Controversy broke out between two once-remarkable DeFi projects, Iron Bank and Alpha Homora, over the problem of bad debt in lending activities.
The lending protocol Iron Bank has frozen the account of the Alpha Homora project, which requires handling of bad debt up to nearly 32 million USD.
Iron Bank’s point of view
It all started on March 1, 2023, when Iron Bank suddenly announced it would stop providing services to Alpha Homora, but other accounts were not affected.
Alpha Homora’s protocol lending accounts has been paused.
All other protocols and IB users are not affected.
— Iron Bank (@ibdotxyz) March 1, 2023
As revealed, Alpha Homora as of March 2 owes Iron Bank 11,422 ETH, 3 million DAI, 3.8 million USDC and 6.2 million USDT – with a total value of 31.9 million USD. This is the outstanding damage from the attack on Alpha in February 2021 through Iron Bank.
In place of the commitment to repay the debt and serve lending activities between the two parties, Alpha Homora in February 2021 used 50 million ALPHA tokens (worth 105 million USD at that time) of the project as collateral on the project. Iron Bank, as well as spending 20% of the fees on Alpha Homora to pay off debt. However, after a long time, the ALPHA token slipped from the peak of $ 2.6 in February 2021 to $ 0.11 at the present time, the other collateral is only worth $ 5 million.
— Iron Bank (@ibdotxyz) March 2, 2023
Concerned about this situation, Iron Bank on February 14, 2023, asked Alpha Homora to add more collateral for the debt within 3 days, according to the past agreement between the two. However, the request of the lending platform has been ignored for 2 weeks since then, even Alpha side refused to make a new written commitment to repay.
Iron Bank therefore stated that if Alpha Homora does not meet the requirement to increase collateral by 06:00 AM on March 6, 2023 (Vietnam time), they will be forced to suspend the account and demand the deposit. compensation for the full damage of the attack.
Iron Bank would like to remind @alphahomorav2 that the repayment deadline of 2300 UTC March 5 2023 is intervening.
Should Alpha Homora fail to make repayment, we reserve the right to offset the exploit debt from Alpha Homora’s account.
— Iron Bank (@ibdotxyz) March 4, 2023
Alpha Homora’s point of view
The move of the lending protocol caused DeFi activity on Alpha Homora to be affected, even unable to process withdrawals for users who provided liquidity to the lending pool on Iron Bank. Alpha Homora accused Iron Bank of changing smart contracts to prevent users from withdrawing money, and explained that it had contacted Iron Bank since March 1 to find a solution, but claimed to have not received any response. cooperate.
An Open Letter to Iron Bank pic.twitter.com/3yZEpw9Z2Q
— Tascha | Alpha (@tascha_panpan) March 2, 2023
Alpha admits that because of the downtrend market, the 20% of transaction fees paid to Iron Bank has dropped from 180,000 USD to only 5,000 USD / month recently.
However, the project said that the debt repayment agreement with Iron Bank is a contract between the two projects, unrelated to the user, and requires the other party to stop freezing the account so that the user can withdraw money again.
The agreement did not include a debt payment deadline, nor a unilateral termination of the account, so Alpha Homora declared Iron Bank’s actions to be a breach of contract, giving them no reason to continue. Stay active pay 20% transaction fees, top up your mortgage, or even pay off your debt.
Second Open Letter to Iron Bank pic.twitter.com/66WtDgrO05
— Alpha Homora (🪄, ) (@Alpha_HomoraV2) March 3, 2023
Alpha Homora also set a deadline of 06:00 AM on March 6, 2023 (Vietnam time) for Iron Bank to unlock accounts and allow users to withdraw money, otherwise there will be legal actions against Iron Bank. As for the user’s money stuck, the project commits to full compensation.
Alpha also warned other projects that are cooperating with Iron Bank that recent actions show that they are not a reliable partner, willing to misuse their powers to serve their own interests.
Synthetic Kyptos
