Vital Background Info
Timeline Previous to Right this moment:
You will need to be aware that Alpha has been following the debt reimbursement settlement for the reason that begin and ascertained that customers wouldn’t be affected by the incident as it’s a duty and legal responsibility between Alpha and Iron Financial institution (IB). For the reason that day the IB workforce froze Alpha Homora’s person funds on March 1, 2023, Alpha has made many makes an attempt to barter with IB, together with proposing to make use of a major quantity of our token treasury to pay down the dangerous debt, however not one of the proposals was accepted by the IB Group.
As of now, the IB workforce is freezing ~$40M of Alpha Homora’s person funds on the ETH chain, of which ~$32M is the dangerous debt between IB and Alpha and ~$8M is the surplus. To resolve this difficulty and get buy-in from the IB workforce, Alpha lenders must decide collectively as one united voice and as a neighborhood.
Timeline Throughout Open Letters:
With reference to why we’ve not proceeded with repaying all debt without delay after the incident or discover strategy to speak to Iron Financial institution on this:
Earlier than reaching this stage, we’ve already proposed a strategy to repay the $32M utilizing our treasury in a wise timeframe to Iron Financial institution however they rejected. Their unwillingness to speak or negotiate in addition to their actions have proven that they’ll change their thoughts at any second and are troublesome to belief. Thus, we imagine the very best plan of action we will take is to have discussions with the neighborhood by Fourth Open Letter.
Timeline Resulting in Right this moment (Fourth Open Letter):
We have to first perceive that presently IB continues to be holding ~$40m of customers’ funds as hostage. This quantity could be divided into 2 elements:
The overall extra ~$8mThe dangerous debt ~$32m
Step one all of us must concentrate on is the way to cope with the (1). There are 2 doable finish objectives to this: (i) negotiate with IB, or (ii) don’t negotiate with IB.
For (i), Iron Financial institution’s previous actions and the way in which that they’ve proven no real interest in direct communication or negotiation made it troublesome to take any particular actions as there aren’t any ensures that any actions will safeguard the customers’ funds. No matter resolution we negotiate with IB on behalf of customers close to step (1) will solely be an answer our depositors agree upon.
After step (1) is evident, we will then proceed collectively on the way to resolve the $32m dangerous debt. Both we proceed negotiating with Iron Financial institution, or discover a treatment plan along with our depositors – through which we are going to use treasury for this half, which shall be determined and voted on by the neighborhood as nicely.
Because of this thought course of, this led to the motion we proposed to Iron Financial institution within the newest Open Letter #4: negotiate on behalf of customers to get the excellent extra from IB first.
Key Takeaways from AMA
Intention for the proposal in our Fourth Open Letter:
Share what we will nonetheless do on behalf of customers in hope for a dialogue with the impacted customers on how they want us to proceed given the scenario.
Particulars of precise proposal for voting:
This shall be a revised model that has already included customers suggestions from the second we launched Fourth Open Letter.The discharge of the proposal and voting begin date shall be on March 11 8am UTC. Voting will open for 48 hours.
Textual content Clarification in our Fourth Open Letter:
With reference to what was talked about stating “Most significantly, this implies the dangerous debt shall be transferred from between the 2 protocols to 1 between Alpha Homora and its depositors” within the Fourth Open Letter, what we meant was although this dangerous debt is a debt between the 2 protocols due to the protocol-to-protocol mechanism, the dangerous debt has concerned customers the second Iron Financial institution misappropriated person funds.The debt won’t be transferred to customers, however be dealt between Alpha and IB.If IB refuses to launch the funds, then Alpha Homora customers vote to find out the subsequent step ahead, for instance, pursuing authorized motion towards IB, remediation plan to make customers entire as a lot as doable, and so on.
Goal of Fourth Open Letter:
This proposal is within the hope that there’s no less than a way that we will negotiate on behalf of customers to retrieve the surplus funds ($8M) again first.That is the place we plan to contain the neighborhood (as acknowledged) as we need to align the options that the neighborhood would love us to take probably the most. Customers are free to tell us their ideas in addition to vote on the subsequent plan of action they would like us to tackle behalf of customers.
Choices We’re Heading In direction of on the Fourth Open Letter’s Proposal
With all that being mentioned, this leads us to the present choices for the proposal to maneuver ahead:
Choice 1: We and the neighborhood conform to proceed to barter with IB in hope to return $8M customers funds.
Implication: That is the choice that can permit Alpha Homora customers to get some deposits again as quick as doable.
Subsequent step if vote is YES:
Talk the proposal to IB, through which IB has to conform to earlier than executing.Alpha Homora customers and Alpha decide the subsequent step ahead, for instance, pursuing authorized motion towards IB, remediation plan to make customers as entire as doable, and so on.
Choice 2: No, AH shouldn’t negotiate this fashion, however discover one other strategy to negotiate
Implication: Alpha Homora customers could not be capable of withdraw for an extended time period, since extra time could also be required for an inexpensive negotiation with IB.Subsequent step: Alpha Homora customers agree on circumstances for a brand new proposal for IB.
Choice 3: No, AH ought to cease negotiating. Proceed to subsequent steps
Implication: Alpha Homora customers and Alpha cease negotiating with IB.Subsequent step: Alpha Homora customers and Alpha decide the subsequent step ahead, for instance, pursuing authorized motion towards IB, remediation plan from our treasury to make customers entire as a lot as doable, and so on.
Open Flooring Q&A
Q: How is that this vote going to be counted and weighted?A: Worth of ibTokens, so solely lenders will be capable of vote. Solely Alpha depositors on the 4 affected tokens (ETH, USDT, USDC, DAI) on Ethereum chain are capable of vote. Every depositor’s voting energy relies on the greenback worth of their deposits (represented by ibTokens). The ETH value used for voting energy calculation is ~$1529. The costs used are as of Mar 9, 11:08AM UTC.
Full particulars on Snapshot.
Q: In case you select Choice 1, how a lot is the haircut?A: We’re unable to inform the quantity of the haircut given it should rely on the treatment plan that the neighborhood in the end selects by voting. Provided that customers have various ranges of tolerance for a haircut, the chosen resolution shall be decided by the collective vote of the lenders.
Q: What about giving the protocol over to IB?A: On this case, you may vote for possibility 2 and transfer ahead with alternative ways to barter with our financial institution, together with the one talked about.
Q: Is the next possibility doable?To compensate Alpha Homora depositors for his or her lack of ETH funds, Alpha Homora can work with OlympusDAO to implement a bonding mechanism that bonds ibETHV2 with ALPHA Token. By bonding these two property, Alpha Homora can supply customers ALPHA Token on the present market value in trade for his or her stake in ibETHV2.
The bonding mechanism could be applied over a interval of a 12 months to stop any sudden value affect to ALPHA. As soon as the bonding is full, Alpha Homora can use the ibETHV2 to repay its debt to Iron Financial institution.
This resolution can present depositors with a good compensation bundle equal of ALPHA token whereas additionally making certain that Alpha Homora has the mandatory funds to proceed its improvement and development.A: This selection is feasible and shall be added to one of many options within the possibility for customers to vote once we get to the purpose the place everybody agrees that we should always transfer ahead with discussing the treatment plan with customers.
Q: What precisely gave “custody” to IB to maintain any of this within the first place because it appears to be a venture vs. venture (protocol debt) difficulty that’s being turned onto depositors?A: No matter issues Iron Financial institution has doesn’t entitle it to take person deposits. Iron Financial institution make a code change that seems to have been unilateral with out discover and now prevents lenders from withdrawing their liquidity.