Recently, Iron Bank and The "acrimony" between Alpha Homora over bad debts of more than $30m has been widely discussed in DeFi circles.
Iron Bank is formerly Cream v2, which is made by A market that supports partially collateralized (or even non-collateralized) lending that Cream Finance and Yearn Finance jointly launch. Alpha Homora is a leveraged agreement designed to provide profitable farming efficiency. In early 2021, Alpha Homora launched the v2 version to take advantage of it. Cream v2 Liquidity provides leverage services for users.
In short, the relationship between the two parties is: Cream v2 as the bottom lending market Alpha Homora v2 provides users with the liquidity needed for leverage operations, and Alpha Homora v2 provides users with access as an upper layer application based on its own front end. Cream v2 window, and by enlarging the borrowing demand increased. Interest rate income of Cream v2 deposit users.
The conflict can be traced back to a hacking incident in early 2021. At the time, hackers took advantage. Alpha Homora code bug from Cream v2 Eg. Borrowed money carried out a lightning attack on lending, which eventually resulted. $37.5 million in losses. (For details, please refer toCream Finance It was stolen. 3750 Ten thousand dollars, rough and fast. DeFi The development mode has obvious disadvantages")
After the event, both parties shall be obliged to count the part of the loss that cannot be recovered as Alpha Homora's debt to Cream v2. Alpha Homora shall pay 20% of the agreed income monthly for repayment in the future, and shall provide full mortgage assets to ensure repayment -- specific practice is to 50 00 V ALPHA (At that time, about 6000 $10,000) locked in a deal made by Cream v2 control within the escrow contract. (For details, please refer toCream Stolen follow-up: Alpha Finance Repayment from the reserve fund on a monthly basis at 5000 Bandit mortgage escrow")
According to recent disclosures by the now renamed Iron Bank, at the time of the theft. Alpha Homora's debt to Iron Bank details 11,245 ETH + 4263139 DAI + 4032014 USDC + 5647242 USDT for a total of $32.429,000; As at 2 March 2023, the debt details are 11,422 ETH + 3106549 DAI + 3851025 USDC + 6212087 USDT, amounting to $31.947 million.
If all goes well, Alpha Homora may be able to gradually pay off the pair. Iron Bank debt, but Alpha Homora's business numbers have fallen sharply due to market volatility, and ALPHA tokens themselves have fallen sharply. Today, Alpha Homora is only able to pay $5,000 a month from its agreed income, and ALPHA's $60 million mortgage has fallen to nearly $6 million.
The slowdown in repayment and the lack of collateral raised concerns about Iron Bank's ability to recover the debt. On March 2, Iron Bank offered Alpha Homora Released an open letter saying the deal had been called for on February 14th. Alpha Homora also came up with a solution within three days, but two weeks later there has been no action. In order to protect itself and other related agreements, Iron Bank on March 1st suspended lending from Alpha Homora-related accounts. Alpha Homora uses its front end to provide contact. Cream v2 window, this cause this part of the user has been unable to take out temporarily stored. Money from the Iron Bank.
Iron Bank, meanwhile, stressed in a tweet that if Alpha Homora is still not replenishing the mortgage funds on March 5 and will reserve the right to use the funds in this part of the account to offset the debt.
After Iron Bank offered a "killer app", Alpha Homora, facing the crisis of user funds, finally couldn't sit still. Since March 2, the Alpha Homora team has responded to the incident by sending three open letters to Iron Bank.
The first open letter:https://blog.alphaventuredao.io/an-open-letter-to-iron-bank/
The second open letter:https://blog.alphaventuredao.io/second-open-letter-to-iron-bank/
The third open letter:https://blog.alphaventuredao.io/third-open-letter-to-iron-bank/
In the first letter, Alpha Homora explained that he was not sitting on his hands, but that it would take more time to present a solution, and that the Alpha Homora team had requested a meeting with Iron Bank, but was ignored. At the same time, Alpha Homora stressed that Iron Bank has no right to freeze user funds regardless of its concerns and called on Iron Bank Immediately release user funds and return to normal discussions.
In a second letter, Alpha Homora repeated its demand for Iron Bank to release user funds, saying that if Iron Bank does not do so, it will not meet its 2021 repayment obligations and will not replenish its mortgage funds. In addition, Alpha Homora also "threatened" to stay until... The real identity of someone on the Iron Bank anonymous team, considering legal action. Alpha Homora also mentioned that if extreme circumstances occur, it will be responsible for the loss of users' money.
In a third letter, Alpha Homora repeated its demand for the release of user funds and accused Iron Bank of being a centralized platform that arbitrarily changed the rules of the protocol. This time, Alpha Homora has come up with a preliminary proposal, which is as follows:
Iron Bank is required to return customer funds to chains other than Ethereum;
Of the roughly $41 million on the Ethereum chain, Iron Bank will have to return 1100. Ten thousand dollars;
As for the remaining $30 million or so, Alpha Homora Detailed information will be shared with the community one week after Iron Bank agrees to the above solution.
In short, the initial advice was "send back the extra and we'll talk about the rest."
As of this publication, Iron Bank has not responded to Alpha Homora's proposal in official channels, but the delay in resolving the situation has adversely affected both parties.
On social media, Iron Bank's freezing of users' funds came in for a barrage of criticism, with many Twitter users denouncing the move as criminal; While in On Alpha Homora's side, some Twitter users noticed that perhaps the balance of funds had been affected, and some positions on the platform that should have been cleared were not effectively cleared, or the security of the agreement was threatened.
Earlier this morning, Alpha Homora tweeted: "We have been in talks with Iron Bank to get them to release user funds. Discussions are close to a resolution, details are being worked out, please be patient, Alpha Homora will never allow Iron Bank to take user funds."
So far, that's all there is to the story. As for what will happen in the future, the Odaily Planet will continue to follow this story, and please stay tuned.