Second Open Letter to Iron Bank


On March 1st, around 8:20PM UTC+7, Iron Bank, which is a protocol spin off from the team behind C.R.E.A.M., made a config change in their protocol. This change is unilateral without notice and now prevents lenders from withdrawing their liquidity. The Alpha community is very concerned and issued the first Open Letter, which can be found here.

After issuing the first Open Letter, Alpha Homora has continued to reach out to Iron Bank to get on a call to discuss a solution. They rejected having a call and asked us to share the proposed solution on Telegram.

However, any proposed solution should not be in writing until it is a solution that both protocols agree to since the debt issue is between the two protocols and since Iron Bank chose to misappropriate users’ funds and hurt lenders. And as a result of their action, we don’t know what negative thing they would do that could harm even more parties based on our writing that is a solution not yet agreed upon. Only after discussing, then we are able to come to any agreement that can be translated to writing a final version.

Response to Iron Bank’s First Open Letter

This is Iron Bank’s Open Letter. Iron Bank’s request to have all the debt repayment be transferred by March 5th is invalid and unjustified because both protocols have agreed to terms since 2021 that debt will be paid down using 20% of Alpha Homora’s protocol fees in addition to having 50M ALPHA as collateral that was 2x of the bad debt (or exploited funds). There was no specific timeline agreed in the original agreement, and it is unjustified to simply change the terms, especially when Iron Bank failed to liquidate the collateral when it dropped below 1.66x. This shared understanding is also public on the smart contract here.

Path Forward

Iron Bank has breached the original agreement since the moment they froze users’ funds. In the original agreement, it is agreed that if collateral was not topped up within 3 days of Iron Bank’s request, Iron Bank reserves the right to liquidate a portion of the escrowed ALPHA to pay off the debt. However, Iron Bank did not liquidate the collateral and chose to freeze users’ funds instead.

Because Iron Bank breached the agreement and now trust between two protocols is broken, there is limited reason for Alpha Homora to continue upholding the original agreement. Therefore, if both parties cannot come to a new agreement or Iron Bank continues to withhold users’ funds, Alpha Homora will neither continue to transfer 20% of protocol fees to pay off the debt nor will top up any collateral.

This 2nd Open Letter will be the last attempt that Alpha Homora asks Iron Bank to discuss a potential solution to unfreeze users' funds.

If Iron Bank does not return users’ funds or does not discuss a potential solution with Alpha Homora by March 5th 23.00 UTC, Alpha Homora will do 2 things.

  1. Seek legal advice to see how Alpha Homora can help users since Alpha Homora is aware of one of Iron Bank team members’ identities.
  2. Within 1 week, if this scenario were to take place, we will share details of how we will handle or even absorb some of the cost on behalf of users

Closing Thoughts

Alpha Homora is also a victim of the exploit, and the funds are with the hacker. However, we take responsibility in solving the problem in a way that it should be - between the two protocols. Whatever concerns Iron Bank has does not entitle it to take user deposits. Alpha Homora will continue to push forward such that Iron Bank takes corrective action to return the lenders’ funds.