I’m writing to precise concern about actions taken by Iron Financial institution that harms depositors and to induce Iron Financial institution to take speedy motion to reverse your actions. Round 8:20PM UTC+7, a code change was made within the code of Iron Financial institution, a protocol spin off from the crew behind C.R.E.A.M. This variation seems to have been unilateral with out discover and now prevents lenders to withdraw their liquidity. I’m deeply involved that this can be misappropriation of customers’ funds.
Here’s what occurred:
Since 2021, there exists unhealthy debt between Alpha Homora and Iron Financial institution. The 2 protocols work by protocol-to-protocol lending mechanism, and thus it was acceptable for the difficulty to be resolved between the 2 protocols. On the time, each protocols agreed to
1) have the unhealthy debt be paid down by utilizing 20% of Alpha Homora’s protocol charges to repay the debt2) have 50M ALPHA to be locked as collateral
These shared understandings are additionally public on the good contract right here.
On the subject of unhealthy debt, we’ve got been utilizing 20% of the protocol charges to repay the debt repeatedly on a month-to-month foundation because the starting as agreed. Transactions of these transfers might be discovered right here.
On the subject of collateral, the collateral has depreciated in worth in accordance with the general crypto market. Consequently, the debt has been undercollateralized. Nevertheless, Iron Financial institution raised considerations two instances almost about the collateral, and for each instances we’ve got come to a mutual settlement on fixing the issue with the agreed options. The primary answer that was carried out was so as to add extra collateral. The second answer that was additionally carried out was to rebalance the debt.
On February 14, 2023, Iron Financial institution raised a priority the third time almost about below collateralization and requested for our crew to give you an answer. We agreed to give you an answer and requested for a while to determine. On March 1st, 2023, we had been in a position to give you an answer and messaged them straight away at 5PM UTC+7, so we might set a time to debate.
Nevertheless, they ignored the message and as a substitute of working to unravel the issue like how we’ve got been doing, Iron Financial institution went forward at 8:20PM UTC+7 on March 1st to make a code change that seems to have been unilateral with out discover and now prevents lenders from withdrawing their liquidity. Particularly, they modified the config within the good contract in order that lenders can not withdraw their liquidity.
Given the total context above, we’d wish to level out and make clear Iron Financial institution’s message to their Discord neighborhood.
As shared above, each protocols have agreed to have 20% of Alpha Homora’s protocol charges be used to repay the debt on a month-to-month foundation, and that is what we’ve got performed because the starting in 2021. The bear market doesn’t solely affect crypto valuation, but in addition impacts on-chain and DeFi utilization. Consequently, the protocol charges collected had been decrease in worth because the bear market.
Topping off collateral
As shared above, each time that Iron Financial institution raised a priority, we got here up with an answer that each events agreed upon and carried out. After listening to a priority from Iron Financial institution the third time on Feb 14, 2023, we agreed to give you an answer and reached out to them to debate the answer we got here up with. Nevertheless, they ignored the message and went forward to make a code change that seems to have been unilateral with out discover and now prevents lenders from withdrawing their liquidity.
The trail ahead:
No matter considerations Iron Financial institution has doesn’t entitle it to take person deposits. As a result of these actions increase belief points with Iron Financial institution, we’ll disable new lending and new positions on Alpha Homora v2 to stop any new person from participating immediately with Iron Financial institution. Open leverage positions can nonetheless be closed.
We are going to proceed to push ahead such that Iron Financial institution takes corrective motion to return the lenders’ funds and discusses with us on the answer we got here up with that’s legally and morally proper, that’s honest to lenders.
On the product growth entrance, constructing continues as we’ve got been heads down constructing Alpha Homora v3 and Alpha Chambers that collectively will create a simpler and safe cash market ecosystem pushed purely from a profit-sharing mechanism as a substitute of rate of interest mannequin. For extra particulars, please see right here.
Closing thought and observe to different builders:
It is a reminder to all different protocols that combine with Iron Financial institution to be very aware and cautious, as their motion has proven that they’re prepared to unethically misappropriate customers’ funds. We, as builders and suppliers of services to this open area, mustn’t work or help this sort of wrongdoing, mentality, motion, and other people making these selections that hurt customers.