For over a decade, there has been substantial mystery surrounding the formation of Haumea and its collisional family. Haumea is a rapidly rotating (3.9 hr period) small body in the Kuiper Belt, with a strong water ice spectral signature. About a dozen Kuiper Belt objects (KBOs) have been identified as on dynamically similar orbits, and share Haumea’s unique water ice spectral signature. Since 2007, it has been thought that Haumea, and the associated family of objects, was formed in a collision. However, none of the existing hypotheses can match the unique set of features that the family possesses, most notably an extremely low velocity dispersion (∆v) of icy family members (Proudfoot & Ragozzine 2019). Here, we present a complete hypothesis that matches all the observed features without invoking exotic and/or low-probability steps and which naturally matches the context of the formation of the outer solar system. We propose a graze-and-merge collision of a proto-binary which is consistent with the number-size-velocity distribution of family members and their unusually icy surfaces. Our previous work showed the a-e-i distribution of family members was inconsistent with this type of collision, but new simulations, which include Neptune migration, bridge the gap between this collision and the present-day distribution of Haumea family members. We will present our Haumea formation hypothesis with particular emphasis on the dynamical aspects.