Harmony is a Layer 1 smart contract platform that’s more scalable, secure, and can process transactions faster than other popular blockchains.
Harmony uses a technology called sharding, which splits the validator network into shards so that each shard can process different transactions at the same time.
In Harmony’s case, it also splits its blockchain state so that each shard only needs to store info on 1/N of the global state, where N is the number of shards.
The random way Harmony shards its network, coupled with its own consensus algorithm, ensures that Harmony’s transactions remain secure and decentralized.
Sharding the blockchain state also lowers the computing barrier for nodes. Finally, the ability to just add more shards down the road makes Harmony a fully scalable blockchain network.
Harmony is the first major blockchain to use sharding with a proof-of-stake (PoS) consensus algorithm.
It currently uses four shards that can accommodate up to 1,000 nodes and process up to 4,000 transactions with a 2-second (or so) transaction finality.
How does Harmony work?
Harmony achieves scalability through sharding, a process that divides the network into smaller chains called “shards.” Imagine a highway with multiple lanes.
Each lane (shard) can handle a stream of cars (transactions) simultaneously, allowing for faster and more efficient traffic flow (transaction processing).
This is similar to how sharding works in Harmony. Each shard processes transactions concurrently, allowing the network to handle a high volume of transactions with greater efficiency.
Finalizing a block begins with assigning transactions and validators to different shards. Harmony uses its own distributed randomness generation (DRG) protocol to randomly assign validators to shards every epoch (~ 1 day).
The right to propose blocks is determined by the Effective Proof-of-Stake (EPoS) mechanism. EPoS considers the amount validators stake each epoch, but block rewards are based on the median staked by all validators.
This discourages an over-concentration of tokens with any one node or group of nodes, prevents single-shard attacks, and allows for thousands of validators across shards.
Consensus is achieved using the Fast Byzantine Fault Tolerant (FBFT) consensus protocol. A round of FBFT has three phases, starting with the (1) announce phase where the EPoS-elected leader proposes a new block and broadcasts the block to all validators in the shard.
Validators verify the message and sign on the block hash with their signature on the (2) prepare phase. When more than 2/3 of voters have submitted their signatures, the leader will compile the votes into one aggregate signature and send it back to the validators to start the (3) commit phase.
When more than 2/3 of voters have verified the proposed block, the leader compiles the bitmap and aggregates signatures and broadcasts the block so that validators can commit the same info.
Unlike Practical Byzantine Fault Tolerance (PBFT), FBFT validators don’t need to communicate their votes to all the other validators to reach a consensus.
Instead, block leaders use the Boneh–Lynn–Shacham (BLS) multi-signature process so that validators only need to receive and commit one aggregate signature. This process helps validators reach a consensus within 2 seconds.
Aside from building its own chain, Harmony is also building bridges so that it can operate and scale dApps on other blockchains like Ethereum, Binance, Terra, Polkadot, Bitcoin, and many others.
Team background
Harmony was founded by Google Senior Infrastructure Engineer and Apple Search Ranking Engineer Stephen Tse in 2017.
He and his co-founders Rongjian Lan, Sahil Dewan, and Leo Chen got together with other FAANG bros and successfully launched an initial exchange offering (IEO) on Binance Launchpad in 2019.
Tse remains CEO of Harmony while Lan is CTO and Dewan is Chief Product Officer (CPO).
What is the ONE token?
Harmony’s token, ONE, is derived from the platform’s vision “For One and For All.”
ONE is the native token of the Harmony blockchain. It plays a crucial role in the network’s functionality and security.
ONE is an HRC-20 token that follows Harmony’s token governance and is native to the Binance Smart Chain.
The ONE token incentivizes and rewards a variety of participants including developers, validators/stakers, investors, and community members who develop, secure and govern the network. ONE is used for:
- Staking: Users can stake ONE tokens to participate in securing the network and earn rewards.
- Transaction Fees: ONE is used to pay for transaction fees on the network.
- Governance: ONE holders can participate in the governance of the platform by proposing and voting on changes.
| Unit | Value | Equivalent in Ethereum |
|---|---|---|
| Atto | 0.000000000000000001 ONE | Wei |
| Nano | 0.000000001 ONE | Gwei |
Harmony Tokenomics
Harmony has a unique tokenomics model designed to incentivize participation and ensure the long-term sustainability of the network.
Some key aspects of Harmony’s tokenomics include:
- Issuance: Harmony has a constant annual reward rate of 441 million ONE tokens. While ONE has a maximum issuance of 441 million tokens annually, it doesn’t have to be inflationary because transaction fees offset new token issuance as the network gains adoption.
- Staking Rewards: Validators and delegators earn rewards in ONE tokens for securing the network.
- Transaction Fees: Transaction fees are paid in ONE tokens and are used to offset new token issuance.
Token Metrics:
- Circulating Supply: 12.67 billion ONE.
- Annual Reward Supply: 441 million ONE per year (fixed, regardless of block time and staking ratio).
-
Transaction Fees:
- Paid in ONE.
- Burned, potentially offsetting the annual issuance as adoption grows.
Harmony Use Cases
Harmony’s technology enables a wide range of use cases, including:
- Decentralized Applications (DApps): Harmony provides a platform for developers to build and deploy DApps, such as decentralized exchanges (DEXs), NFT marketplaces, and games. Harmony will enable applications that were not previously feasible on the blockchain, including high-volume decentralized exchanges, interactive fair games, Visa-scale payment systems, and Internet-of-Things transactions.
- Cross-Chain Finance: Harmony’s cross-chain bridges allow users to transfer assets between different blockchains, including Ethereum and Bitcoin. This enables the creation of innovative financial products and services.
- Data Sharing: Harmony’s secure and scalable infrastructure can be used for secure data sharing and management, with applications in areas like healthcare and supply chain management.
- Micropayments: Harmony’s fast and low-cost transactions make it suitable for micropayments, enabling new business models and use cases in various industries.
While the user base is smaller than Ethereum, Harmony positions itself as complementary to the blockchain rather than as competition.
Harmony Roadmap
2022
- Launch trustless bridge, Blue Metaverse, ZKProof course, Social NFT wallet, and staking contract.
- Introduce the “Blue To Fly” social token, fixed-rate products, decentralized RPC, and new bridges to Terra and Polygon.
2025
- Harmony’s 2025 roadmap focuses on achieving 1-second finality, unifying decentralized finance, and creating an open AI ecosystem.
2026
- By 2026, Harmony aims to scale Web3 through zero-knowledge proofs (ZKPs) and decentralized autonomous organizations (DAOs).
Harmony also plans to continue improving its network features, including:
- Interoperability: Developing trustless bridges for Ethereum and Bitcoin to enable seamless asset transfers and innovative financial products.
- Decentralization: Improving network security through resharding, fast synchronization, and gossip protocols.
- Zero-Knowledge Proofs: Focusing on products with 100x benefits, such as rollups, mixers, and anti-collusion mechanisms.