Sixth Open Letter to Iron Bank
Since 2021, there exists bad debt from exploited funds between Alpha Homora and Iron Bank (IB). The two protocols work through protocol-to-protocol lending mechanism, and thus it was appropriate for the issue to be resolved between the two protocols. At the time, both protocols agreed to this agreement to settle the debt. This has been the default way ever since.
Since IB froze users’ funds and demanded for accelerated payments from Alpha despite having the original agreement in place and IB failing to liquidate the collateral when it was 1.66x of the bad debt, Alpha Homora has discussed with users and IB via open letters and other channels and proposed a solution for accelerated payment method that users agreed to (95.62% voted For).
Therefore, if IB wants accelerated payments instead of honoring the original agreement to settle the debt, then this solution that users agreed to and voted for is the path forward. However, if IB chooses to sell the collateral, which is a collateral for the whole position, then the debt between the two protocols is settled. If IB chooses to, Alpha Homora can work with IB on executing the solution such that IB gets the most value and as a result users get the most value.
To Alpha Homora users
Even though by IB selling the collateral means the bad debt between Alpha Homora and IB is settled, Alpha Homora will set aside a goodwill fund for users, and details can be discussed later on if this is the case.
Update on effort to retrieve hacker’s funds: Alpha Homora is talking to people who may have intel of the hacker. Separately, we are now connected with the Euler team and will learn and apply their strategies of getting funds back accordingly.
Some users also ask for the future roadmap. Although resolving this issue with IB is our top priority, contributors in tech and product teams continue to build, and we’d like to take this opportunity as requested by some users to share more.
We still really believe in blockchain technology and how it can change the way we all think, work, and operate. We remain passionate in using our expertise and interest in DeFi to drive more adoption of blockchain technology. Diving further into problems in DeFi, we realize that the current money markets that rely on the interest rate model do not allow DeFi to scale further.
Because money markets are the most fundamental part of DeFi, if we can solve this problem, our expertise will contribute to enabling DeFi to scale further and blockchain technology to be more adopted. And this is exactly what we are building - a completely new model of the money market that relies on yield sharing instead of an interest rate mechanism. We believe the yield sharing mechanism will align incentives of all parties using money markets, drive for more adoption of money markets, lead to more DeFi applications that build on top of this yield sharing model, and ultimately more adoption of DeFi.