Harmony Recovery: Round 5
Summary of Funding Round 5
In February 2023, the Harmony treasury issued a total of $120,000 USDS to three “burn partners” in equal increments. These partners consisted of the Recovery One Foundation (R1), Tranquil Finance, and Modulo, all of which were selected for their capacity to distribute the grant capably and in line with the years-long recovery plan. Over the course of approximately four years, the Harmony Treasury expects to issue grants to remove depegged 1Assets which resulted from the Horizon Bridge hack this past June. The remainder of this article will briefly review the results of Funding Round 5.
Please note that due to lower funding offered by the Harmony treasury in round 5, the results are also lower, yet still effective judging by the demand and redemptions.
Round 4 ended with over $1.1M of 1Assets being burned and February marked the inclusion of more unique wallets participating in recovery- opening the redemptions up to more users while shielding funds from arbitration bots. Still, the majority of the 1 Assets that were affected by the hack exist on the market rather than in users’ wallets, meaning that they can be removed for slightly above their market value at the time of the recovery offering. Each partner has considered this and adapted to maximize the redemptions given the amount funded. In practice, this has enabled the burn partners to effectively remove 10x the amount funded each round from circulation. Round 5 totaled approximately $888k burned between the three partners, along with $130k of assets being cleared from Tranquil as ‘bad debt.
Modulo has included nearly all of the affected Assets in their Dutch Auction mechanism found here. This was a widely successful move that aided the efficacy of this round’s funding, resulting in approximately $432k1 in 1Assets being burned by Modulo. Modulo continues to achieve great redemption ratios, totaling $2,489,791 to date.
Once again, Tranquil Finance has chosen to support the recovery process through a direct market buy-and-burn, exchanging $20k USDS for $131,690k 1 USDC, which helped to stabilize the market as the remainder of Round 5 commenced. Additionally, for the first time, Tranquil has used the remaining half of the allocation to pay off an equal portion of ‘bad debt’ from their lending platform. This is in preparation for a v2 launch of their money market, featuring all-new oracles and pairs- coming soon! Tranquil’s total amount burned at this time is $1,943,416 and $131,690k allocated toward the platform!
R1 redeployed their recovery contract and updated the user interface to include all Assets to their Recovery Exchange last month. They managed to burn $325,100K at a flat 10% parity, with all demand targeting 1USDT/1 USDC/1DAI. Additionally, in response to the immediate redemptions that occurred in round 4, R1 team deployed all new smart contracts, which added a WL for the initial redemption stage. This ensured that only real users who were snapshot last Fall by voting with rONE could participate. The new contracts also hindered prevalent bot contracts and added a live ‘Total Burned’ tally to the front end. The average redemption cost on their platform paired with declining market conditions has continued to illustrate that the market accepts redemptions in the 10% offer range. R1’s service fee was used to fund contract development, UI improvements, and the general management of communication between Harmony users and the recovery process. At this time, R1 has burned a total of $1,965,100!
The total amount burned continues to rise with each funding round, this time ending with approximately $6,398,307 burned. As we inch closer and closer to the goal, we continue to see active backend development from the team. We’ll look forward to another funding round coming in the first or second week of March!
Originally published at https://medium.com on March 3, 2023.
