Blockchain startup Harmony has proposed issuing nearly 5 billion new cryptocurrency tokens to compensate customers for the almost $100 million worth of such assets that were stolen from its service.
Many of those customers are unhappy with what Harmony is proposing, fearing it would undermine the already depressed price for its token.
"It boggles my mind that not only do we lose money, we also pay for the reimbursement ourselves via inflation," said a user with the screen name dilutedtozero. "You guys have no shame to call this a 'reimbursement proposal.'"
Last Tuesday, the Sunnyvale startup offered two different proposals via its website. Under the first scenario, the company — legally known as Simple Rules Co. — would attempt to fully reimburse those affected by the theft by minting, or issuing, 4.97 billion tokens over a three-year period at a rate of about 138 million a month. Under the second scenario, it would issue 2.48 billion tokens over the three-year period at a rate of about 69 million a month.
In both cases, it would assign a value to the tokens of 2 cents each — about what the currency is now worth — regardless of what happens to the price of its cryptocurrency in the open market over the next three years.
"Our community is a critical component to Harmony’s success," the company said on the webpage detailing its proposals. It continued: "The Harmony team has worked tirelessly to brainstorm and develop paths towards reimbursing those who were impacted by the recent hack."
Harmony representatives did not immediately respond to a request for comment.
By Monday, Harmony's proposals had attracted more than 300 responses from users, many of them critical. Many worried that the issuance of billions of new tokens would effectively make all Harmony cryptocurrency worthless.
"DO NOT MINT MORE!" said one user with the screen name Dogecoin Pilot. The user continued: "Did we not learn about inflation? When you increase the supply, price does not follow."
Harmony operates a so-called cryptocurrency bridge. Such services allow owners of particular cryptocurrency tokens to trade in other such assets without formally exchanging one for the other. Instead, they essentially put up the tokens they own as a kind of collateral. The arrangement allows users to avoid exchange fees.
The company has said it is working with "national authorities and forensic specialists" to recover the stolen tokens. Harmony has also offered a $1 million bounty in exchange for the return of the assets and information on how they were stolen.
Harmony's token, which trades under the symbol ONE, is going for about 2.3 cents each. That's down from about 38 cents a piece in October.
