Blockchain

What is Harmony? Blockchain uses chance to strengthen proof-of-stake

In short

  • Launched in 2019, Harmony runs four parallel blockchain networks called shards to reduce latency by 1,000%.
  • Harmony controls the influence of stakeholders, called validators, by randomly assigning them to a given shard and limiting the size of each stake.

Many in the block chain the world is trying to wean Bitcoinit’s proof of work system, in which energy-intensive minors use their computing power to verify each new block of transactions in exchange for new coins.

In the Ethereum world, much of the development has turned to the alternative proof of stake consensus mechanism, which relies on a distributed cohort of actors. To earn the right to validate transactions and generate new coins, these “validators” do not use computing power but deposit or staketheir own money on the network.

However, efforts to build a proof-of-stake system often run into a problem: it is too easy for one stakeholder, or multiple stakeholders working in a conspiracy, to raise funds and co-opt the network. This compromises security and decentralization, two of the three cornerstones of an effective blockchain, for the sake of scalability. Harmony attempted to build a fairer system that keeps validators in line.

What is Harmony?

Harmony is a layer 1 blockchain built in 2018 and launched in 2019 by Stephen Tse with the aim of solving the persistent “blockchain trilemma” of balancing scalability with security and decentralization.

It was launched via Binance Launchpad and net 23 million in May 2019, and now has a total market capitalization of $1.5 billion. It runs on the Ethereum network and includes a token called ONE that validators can create for themselves and pull as a transaction fee. Its developers boast that the network can handle 2,000 transactions per second, each of which takes an average of 2 seconds to settle – the average transaction on Ethereum proper, on the other hand, takes around ten minutes. Fees are also reduced by 1,000 times.

Harmony also incorporates a cross-chain feature called Horizenwhich allows holders to move between ONE and the underlying Ethereum network, meaning they can enjoy both Layer 1 network security and Layer 2 network efficiency. It builds currently a non-fungible token lending platform (NFT).

How does Harmony work?

Harmony’s blockchain is divided into four networks called “shards”, which run in parallel but are validated by separate groups of stakeholders – a kind of blockchain division of labor that makes the blockchain more efficient and reduces latency. Harmony calls this approach Effective Proof of Stake.

Harmony stakeholders deposit Harmony’s native ONE token and are assigned to one of four shards (only one of which, shard 0, is currently in use). Validators should maintain a full copy of a given shard’s transactions, but, importantly, not a full copy of the entire network, as is usually the case. As a reward, they receive newly minted coins and part of the generated transaction fees. They are rotated between shards after a period known as the “Era” to keep them from getting too comfortable. Each shard currently has 250 validator slots, but scaling may introduce more.

Harmony’s clever idea is to randomly assign stakeholders to each shard to avoid coordinated attempts to take over the network. Harmony also discourages token hoarding by fining those who bet above a certain limit and rewarding those who invest less. The (supposed) result? Faster transactions and lower fees, without compromising security.

Who works with Harmony?

  • 🐵 Bored Ape Yacht Club: A very popular Profile Picture NFT (PFP) series featuring colorful monkeys, which provides access to benefits within a large and vibrant community. Bored Ape holders can emigrate their NFTs in DeFi Kingdoms, a play-to-earn game built on the Harmony blockchain.
  • 💲 Terra: An algorithmic stablecoin popular on decentralized exchanges, a Partnership between Terra and Harmony allows UST to be wrapped on the Harmony blockchain as 1UST.

What is Harmony’s ONE token?

Harmony’s native token, ONE, can be staked, earned, and mined and also confers governance rights on holders, allowing them to participate in decisions about the future of the network.

Like Bitcoin, it has a limited supply – of just 12.6 billion tokens, of which 9.4 billion have already been minted, per CoinMarketCap. About 15% of ONE tokens went to the founding team.

Where to buy ONE token

Harmony’s ONE token is available for purchase on a range of exchanges, including BinanceCrypto.com and Huobi Global.

Did you know?

In mid-January 2022, Harmony’s ONE token reached a market capitalization of $4.8 billion.

The future of harmony

Harmony is developing a feature enabling NFT lending and is migrating its token from a Chrome extension to Metamask as it builds its own proprietary portfolio.

He also created a $13 million fund called Harmony Grants that aims to fund new research in the field of proof of stake. It has, for example, deployed a decentralized autonomous organization, or CADCADwhose objective is to fund research on zk-SNARKS, a way to communicate sensitive data anonymously through blockchains.

https://decrypt.co/resources/what-is-harmony-the-blockchain-using-randomness-to-reinforce-proof-of-stake

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