Cosmic Universe's Wizzard Blizzard: Harmony ONE is Insolvent

The $320 Harmony Network could become insolvent within a matter of months, the pseudonymous founder of crypto game Cosmic Universe wrote in a pointed warning to his community.

The warning from “Wizzard Blizzard” came in a Friday message asking his group’s members to support removing the game’s native tokens — MAGIC and COSMIC — from liquidity pools tied to Harmony’s token, ONE.

“Given the exceptionally turbulent state of the crypto and financial markets in general, this proposal is for moving the majority of liquidity for Cosmic Universe to USDC pairings on Harmony,” Wizzard Blizzard wrote in the missive to members of the game’s Discord chatroom. “The logic behind this proposal is that if MAGIC and COSMIC are paired with a stablecoin (USDC has the most liquidity on Harmony), then there will be far less downward pressure on the price of our tokens.”

Liquidity pools pay interest on deposits, but involve a concept known as “impermanent loss.” The gist of it is that users deposit two tokens at a ratio that remains constant between the day of deposit and the day of withdrawal. As a result, if the price of one token in a pairing falls, the user will receive fewer of both tokens when they make a withdrawal. And if one token becomes worthless, the entirety of their deposit becomes worthless.

Wizzard Blizzard’s Friday proposal made the commentary about Harmony’s financial standing as a subtle but dire warning.

“ONE has fallen -93 percent from its [all-time high] and dropped from around 50th top crypto to 110th,” the game developer noted. “Additionally, we believe ONE is at a high risk of falling even further, not only due to the current big challenges facing the financial and crypto markets, but Harmony itself, which currently only has $10 million cash on hand, and seems to indicate that it must dip into its $170 million in ONE (as of the beginning of June when ONE was [valued at] $0.045 while now it is $0.025, so this figure is likely under $100 million as of the time of this proposal) treasuries in order to sell enough ONE for 12 months of runway.

“Harmony is planning to ‘Convert more treasury to $30 million for 12-month hard-cash runway,'” he added, “which at the current price of ONE means selling approximately 1.2 billion ONE.”

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The 1.2 billion figure would represent around 10 percent of the token’s circulating supply of a little more than 12 billion, meaning that if the assessment were correct, the token’s price would be likely to face significant downside in the months ahead. As of Sunday, it stood at 2.7 cents, down from a January peak of roughly 38 cents.

Meanwhile, Cosmic Universe’s primary token, MAGIC, was priced at 3.4 cents as of Sunday, down from $4.50 in January. Its second token, COSMIC, stood at roughly a tenth of a cent, down from 13.8 cents in January. The two cryptocurrencies can be paired with ONE for rates of 180 to 250 percent APR on LootSwap, but that platform is set to be deprecated when Wizzard Blizzard launches an alternative called OneFi.

He said in Friday’s message that OneFi was set to launch within two weeks, and asked MAGIC holders to vote in favor of pairing his project’s tokens with stablecoins after the migration rather than with ONE.

“This proposal’s voting process will last for 336 hours,” Wizzard Blizzard wrote. “By this completion of the voting process, we expect our DEX [decentralized exchange], OneFi Exchange, to be up and running, with our farming contract on OneFi and new liquidity pools created. If the vote passes to have the majority of our liquidity … then we will not recreate the [Harmony pairings] on OneFi until ONE stabilizes and demonstrates it is on a solid upward trajectory.”

The Cosmic Universe project launched on Harmony in October, but isn’t expected to have a playable product until later this year.