The Aave governance page shows that a joint recovery plan has been proposed by users for Aave and Harmony to compensate for the loss of user funds on AAVE after the Harmony blockchain suffered a hack attack. The core of this recovery plan involves setting up a Recovery Fund, with both Harmony and Aave contributing 20% of the total necessary funds for reimbursement. This will enable affected users to immediately recover 20% of their balances before the hack attack, providing some immediate relief and laying the foundation for further recovery efforts. Aave's contribution will include liquidating a portion of their current holdings of depreciated assets in the Harmony DAO treasury, which includes approximately 2 million aONE and 700 aLINK tokens. The remaining contributions from both parties may come from their respective reserves or other funding sources.
The proposal also introduces the Decaying Oracle Mechanism proposed by service provider BGD, which will start with a recovery rate of 20% and gradually decrease in a depreciating manner to liquidate illiquid assets as early as possible. If there are any remaining bad debts, this debt will be shared equally between Harmony and Aave. The recovery process is expected to take around four years.