Harmony

What is Harmony (ONE)?

Harmony is an open, fast blockchain that runs Ethereum applications with 2-second transaction finality and far lower fees.

Tackling the blockchain trilemma of scalability, security, and decentralization with random state sharding, Harmony has been live since June 2019 and incorporated open staking in 2020. It features four network shards with 250 nodes each and over 25,000 on-chain delegators.

While a highly performative project in its own right, Harmony suffered a massive attack in June 2022. Referred to as the “Horizon Bridge hack,” the attack resulted in $100 million worth of assets being drained from the Ethereum and BNB chains, ultimately depegging bridged (ONE) assets.

Just months prior, Harmony’s most successful application, a game called DeFi Kingdoms (DFK), announced its migration elsewhere. While not as profound as the Horizon Bridge attack, this event also contributed to a downturn in Harmony’s fortunes.

What was the Horizon Bridge Hack?

Malicious actors could hack the Horizon bridge by taking control of the 2-of-5 multisig wallet that secured it. They then stole $100 million worth of funds, transferring them to various wallets before routing the majority through the Tornado Cash mixer. Importantly, this attack was managed by compromising the multisig, not the Harmony blockchain.

In the aftermath of the attack, the Harmony team updated the bridge to a 4-of-5 multisig. A group of community members also formed the Recovery One Foundation to engage with validators, developers, partners, and other community members.

The Harmony team committed to 0% minting to preserve existing ONE tokenomics and avoid the inflationary impact of increasing supply. The team has also allocated a monthly budget to close partners using burning mechanisms designed to remove depegged assets from circulation.

Tornado Cash was also significantly affected after the Horizon Bridge hack. The protocol was blacklisted by the Office of Foreign Assets Control, part of the US Department of the Treasury. OFAC accused Tornado Cash of laundering over $7 billion in virtual currencies and being used by the Lazarus Group, which is associated with the North Korean state.

Tornado’s GitHub repository was taken down immediately, and developer accounts were suspended. Circle froze $75,000 in USDC from Tornado Cash accounts, and, most jarring, developer Alexey Pertsev was arrested in Amsterdam in August 2022.

Who are the Founders of Harmony?

Harmony was founded by Dr. Stephen Tse, a specialist in the field of cryptographic protocols and type theory. Before his work at Harmony, Dr. Tse had spells at Microsoft, Google, and Apple. He also founded Spotsetter, a search engine that Apple eventually acquired.

Dr. Tse began the Harmony project in 2017, and the blockchain’s mainnet went live in 2019.

How Does Harmony Work?

Harmony is a sharding-based blockchain that achieves scalability by sharding the blockchain state itself, a significant deviation from many other prominent sharding-based systems. It employs a distributed randomness generation (DRG) process that is unpredictable, unbiasable, and verifiable. This makes it provably secure.

Harmony’s approach combines the strengths of Algorand’s VRF-based (Verifiable Random Function) cryptographic sortition to select consensus validators and Ethereum’s VDF (Verifiable Delay Function) to delay the revelation of the actual random number.

What makes Harmony Unique?

As Harmony recovers from an especially trying 2022, the platform’s development continues. The Harmony team is developing 1-block composable cross-shard transactions and validator resharding every 18-hour epoch with gradual state sync. Also planned are account abstractions for smart wallets with social recovery but no central custodians or fee forwarders.

Harmony is also making strides in the domain of Zero-Knowledge, focusing on ZK innovations that have the potential to reach millions of users. Aiming for universal ZK constructs that can serve as the building blocks for Web3, Harmony even features a zkDAO and a “Zero Knowledge University.”

How is the Harmony Network Secured?

Unlike other sharding systems, which require proof-of-work to select validators, Harmony relies on a proof-of-stake system called effective proof-of-stake (EPoS). This system allows Harmony to reach a consensus with a linearly scalable Byzantine Fault Tolerance algorithm.

Furthermore, the threshold of stakes required for a node to join the network is adjusted based on the volume of total staking. In this manner, malicious stakers are prevented from concentrating their power in a single shard. The threshold is also low enough that small stakers can still participate in the network and earn rewards.

What is the Use of ONE?

ONE is the native token of the Harmony blockchain and is used primarily for staking and network security.

How Much ONE is In Circulation?

The ONE token has a circulating supply of over 13 billion ONE, with no defined maximum since there are both inflationary and deflationary pressures on the token via emissions and burning. The Harmony tokenomic model features the issuance of 441 million ONE per year, offset by transaction fees.

At genesis, Harmony had a total supply of 12.6 billion ONE. 22.4% of this figure was sold to investors in the project’s seed sale, with 12.5% earmarked for a subsequent Launchpad offering. The founding team received 16.9% of the supply at the time.

How Do You Buy ONE?

You can buy ONE on several major cryptocurrency exchanges, with the project receiving widespread listing given its status as a multi-billion dollar project in 2021. You can expect ONE tokens traded against stablecoins like USDT on most trading venues.

How Do You Store ONE?

Harmony, a blockchain that has seen plenty of use among the crypto community, has plenty of options regarding wallets.

If you prefer the safety of a hardware wallet, Ledger, Trezor, and Safepal are all compatible with Harmony. For use in DeFi and on Harmony-based dApps, you might prefer a browser extension like Metamask, Math Wallet, or the Harmony Chrome Extension Wallet.

There are also plenty of mobile wallets for Harmony, including Trust Wallet, Guarda, Frontier Wallet, and Infinity Wallet. The Harmony website’s documentation section lists all the top wallets compatible with Harmony.

Is ONE a Good Investment?

Before the events of 2022, when Harmony was shaken to its very core by the Horizon Bridge hack, Harmony was an extremely popular blockchain. Its speed, scalability, and low fees made it a great choice for developers and users alike.

However, the project is now recovering from the attack and entering one of the most critical periods in its relatively short lifetime. If Harmony can rebuild both in terms of reputation and usage, there’s no reason ONE can’t recover and even surpass previous highs.