Harmony is a decentralized blockchain platform that is designed to build a bridge between decentralization and scalability. The need to create that bridge is rooted in the blockchain trilemma. There are three basic features which are security, scalability, and decentralization. While most people would prefer to have a blockchain that has all three features, it is only possible to have two of them sacrificing a third.
Blockchains like Ethereum gave birth to decentralized finance and other innovations. But Ethereum is decentralized and secure, therefore it doesn’t scale very well. This is where Harmony steps in by building a bridge between different blockchain protocols and adding scalability.
The promise of Harmony’s technology is simple: delivering a high throughput with low latency and low fees. Giving access to an ecosystem that includes but is not limited to decentralized marketplaces, ad exchanges, supply chain tracking, and more. The project started in 2018 raising USD 18 million prior to the launch of the ONE token as part of an IDO in May 2019.
How does Harmony work?
The basic idea of Harmony is that there is no single platform that has ever achieved a satisfying balance between decentralization and scalability. A key feature is the interoperability of Harmony allowing it to interact with a variety of different blockchains being completely agnostic to the question if they are using proof of work or proof of stake.
Harmony itself is making use of random state sharding allowing the network to split the database into smaller parts called shards which are able to process transactions simultaneously. This reduces latency drastically and also allowed the test net to achieve 118,000 transactions per second, reaching transaction finality in 2 seconds.
Other projects have achieved similar speed but they all had to introduce a new technology like the directed acyclic graph (DAG). Since Harmony is based on sharding and each shard consists of a group of validators its technology is more decentralized without sacrificing speed. Validators are nominated by the number of tokens they possess based on fast Byzantine fault tolerance consensus.
What is the One token?
The ONE token is the native token on the harmony blockchain and is used to pay transactions on the network such as interactions with decentralized apps. The name of the token stems from the credo “For one and for all”. ONE token was issued as ERC-20 tokens on the Ethereum blockchain and as BEP-2 tokens on the Binance Smart Chain. With the launch of the main net, the token was migrated.
The token is also needed to become a validator under the condition that a minimum of 10,000 ONE tokens is held. Since Harmony‘s consensus is based on proof of stake, validators receive a reward depending on the amount of ONE that is staked. The network is protected from malicious validators using slashing. Should a bad actor choose to try to corrupt the network a large number of ONE token are effectively taken from him. With a combination of reward and punishment, it is believed that the network relying on proof of stake will become even more secure because stakers have skin in the game and therefore the strongest incentive to act fair. Holding the ONE token will allow you to:
- Take part in staking and create additional income with the rewards
- Pay various fees, including transaction fees, storage fees, and even gas fees
- Holders are granted voting rights as part of Harmony’s governance system
Interoperability and bridging
One of the most impressive use cases is bridging. A blockchain bridge allows the transfer of tokens or arbitrary data between different blockchains. Meaning that Harmony can solve a lot of problems for users trying to interact with DeFi protocols by offering cross-chain transfers.
The most pressing issue is the fees. Transactions on Ethereum are expensive and if a token exists on the Binance Smart Chain it might be cheaper to bridge it and to pay transaction fees with ONE token instead of transacting on Ethereum. But that is only one of many examples.
Which wallets are available for Harmony?
There are a variety of wallets available. The Harmony ONE wallet comes as a Google Chrome extension that allows interacting with decentralized apps more easily using the browser as the interface. But such extensions always come with the risk of being exploited since a malicious website could possibly try to interact with the extension.
Another option is using hardware wallets which almost completely eliminate the threat of a remote attack if used properly. Acquiring such a wallet comes with additional costs and requires knowledge to set up the device in a safe way and secure the seed.
Interacting with the Harmony blockchain in the securest way is by combining a hardware wallet with the browser extension or a common software wallet.