Fifth Open Letter to Alpha Community
Per Alpha’s Fourth Open Letter, the Alpha depositors have voted for Alpha to negotiate with Iron Bank (IB) in order to find middle ground for the bad debt repayment. After the voting result, we have been exploring potential solutions taking into account the depositors’ feedback and IB’s proposal to unpause certain markets if the debts are fully repaid in any of those markets.
We’d like to assure the community that this matter is of utmost importance to us, and we apologize for not being able to communicate sooner as we had to take time to consider all possible options to ensure that the solution we propose is one that we can truly execute and can be agreed upon by relevant stakeholders. At the same time, we are doing everything we can to get the stolen funds back from the hacker.
We’d like to propose the following solution to IB and depositors.
- Since the amount of liquidity supplied on USDT and DAI is less than the debt amounts, specifically ~1.89M USDT and ~1.92M DAI, Alpha is committed to pay IB ~1.89M USDT and ~1.92M DAI within 1.5 years.
- Since the amount of liquidity supplied on ETH and USDC is more than the debt amounts, specifically ~4.85k ETH and ~5.1M USDC, we propose IB to allow ETH and USDC depositors on Alpha Homora v2 to withdraw the excess amounts proportionately.
This means that every ETH depositor will be able to withdraw ~30% directly from the platform, and every USDC depositor will be able to withdraw ~57% directly from the platform.
We understand that Alpha’s commitment to paying ~1.89M USDT and ~1.92M DAI to IB over 1.5 years is very important to IB, and IB may not accept this whole proposal altogether and users funds’ will be stuck for longer. Therefore, Alpha is committed to pay a total of ~1.89M USDT and ~1.92M DAI within 1.5 years, so that IB can accept this proposal and release excess ETH and USDC funds to users.
3. As Alpha pays ~1.89M USDT and ~1.92M DAI to IB within 1.5 years, 63M ALPHA tokens, that are locked and set aside as initial recovery plan with IB, shall be returned proportionately from IB to Alpha treasury.
4. As 63M ALPHA is returned from IB proportionately over 1.5 years, Alpha will distribute this recovery portion to affected users over time.
a) Details as to how 63M ALPHA will be distributed can be discussed and voted again later on after we know this whole proposal is the direction we are executing.
5. Additionally, 20% of protocol fees from all upcoming Alpha products will be distributed to depositors over 1.5 years.
Note that all exact numbers are to be agreed upon before actual execution if this proposal passes and if IB accepts.
Within 24 hours, we will put this proposal up for depositors to vote and open the vote for 48 hours. As always, we are available and active on Discord for any queries and suggestions.
If this proposal is passed and IB agrees:
- ETH depositors will be able to withdraw ~30% from the platform
- USDC depositors will be able to withdraw ~57% from the platform
- As 63M ALPHA is returned from IB proportionately over 1.5 years, depositors will get this portion.
a) Details as to how 63M ALPHA will be distributed over 1.5 years can be discussed and voted again later on after we know this whole proposal is the direction we are executing.
If this proposal is not passed:
- IB is not going to release excess ETH and USDC funds
- 100% of all depositors’ funds will continue to be stuck
Since the exploit in 2021, Alpha has taken the steps we can to chase down the hacked funds. We have notified centralized exchanges of the exploiter addresses, contacted top security firms to find trails, set up a monitoring system to track fund movements, contacted AAVE and Curve teams to find resolutions since the hacked funds are deposited into these protocols. We have continued to work with emerging security firms and specialists to get more leads on the hacker’s identity and will continue to do so until the funds are returned.
However, if the hacker returns the funds to us, 10% of the funds can be retained as whitehat bounty and we will cease all efforts to find the hacker’s identity and investigations.
While we are solving this problem and working out solutions so that depositors get the funds returned as soon as possible, we make sure to keep building and creating more value to the Alpha ecosystem.
Thus, we’d like to take this opportunity to share our vision and roadmap for the next phase of Alpha in order to shed light on how we plan to create value for our ecosystem. With the new Alpha products that are estimated to go live in Q2, we believe that they will allow us to break new barriers in scaling money market infrastructure in DeFi.
Alpha's new products will build on our profit-sharing primitive and expand beyond yield farming to encapsulate any kind of leverage strategies with 0% borrow interest rate. Leverage users can deploy all kinds of strategies, such as leverage yield farming protocol, leverage liquidity providing, leverage staking, leverage trading, while paying 0% flat borrowing rate. Borrowers share a profit cut only if they make profits, and these profit cuts become the yields for lenders.
This is the first time in DeFi that borrowers get to borrow at 0% interest rate and lenders get returns that reflect real yield opportunities in the market. We believe our new products will unlock and onboard new liquidity in DeFi as we solve a key problem preventing the DeFi money market to scale further. We remain committed to innovate in DeFi and will make sure we keep on building to bring value to our ecosystem.