What is Harmony? 

Harmony is a layer 2 blockchain sharding system with an Ethereum bridge that is highly secure and scalable. It includes four shards that process transactions in parallel and trustless cross-chain bridges. Each of these shards is capable of performing the same difficult tasks as the complete database/network. The goal of a sharded network is to reduce computation and storage requirements while processing transactions rapidly, precisely, and securely.  

Effective Proof of Stake encourages decentralization of validators, and secure sharding shares the network's load among validators, delegators, and users. Harmony, like many other layer 2 protocols, is now fully compatible with the Ethereum blockchain.

Transaction fees, governance, and staking are all handled through its native token, $ONE. $ONE can be used as an incentive to reward network participants for validating and safeguarding the network, and it can also be utilized in network governance to offer voting rights to holders. $ONE is used to pay for gas, transact, and to pay for storage.

Harmony believes that its blockchain's massive scalability, combined with its decentralization and security, will allow it to accomplish feats previously impossible on other blockchain networks, such as establishing large decentralized exchanges, large payment rails, and "internet-of-things" transactions.

Quick History Lesson

Harmony was founded in 2018 by Stephen Tse, a cryptographic engineer, and co-founders ‌Rongjian Lan, Nick White, and Sahil Dewan, whose aim was to provide a decentralized, open, and trustless blockchain platform for DeFi users globally. It was launched to the mainnet via the Binance Launchpad in 2019.

Harmony has a long-term vision to provide a trustless, decentralized, and open blockchain platform for all people by enabling cross-border utility, decentralized development, and auditable privacy. The network's developers maintain that it can process 2,000 transactions per second, with each transaction taking an average of 2 seconds to settle. By comparison, the average transaction on Ethereum takes roughly ten minutes.

The platform's core feature, "random state sharding," allows users to build blocks in seconds, reducing fees by 1,000 times and reducing validation times greatly.  In general, users can expect to pay $0.0001 per transaction. Furthermore, technologies such as Effective Proof of Stake (EPoS) and the distributed randomness generation (DRG) protocol improve transaction finality and costs. This report by Messari does a good job of highlighting more details about the profile, origin, and historical data of Harmony. 

The wild world of DeFi options

Harmony is also a dedicated layer 2 scaling solution for Ethereum that uses many of the same tools as Ethereum such as  Solidity and Ether.js. This enables developers to build on Harmony seamlessly. Harmony’s design gives users two-second transaction completion times and provides easy digital asset swapping across the Harmony and Ethereum blockchains. Moreover, the Harmony bridge supports both Decentralized Finance (DeFi) and Non-Fungible Token (NFT) applications so users can interact with these dApps without friction.

Harmony also has an ecosystem of funds with new and existing DeFi, gaming, and NFT projects coming on board. Harmony is in partnership with Sushi Swap, a decentralized exchange built on the Ethereum network; as well as Bored Ape Yacht Club, a collection of 10,000 NFT Apes, that allows BAYC owners to import their profile to DeFi Kingdoms.

DeFi activity has grown rapidly on Harmony in recent months. Harmony's compatibility with Ethereum makes it especially attractive for DeFi protocols and users looking for cheaper and faster transactions.

Effective Proof of Stake (EPoS)

One of the concerns with Proof of Stake (PoS) is stake centralization, which occurs when validators are compensated based on the amount of stake they own. Harmony’s iteration of Effective Proof of Stake (EPoS) is designed to solve all of these issues while still maintaining the decentralized aspect of the blockchain for network security and a "fair" token distribution. In exchange for block rewards, EPoS allows users to stake directly or delegate their holdings to an active validator. It also encourages users to delegate to smaller validators by providing more rewards for sending to smaller validators, thereby reducing stake concentration. Reward compounding, double-sign slashing (to keep validators in check), and unavailability checking are other EPoS components.

EPoS reduces incentives for validators who invest too much in a single node. This mitigates the risk of a single point of failure. It also provides a secure means of approving transactions. In comparison to Ethereum, EPoS gas fees are also lower, which boosts overall efficiency, scalability, and interoperability, all of which help to enable optimum functionality.

Sharding

The Harmony blockchain is sharded in three dimensions - State Sharding, Network Sharding, and Transaction. The benefit of sharding is that a larger number of validators is required for sharded blockchains. The quantity of $ONE staked at each epoch determines the right to propose and confirm blocks, however, it is capped at a maximum 15% divergence from the median amount of $ONE staked by all validators. This encourages the decentralization of nodes.

Sharding is one of Harmony's essential features for ensuring security, scalability, and decentralization. The Harmony sharding divides the network into four parallel pieces. Users can select whatever shard they wish, distributing the burden throughout the network. Each shard handles validation, transactions, block creation, and staking independently. 

Harmony was the first successful deployment of a sharded Proof-of-Stake blockchain in terms of technology. Many developers have devised novel approaches to the difficult problem of shard interoperability. The Harmony team, on the other hand, has devised a method that involves keeping the same blockchain state across several shards. This allows transactions between shards to be close to the same speed and gas price as transactions within the same shard. Furthermore, users can hold digital assets in numerous shards at the same time.

Harmony ONE token

$ONE is the native token of the Harmony blockchain. The $ONE token is used by Harmony to pay for network costs and to stake to secure the Harmony blockchain, with participants getting rewards for doing so. The ONE token will likely be utilized for governance across the Harmony system in the future and at present, about 441 million $ONE tokens are minted each year.

Furthermore, Harmony (ONE) provides users with an exceedingly scalable service as well as a very rapid and efficient consensus program. It also enables the network to execute ultra-fast transaction procedures with a simple communication protocol.

According to CoinGecko, there are 9.2 billion circulating ONE tokens out of a total supply of 12.6 billion, this is an approximation, though, because the Harmony block explorer shows no circulating supply. This is due to the fact that the ONE token is available as both an ERC-20 and a BEP-2 token on the Ethereum blockchain.

But wait, there’s more

Staking is another feature of Harmony that protects the network's security and serves as an incentive for both validators and delegators. Validators must stake a certain quantity of $ONE token to run Harmony nodes, and the payouts fluctuate according to the percentage of a participant's $ONE token holdings that are staked. This can range from 9% APY for staking 95% of a user's $ONE token supply to 150% APY for staked 5% of ONE token holding. The unlocking period for staked $ONE tokens is seven epochs (approximately every six days).

Harmony’s long-term vision is to provide a trustless, decentralized, and open blockchain platform for all, making it familiar for developers when building on the Harmony blockchain. Furthermore, the two-way Ethereum bridge allows digital asset swap transactions between the Harmony and Ethereum blockchains to be almost instantaneous and almost free. Harmony is indeed growing and collaborating with the industry's most recognized smart contract-enabled blockchains. 

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