What is Harmony (ONE) ?
Harmony is a high-performance blockchain platform with fast and low-cost transactions. How does it work? Why do we need it? Let’s see together!
The Harmony architecture includes sharding and its own effective Proof-of-Stake (EPoS) algorithm, which allows for high throughput. The project network is now divided into four shards.
The native Harmony cryptocurrency is traded under the ticker ONE and is one of the top 150 crypto assets by market capitalization.
The Harmony platform has an established ecosystem with dozens of active decentralized applications.
Who created Harmony and when?
Harmony Protocol was founded in 2018 in the United States by several people: Rongjian Lan, Nick White, Stephen Tse, and Sahil Dewan. Previously. They previously worked for major technology companies such as Google, Amazon, Apple, and Facebook.
Already at the start of 2019, the startup team had completed three rounds of investment, raising a total of $28.5 million.
The main Harmony network was launched in June 2019, and the network was decentralized in May 2020 by introducing a mechanism for delegating native ONE coins that had been blocked in staking to validators.
The Harmony blockchain features
The Harmony protocol has two features that allow this blockchain to achieve high performance:
- A unique Effective Proof-of-Stake (EPoS) consensus mechanism;
- Sharding — the division of a single block chain into segments working in parallel.
The EPoS mechanism is based on the widely used Delegated Proof-of-Stake algorithm, which allows coin holders to participate in the network by delegating cryptocurrencies to validators.
To achieve consensus among validators, the Fast Byzantine Fault Tolerance (AFT) protocol is used. It enables parallel processing of transactions in separate segments (shards), increasing speed and efficiency. As a result, creating new blocks in Harmony takes less than 2 seconds.
The FBFT consensus consists of three stages:
- Advertisement
At the beginning of a new round, a randomly assigned leader creates a new block and passes its hash to all validators; - Preparation
Validators check the message, sign the block hash and send the signature back to the leader. At least 2/3 of the votes must be collected to complete the phase; - Fixation
The leader combines the collected signatures into an aggregate signature, which the validator sends out. They verify that at least two-thirds of the votes were collected in the previous phase and sign the approved block, which will be fixed by the leader after at least two-thirds of the signatures are collected.
How does sharding work?
The Harmony consensus cycle is known as an “epoch,” and it lasts 32,768 blocks (about 18.2 hours). Validators in the Harmony blockchain are distributed among the “head” network (Beacon Chain), which is responsible for segment consensus (shards).
Shards operate in parallel, with each having its own group of validators chosen at random from the general list for the time of the next epoch. Transactions and blocks are also confirmed independently in each shard.
The sharding principle is required to achieve the Harmony blockchain’s high level of scalability. Each shard has its own block chain and state database.
Individual Harmony network elements are synchronized at the end of each epoch. The Beacon Chain, or “zero” of the “beacon” shard serves as a coordinator for other shards. It generates a set number of blocks. Other shards use the “beacon” to synchronize the height of their block chains. This change is also transmitted to other shards as soon as the next epoch in the Beacon Chain ends.
All network activity is now concentrated in the Beacon Chain, and shards 1, 2, and 3 are almost never used, despite the fact that they generate blocks smoothly. Harmony can currently perform 2000 transactions per second in its current configuration. The number of balls can be increased as the load increases.
The emission volume and the functions of a ONE native coin
The project team initially released a native cryptocurrency on the BNB Chain blockchain. During the investment rounds, 2.8 billion rubles were sold to large investors.
Harmony then went public on the Binance Launchpad platform. Another 1.575 billion ONE tokens were sold during the token sale. The native coin was transferred to the Harmony network with the launch of its own mainnet in June 2019, releasing 12.6 billion coins all at once.
As of September 2022, the total supply of ONE is more than 13.15 billion coins, and the maximum size of the issue is not limited. Annually, approximately 441 million coins are issued to reward network validators, corresponding to a 3% annual inflation. However, because the mechanism of burning transaction fees is in place, the actual inflation is directly proportional to network activity.
The main ways to use cryptocurrency ONE:
- Payment of transaction fees (less than $0.0005 per transaction);
- Participation in project management and development using the DAO system;
- Stacking.
Harmony supports three user token standards that are identical to Ethereum standards: interchangeable HRC-20 and non-fungible tokens (NFT) — HRC-721 and HRC-1155.
The staking of a ONE cryptocurrency
The number of available validator slots on the Harmony blockchain has increased several times in response to network demands and now exceeds 800. However, there are just over 150 active validators among them.
The validator must have at least 10001 ONE coins in their wallet. Coin holders give their ONE to selected validators in exchange for a portion of the block rewards. As of mid-September 2022, the profitability of stacking ONE when delegating cryptocurrencies is greater than 9% per year.
An important distinction between EPoS and DPoS is a unique mechanism for reward distribution that promotes decentralization. The profitability of nodes with less ONE in the steak turns out to be higher than that of large validators. This encourages the management of nodes, each of which has a small steak, rather than one large node.
How many projects does Harmony have?
Activity in Harmony began to grow rapidly in 2021 at the same time as its main competitors — the EVM-compatible networks Polygon, Avalanche, Fantom, BNB Chain, and others.
According to DeFi Llama, as of September 2022, about 60 DeFi protocols are running on this blockchain. In total, more than 200 decentralized applications have already been launched in this network. Compatibility with EVM made it easy to integrate successful projects from Ethereum into Harmony.
Among the major protocols operating on the Harmony network, one can single out the decentralized SushiSwap exchange, the Aave landing service, the Synapse, and Router Protocol cross-chain bridges, as well as the Beefy yield aggregator. The GameFi segment is represented by blockchain games DeFi Kingdoms, Defira, MarsColony, Knight & Peasants, Moon Robots, and other projects.
In January 2022, the volume of blocked liquidity (TVL) in the Harmony ecosystem reached $1.35 billion. However, in the following months, against the backdrop of a bear market, TVL fell to less than $40 million.
Network activity has also decreased many times. If on January 24, 2022, more than 5.3 million transactions were processed per day, then in September, on average, the number of transactions does not exceed 250 thousand per day, and the number of active wallets is about 10 thousand. Moreover, the aforementioned blockchain game DeFi Kingdoms provides almost 50% of the activity on the network.
The attack on the Horizon cross-chain bridge was a major setback for Harmony, from which the project is yet to fully recover.
Hacking the Horizon cross-chain bridge and stealing $100 million
On June 23, 2022, hackers managed to hack the Horizon Ethereum Bridge, as a result of which about $100 million in cryptocurrency was stolen from users.
The Harmony team offered hackers a reward of $1 million for a refund, and then $10 million. However, the attackers ignored all offers and laundered the stolen funds through the Tornado Cash mixer. According to experts, the infamous hacker group Lazarus, affiliated with the DPRK authorities, may be involved in hacking Horizon.
The Harmony team published a compensation plan a month after the incident. It included a hardcore for the release of new ONE tokens to compensate hacking victims. However, the Harmony community declined this offer.
Since August 2022, the community has been debating a new recovery strategy that includes the creation of a special management token and a DAO based on it called Recovery One Foundation.
Key partners of Harmony and its prospects
In 2019, when the main Harmony network launched, its key developer began working with several leading crypto projects. Then, in particular, Harmony’s partners became:
- Chainlink, a network of decentralized blockchain oracles;
- Ankr, a decentralized computing environment and platform for business applications.
In addition, Harmony actively collaborated with crypto wallet teams and staking providers.
In April 2019, Harmony entered into a partnership agreement with the securities tokenization platform Nomica, which intended to use this blockchain to record information about the ownership of digital tokens and automate their management.
In the fall of the same year, Harmony Protocol presented a $300 million fund designed to develop the ecosystem until the end of 2025. Of this amount, $180 million was allocated for grants for developers, and $50 million was allocated to finance 100 regional DAO. We also planned to hold 10 hackathons for developers and launch programs to encourage liquidity providers and partners.
The next stage was the launch in 2022 of the comprehensive Harmony One Accelerator program, which is divided into four areas:
- Harmony Venture Network — search for strategic investors;
- Harmony Talent Network — attracting developers, designers and other specialists to the Harmony ecosystem;
- Harmony Advisors Network — expert consultations in the field of corporate structure, finance, economics, law, etc.
- Harmony Services Network — a carefully selected list of service providers for blockchain companies, from smart contract audits to liquidity providers.
However, in June 2022, the Harmony Protocol team announced a partial suspension of the fund’s work due to large losses incurred as a result of the attack on the Horizon Bridge.
What are your thoughts? If you have anything to add to the Harmony topic, please leave your comments below!
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