quarmby, B. Backlash as Harmony proposes minting 4.97B tokens to reimburse victims. (Accessed July 27, 2022)].
The full text of Harmony's Reimbursement Proposal may be accessed by clicking here.
"The team is awaiting community feedback before proceeding forward, but initial responses already appear to be overwhelmingly negative, with most comments on the community page or on Twitter voicing strong concerns with the ideas" [Id]. For example:
"Shwaver, a community member, expressed his displeasure with the proposal, stating that it would end up driving builders away from the Harmony eco-system. 'You’ve done this completely backward. To afford the repayment, you need to first reestablish a stable ecosystem, e.g., repeg or alternative, so projects have a reason to build here, people have a reason to make long-term investments, etc.,' he stated" [Ansah, supra].
The community has also noted that a similar method of recovery was employed by the Terra eco-system following its $40 billion meltdown in May. On the community page, user BSKA wrote 'This is absolutely garbage, scrap the whole proposal and go back to the drawing board Team!' While CJL noted, 'let me get this straight: no word for weeks [...] and the proposal you come back with is a LUNA-style hard fork and a 3-year vest?'
[Quarmby, supra]
At least so far, it appears that the Harmony Team is either unwilling or unable to make a satisfactory reimbursement proposal to its own community. This begs the question whether the Team is out of touch with the will of its investors? Time will tell.