What’s the beef between Alpha Homora and Iron Bank?
What’s the beef between Alpha Homora and Iron Bank?
On March 1st, Iron Bank paused Alpha Homora’s lending accounts. As a result, lending pools have been impacted thus making users unable to withdraw their funds. According to Homora’s Twitter, the following pools have been affected:
• On ETH - ETH, USDC, USDT, DAI
• On OP - ETH
• On FTM - FTM, USDC, ETH, DAI
• On AVAX - All pools
How did we get here? The reason is, unfortunately, quite boring and in the end mostly affects users. So, par for the course as far as crypto goes.
I am far from being the type of researcher that doesn’t want to offend any side, however there does seem to be some fault on both sides in this case, combined with a regretful business decision and less than stellar business practices.
Effectively, Alpha Homora has incurred quite the substantial debt to Iron Bank after their exploit from two years ago in Feb 2021. According to IBs Twitter, the debt stands at:
• 11,245 ETH
• 4,263,139 DAI
• 4,032,014 USDC
• 5,647,242 USDT
For a total debt equivalent to $32,429,175. IB states that as of March 2, that total debt stands at $31,947,429, so roughly only half a million smaller. The debt repayment plan that has been agreed upon has AH pay 20% of its protocol fee to IB. This of course means revenue that AH makes from other chains as well. However, due to the bear market, this sum has gone down considerably, having been roughly $5,000 last month from as high as $180k+ some months ago. It’s not exactly difficult to understand that at this rate, a $30 million + debt will take some time to be repaid.
IB has asked AH to top up their debt collateral which consists of $ALPHA tokens. Naturally, these have also taken a big hit due to market conditions. IB states that it finally paused Homora’s account after two weeks went by and the collateral wasn’t raised, in order to protect depositors from Curve, Keep3r, IB and others. There is definitely an argument to be made on debt being dutifully repaid and that one protocol’s exploit shouldn’t be another protocol’s problem.
However, the approach that IB has is affecting users that have no business in a protocol-to-protocol bad debt spat. IB has changed smart contract configuration that doesn’t allow lenders to withdraw liquidity. AH is claiming that the debt repayment plan has been agreed upon by both sides, with no fixed date on when it is to be completed. At present, the only thing being affected is other user’s funds, who just so happened to use Homora or third party services that use these pools. For example, Aperture Finance’s @mcdavid has urged users to be especially cautious with their Homora and Pangolin positions via Aperture.
The fight between the two protocols is still ongoing and except for the facts laid down above, both are accusing each other of a combination of: being unresponsive, misappropriating user’s funds, not bringing a solution to the table or being unreasonable. Al on the back user’s deposits…