Strengths and Weaknesses
- Transaction speed: Harmony’s sharding and Proof of Stake (PoS) consensus mechanism allow for fast and efficient transaction processing, making it suitable for decentralized applications and boasting low gas fees, 2,000 TPS, and a time to finality of 2 seconds
- Team: the Harmony team consists of experienced blockchain developers, researchers, and advisors who bring extensive knowledge and expertise to the project
- Chain security: the network structure provides a secure and decentralized environment for dApps, and the effective consensus algorithm balances security, scalability, and decentralization
- Applicability: the network has a wide range of use cases, including DeFi, gaming, and social media, making it a versatile platform for developers
- Interoperability: Harmony supports cross-chain interoperability, allowing for the seamless transfer of assets between different blockchains. Horizon Bridge is one of the key platforms that has been developed for bridge support since Harmony was launched
- Uniqueness: the consensus algorithm used by Harmony provides a unique approach to balancing security, scalability, and decentralization, making it stand out from other blockchain platforms. This is complemented by innovations in state sharding and Peer-2-Peer networking
- Complexity: the network structure and consensus algorithm can be complex, making it challenging for developers to build decentralized applications on the platform
- Limited adoption: currently, the adoption of Harmony is limited, which may impact its potential to become a widely used blockchain platform
Harmony is an open-source, decentralized, EVM-compatible, high-performance layer-1 protocol. The blockchain’s motto is "decentralization at scale", with a focus on high performance with low fees and latency.
Harmony uses sharding technology, aiming to scale blockchain technology to serve billions of users while maintaining low latency and high throughput. The blockchain uses the Proof of Stake (PoS) consensus mechanism and distributed validator technology, including distributed key generation and secure multi-party computation, to improve security and efficiency. The Harmony network also includes a number of additional features and technologies, such as cross-shard communication, efficient consensus, and staking rewards, to help drive the growth and adoption of decentralized applications and services.
It certainly seems like Harmony uses more resources to achieve true interoperability integration with their own platforms, such as DAO, Web 3.0 applications, and cross-chain NFTs platform than other chains.
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Functioning of the Chain
Harmony is a next-generation blockchain platform designed to solve the scalability and security challenges faced by other blockchain networks. The platform uses a unique sharding approach and an adaptive-thresholded mechanism to increase the overall speed and efficiency of the network. It supports a large number of transactions and smart contracts, as well as providing a scalable networking infrastructure with consistent cross-shard transactions.
Harmony uses the PoS consensus mechanism, with validators chosen based on the amount of staked coins. This approach is energy-efficient and enables a higher level of decentralization. Sharding is used to increase the scalability of the network by dividing its state and workload across multiple smaller units, called shards. Harmony implements a secure and efficient staking-based sharding mechanism, and the network can be resharded dynamically to ensure it remains efficient and scalable. The shard chains are supported by a beacon chain, which maintains the overall state of the network, manages validators, and coordinates between shard chains. Harmony uses a unique approach to state sharding, enabling the network to store and process transactions and smart contracts across multiple shard chains.
Harmony implements innovative networking solutions to ensure high performance and scalability, including Kademlia-based routing, efficient broadcasting with erasure code, FEC-based unicast, support for home nodes, and support for locator mobility. Node operators are incentivized to participate in the network and maintain its security and stability through consensus rewards, stake slashing, and stake withdrawal.
Harmony can now process 2,000 Transactions Per Second (TPS), but the team believes it will process 10 million TPS in the long run through the use of sharding technology.
As well as cross-chain capabilities, Harmony has introduced Horizon, a cross-chain interoperability bridge. Zero-Knowledge-Proofs also allow for data sharing while preserving the consumer's privacy. Common industry use cases include advertisement exchanges, credit ratings, and several other uses of data that would otherwise take many years to collate.
- Harmony began as a company
- May - 18.3 million USD private round with Binance Launchpad's Initial Exchange Offering (IEO), a further 5.5 million USD node round (led by Binance Labs and HashKey Capital), and a 5 million USD Initial Exchange Offering (IEO) through Binance Launchpad
- June: Harmony launched its mainnet
- Jan - Native token launched
- May - Open staking
- cross-border utility, decentralized development, and auditable privacy. The project designed a new version of Proof of Stake (PoS), which it calls Effective PoS (EPoS), on its consensus layer to provide Sybil resistance
In June 2022, Harmony attracted the attention of the FBI after losing 100 million USD in an attack. As a consequence, the native coin ONE fell in value, and the developers had to work with national authorities and forensic specialists to identify the culprit. The hacker had exploited a weakness in the bridge protocol.
Then, on January 13, 2023, hackers used the Railgun privacy protocol to steal over 60 million USD’s worth of ethereum. The on-chain sleuth, ZachXBT, spotted this activity and reported it on January 16, by which time the hackers had deposited the funds on three different exchanges, using 350+ addresses.
In my opinion, this is a further example of risk when it comes to using bridge protocols, and extra evidence that you should be cautious when using bridges for large transactions.
Nick White: Co-Founder at Harmony (Zeroth AI specialist, Stanford EE BS & MSc)
Rongjian Lan: CTO & Co-Founder at Harmony (Google Search engineer, Maryland Ph.D. candidate)
Stephen Tse: CEO & Co-Founder at Harmony (Google engineer, founder of Spotsetter (acquired by Apple), UPenn CS Ph.D.)
Sahil Dewan: CPO & Co-Founder at Harmony (Edtech startup founder, Draper Dragon, Harvard MBA, CS BS)
The team at Harmony is not only composed of experienced individuals, but also bolstered by the expertise of several advisors from distinguished organizations and companies such as Binance, Chain Capital, and NGC Ventures.
- Hakwan Lau (Professor of neuroscience and machine learning at UCLA)
- Ka-yuet Liu (Professor of medical data and network analysis at UCLA)
- Zi Wang (9 years at Google, founder of Google X lab on retail)
- Bruce Huang (8 years at Microsoft, director at Alibaba Cloud and CreditEase)
Governance Token: the governance token is called ONE, and it is used for staking, voting on proposals, paying for transaction fees, gas and storage fees, and participating in the consensus.
Functioning: the governance of the blockchain is based on a decentralized system in which stakeholders can suggest proposals and vote in order to improve the network.
Proposal Making: proposals can be made by stakeholders in the network.
Voting: the ONE holders with a minimum of 1,000 coins can participate in the voting process.
Revenue & Tokenomics
Harmony Revenue Model:
One of the key sources of revenue for the blockchain is its native coin, which is used for transactions, smart contract execution, and as a means of payment for various services offered on the platform. The coin also provides staking and leasing rewards for network support, which incentivizes users to support the network and maintain its stability. The platform offers a range of services such as its cross-shard transactions and consensus mechanism, which are designed to increase the overall speed and efficiency of the network. These services generate revenue for the platform through transaction and smart contract execution fees.
In addition, the platform implements a staking mechanism that allows users to stake their coins and earn rewards for their contribution to the network. This incentivizes users to support the network and ensures its decentralization and security. The chain also has a community program, which provides a platform for community-run projects and helps to drive innovation and growth. The DAO’s infrastructure also contributes to the platform's revenue by enabling users to make decisions about the platform's development.
Finally, the chain also generates revenue through its node implementation, further contributing to a protocol that provides businesses with the tools and infrastructure they need to build decentralized applications and contribute to the growth of the platform.
- ONE max supply - 12.6 billion
- Seed sale tokens - 22.4% of the total supply. The seed sale was completed in May 2018 and raised a total of 18.3 million USD at approx. 0.0065 USD per coin
- Binance launchpad’s IEO - 12.5% of the total supply from the sale in May 2019, which raised 5 million USD at approx. 0.003175 per coin
- Team coins ownership - 16.9% of the total supply
- Protocol development - 26.4% of the total supply
- Ecosystem development - 21.8% of the total supply
Harmony’s utility coin, ONE, has been running on the protocol’s mainnet since June 2019, and is forecasted to reach an annual inflation of 3%. The coin is used for staking, as well as for initiating transactions.
- ONE circulating Supply: 13,073,509,612
- Total Staked: 6,112,918,712
- Ratio of Locked Coins: 47%
ONE had a dynamic inflation schedule up until March 2020, after which the rate of inflation was changed to a fixed annual rate of 3%. In order that validators can have stable returns, Harmony also burns all transaction fees in an effort to lessen the inflationary impact of a fixed annual issuance.
Vesting Process: When comparing the current supply with that of 4 years’ time, we can see that a large amount of staking rewards are still to be released (2.2 million), as well as a further 1 million ONE for ecosystem development, and a smaller amount for the team. This is useful to know, as the supply side pressure will mostly come from staking.
The Uniqueness of the Chain
Harmony stands out from other blockchain protocols with its unique technology, which includes random state sharding. This approach to sharding divides not only the network nodes but also the blockchain state into smaller segments, called shards, which can process information in parallel. This improves system performance and transaction validation speeds, while also lowering hardware requirements for prospective node operators.
Harmony’s sharding approach is designed to deter single-shard attacks, as each shard will eventually have 250 nodes. The protocol also employs a Verifiable Random Function (VRF) to randomly select shard membership, preventing any group of nodes from coordinating an attack. Additionally, Harmony uses Practical Byzantine Fault Tolerance (PBFT), a faster version of the traditional BFT, allowing it to reach finality faster. The protocol also uses Boneh–Lynn–Shacham (BLS) constant-sized signatures to commit blocks in a single round of consensus messages, enabling the network to achieve 8-second block times.
Harmony deploys its own version of Proof of Stake (PoS), called Effective PoS (EPoS), for network security. EPoS incentivizes users to either stake directly or delegate their holdings to an active validator in exchange for block rewards, and aims to reduce stake centralization by encouraging users to delegate to smaller validators. Other EPoS components include reward compounding, double-sign slashing, and unavailability checking, making Harmony’s coin distribution fairer than its competitors.
How the Network is Secured
Chain Security Analysis:
- Security: Harmony uses a sharding architecture to distribute the processing of transactions across multiple nodes, providing scalability and security. The network employs a Proof of Stake consensus, meaning that validators are selected to validate transactions based on the stake they hold in the network. This incentivizes them to act honestly, as their stake is at risk if they engage in malicious behavior. Additionally, the network employs smart contracts for executing transactions and enforcing rules and conditions
- Bug Bounty: Harmony has a bug bounty program to encourage responsible disclosure of security vulnerabilities. The program rewards individuals for reporting potential security issues, and offers rewards based on the severity of the vulnerability reported. The bug bounty program provides an additional layer of security by allowing external security experts to test and validate the security of the network
- KYC of Developers: the developers working on Harmony are required to undergo Know-Your-Customer (KYC) checks to verify their identity and ensure they do not pose a security threat. This may include verification of government-issued ID, proof of address, and background checks, all of which help to ensure that the network is protected against malicious actors
- KYC of Partner Companies: in order to ensure the security of the network, Harmony also requires its partner companies to undergo KYC. This helps to ensure that the network is protected against malicious actors who may attempt to compromise it. By verifying the identity and background of its partner companies, Harmony can help to prevent potential security breaches and ensure the long-term security of the network.
At present, Harmony consists of 1,000 nodes, with 640 managed by community members. The Harmony Foundation maintains the remaining nodes, but the organization does not collect any staking rewards. As the network progresses, the team intends to open up the remaining node slots to the community.
Becoming a Nominator or Validator:
- Stake ONE: in order to become a validator or nominator on the Harmony chain, you must hold and stake harmony (ONE) coins. This stake acts as collateral and ensures that validators and nominators have a vested interest in the security and stability of the network
- Run a Validator Node: to become a validator, you must run a validator node. This requires setting up and maintaining a server with the necessary hardware and software to run the Harmony chain software. Validators are responsible for validating transactions and maintaining the network's consensus
- Choose a Validator: if you are interested in becoming a nominator, you can choose to delegate your coins to an existing validator. Nominators earn rewards for delegating their coins to a validator but do not have the same level of responsibility as validators
- Meet Technical Requirements: becoming a validator or nominator on the Harmony chain requires technical expertise and resources, including knowledge of server administration, cryptography, and blockchain technology. It is important to thoroughly research and understand the technical requirements before becoming a validator or nominator
- Join the Harmony Community: joining the Harmony community can provide valuable information and support for becoming a validator or nominator. The community provides resources, forums, and other channels for discussing and sharing information related to the Harmony Chain.
Advantages of Nominators
Holders of ONE can use the staking page to delegate their coins to existing validators. As a nominator or a validator, you can participate in staking and receive rewards in return.
Advantages of Validators
Earn rewards: one of the main advantages of being a validator on the Harmony chain is the potential to earn rewards. Validators earn rewards for verifying and confirming transactions, which helps to ensure the security and stability of the network.
Contribute to the network: by becoming a validator, you have the opportunity to contribute to the growth and development of the chain. You can help to maintain the security and stability of the network by validating transactions and helping to prevent malicious activity.
Technical expertise: running a validator node requires technical expertise and knowledge, which can be a valuable skill to have in the growing field of blockchain technology.
Potential for increased stake: as a validator, you have the potential to earn rewards, which can increase your stake in the network. This can provide additional benefits, such as increased influence and higher rewards in the future.
Collaboration with the community: being a validator provides the opportunity to collaborate with other members of the Harmony community. You can share knowledge, resources, and best practices with other validators and contribute to the growth and development of the network.
Further information on how to become a validator.
- LayerZero Bridge
- Timeless Wallet
- Collect Transaction Fees
- Technical Comparisons
- 2023 Whitepaper
- Sharding Fellows
- Cross-Shard Transactions
- Matching Shard 1 Traffic
- Validator Resharding
- On-Chain Escrows
- Cross-Chain Toolings
- Social Curation Reputation
- Creator-Fan Economy
- Social Recovery Wallets
- Seasonal Governance
- Embedded Marketplaces
- Zero-Knowledge Bridges
- Modular Data Availability
According to a release from the Harmony team, the main focus is on developinga full-scale Web 3.0 ecosystem with Zero-Knowledge Proof and thousands of DAOs by 2026, as well as a Blue Metaverse, Apes Games, Social Tokens, and digital festivals.
3 biggest projects within the ecosystem
- Defi Kingdom: DEX
- Synapse: Cross-Chain DeFi solution, bridges, swaps and staking
- Tranquil Finance: Lending
The Harmony chain is a promising platform that has a strong and growing community of developers and dApps. The quality of the developers and dApps on the platform is generally high, with a focus on user experience and security. The platform's incentivization model is also a positive factor, as it rewards developers and users for their contributions to the network, offering a total of 380 million USD for the developer grant program. These factors, combined with the platform's fast transaction speeds and low fees, make the Harmony chain an attractive option for developers looking to build decentralized applications.
Developers also have access to a set of API tools, a SDK, and several documents. For more information visit the Developers Resources page.
A strong and engaged community is essential for the growth and success of a blockchain platform. The community can provide support and feedback, and contribute to the development and promotion of the platform. Harmony has a large and active community, which is evident from its presence on social media platforms such as Twitter, Telegram, and Reddit. The community is also engaged in discussions and debates about the platform’s features and future developments. The Harmony team regularly communicates with the community and provides updates and announcements, which helps to keep the community informed and engaged.
The administration team plays a critical role in the success of a blockchain platform. They are responsible for managing the platform, ensuring its security, and implementing new features and improvements. The Harmony administration team is active and engaged, regularly communicating with the community and providing updates and announcements. They are also responsive to questions and concerns from the community.
The protocol’s marketing plan has had a significant impact on its brand and community. Harmony has been able to build a strong online presence through social media, with an active presence on platforms such as Twitter, Reddit, and Telegram. In addition, the protocol has been able to successfully host and participate in events, such as conferences and meetups, which have helped to increase awareness of its platform and reach a wider audience.
Partnerships have also played a key role in Harmony's marketing plan. By forming strategic partnerships with other companies and organizations, Harmony has been able to tap into new markets and reach new audiences. Additionally, advertising campaigns have been effective in driving traffic to the website and increasing brand recognition.
Currently, Anmi Group, Blockchain Assets, BTC12 Capital, Continue Capital, Hayek Capital, HM Capital, Lemniscap, Qtum, Skunk Capital, UniValues Associates.
In 2019, Binance Labs, Coin Fund, Cyphermines, Digital Asset Capital Management, FBG, SNZ, Wanxiang Hashkey.
Integrations and Partners
- DeFi - Aave, Curve, Frax, Sushi, Tranquil, Stably, StakeDAO
- Games - DeFi Kingdoms (yield quests), DeFira (liquid staking), Mercury Forge (space exploration), Mars Colony (metaverse land), Knights & Peasants (medieval role play)
- NFT - Bored Apes, 88rising, Animoca, Atari, MAD, .country domains, dj3n, Tofu, Key
- Bridges - LayerZero, Datachain, Celer, Trustless BTC
- Gateways -Transak, Simplex, C14, Ramp
- Exchanges - Binance, Huobi, Kucoin, Crypto.com, OKX
- DAO - Gnosis, Snapspot, Opolis, Aragon, Blu3, Research, Liquidity
- Middleware - Chainlink, Graph, Covalent, Chainsafe, Hummingbot
- Analytics - DeFi Llama, dAppsRadar, DEX Screener, Footprint, Metrics
- Wallets - MetaMask, Ledger, Trust, 1Wallet, SMS Wallet
- Reports - Common Prefix, Delphi Digital, Messari, dAppsRader
- Analysis - Chainalysis, anChain, Slowmist, Peckshield
When compared with other top layer-1 and cross-chain platforms, I found that Harmony’s architecture, PBFT, EPoS, random state sharding, and the reverse ratio of rewards for major validators, have all combined to ensure that transactions are fast, gas fees are low, and hardware demands are reasonable. There is clearly great potential for scaling without loss of decentralization, and a high level of security.
Right now, Harmony has a very small market share but I can see the potential in its technology, vision, and way of thinking. Harmony gives investors access to an ecosystem that will enable the company's adoption across a variety of businesses, with a focus on data sharing, decentralized marketplaces, supply chain monitoring, ad exchanges, credit rating systems, and gaming.
Harmony helps businesses build marketplaces for fungible tokens (such as energy credits and loyalty points) and non-fungible assets (such as game collectibles and real estate). Both of these plays a strong role in the ecosystem.
In terms of coins distribution, we can see that insiders held 65.7% of the total coins when the chain was launched. This is ultimately a concern, as it means that the majority of ONE are held by a relatively small number of participants, which could lead to issues with price volatility, security and adoption.