What is Harmony (ONE)?

Today, we will take a closer look at Harmony (ONE), one of the exciting players in the blockchain world, and its native token, ONE. If you believe that blockchain technology is not limited to Bitcoin and Ethereum, or if you are tired of high costs and low speeds, the answer to the question “What is Harmony?” may be just what you need. Harmony is a fast and open blockchain platform designed for creating and using decentralized applications (DApps). Its primary goal is to provide innovative solutions to the scalability issues faced by existing blockchains. Harmony focuses on technologies like random state sharding to achieve this objective.

Harmony's promise is quite ambitious: to offer high transaction volume while also providing low latency and low fees. These features aim to position the platform as a key foundation for the future of decentralized, trustless economies. The answer to the question of how Harmony network works is shaped around these core objectives. Let's take a closer look at this sharding-focused network together...

Harmony's Definition and Origin

Harmony (ONE) stands out as a fast, cost-effective, and independently operating Layer-1 blockchain network. Layer-1 means that Harmony operates on its own chain and executes transactions without relying on another network. This structure is specifically designed to facilitate the development of decentralized applications (DApps). Founded by Stephen Tse in 2018, the project launched its mainnet in 2019 and introduced its native token, ONE, to the market. Harmony’s primary goal is to strike a balance between the classic blockchain dilemma of “scalability versus decentralization.” That’s why it defines itself as a platform that offers “scalable decentralization.”

To achieve this balance, Harmony employs several innovative technologies. One of the most notable is its sharding system, which divides the network into shards. What is sharding? This system allows transactions to be processed in parallel across different shards, thereby increasing transaction speed and making the network more efficient. What sets Harmony apart is that it doesn't limit this sharding system to just data; it also applies it to the network's consensus and state layers, thereby elevating security to the highest level. Additionally, this structure allows even low-spec devices to join the network.

In the consensus section, a system called Effective Proof-of-Stake (EPoS) comes into play. This system can be described as a slightly more advanced version of the classic stake model. Its purpose is to ensure that more validators participate in the network while maintaining decentralization. EPoS is supported by security measures such as token delegation, reward accumulation, penalizing validators who sign twice, and excluding passive validators. As the amount of ONE staked increases, the security of the network also increases.

Finally, to increase the speed of the network, Harmony utilizes a special consensus protocol called Fast BFT and technologies such as BLS signatures. These systems enable more than 250 validators to reach consensus in less than two seconds. At the same time, communication load is reduced through batch signing. Thanks to all these features, Harmony offers a fast, secure, and accessible experience for both developers and users.

Harmony's compatibility with Ethereum is also a critical feature. Harmony ONE is 100% compatible with the Ethereum Virtual Machine (EVM). Why is this important? This compatibility allows developers to easily migrate existing Ethereum DApps or new DApps to the Harmony network or develop them here. Harmony's 2-second transaction finality time and significantly lower transaction fees compared to Ethereum make it an attractive alternative for existing Ethereum DApps. This is one of the features that sets Harmony apart among Ethereum-compatible layer 1 blockchains.

Harmony's History: Key Milestones

Harmony's journey began in 2018 with Stephen Tse and a group of experienced engineers. The team consisted of individuals who had previously worked at leading technology companies such as Google, Microsoft, Amazon, and Apple. The project's primary goal was to provide a permanent solution to the scalability and decentralization issues in the blockchain world. Throughout its establishment and beyond, Harmony has achieved many important milestones. It also suffered a major cyberattack. Here are a few notable historical events:

• 2018 - Establishment and testnet phase: The project was launched as a startup in 2018. During this period, the technical infrastructure was developed, and trials were conducted on test networks.
• 2019 - Mainnet launch and ONE token's market debut: Harmony gained attention by hosting an Initial Exchange Offering (IEO) on Binance Launchpad in May 2019. During this IEO, over 2.8 billion ONE tokens were sold to investors. In June 2019, Harmony's mainnet was officially launched. With the mainnet going live, ONE tokens previously issued under the ERC-20 and BEP-2 standards were converted to native ONE tokens at a 1:1 ratio.
• 2021 - Ethereum bridge and NFT project integration: In 2021, Harmony introduced Horizon, a cross-chain bridge fully compatible with Ethereum. This bridge enabled users to transfer ERC-20, ERC-721, and ERC-1155 tokens from Ethereum to the Harmony network and vice versa. As a result, assets on Ethereum could benefit from Harmony's low transaction fees and fast transaction confirmation times. Overall, 2021 was a period during which many NFT projects were launched on the Harmony network. Notable projects include daVinci Marketplace, Harmoonies, OneCoin NFT, Harmony Whales, and Harmony One Punks. In September 2021, Harmony announced a $300 million fund aimed at expanding its ecosystem and incentivizing developers.

• 2022 - Horizon Bridge attack and security measures: Looking back at Harmony's history, not everything has been smooth sailing. On June 24, 2022, Harmony's “Horizon Bridge” was hacked. In the attack, which was later found to be carried out by the North Korean hacking group Lazarus, the thieves stole various crypto assets worth a total of $99.6 million. The main reason for the attack was the weak security of the Horizon Bridge's 2-of-5 multisig structure. Following this incident, Harmony transitioned the Horizon Bridge on the Ethereum side to a more secure 4-of-5 multisig structure. This new structure requires approval from at least four out of five signers to execute transactions, thereby ensuring the system remains resilient even if private keys are compromised.

Why is Harmony Valuable?

Harmony has many valuable features that make it stand out in the blockchain world. These features make the platform attractive to both users and developers.

Harmony and the “Shard” Structure

Harmony's core value comes from its ability to offer parallel processing power through a four-shard structure. Harmony divides the blockchain into shards, enabling transactions to be processed in parallel across these shards. The Harmony mainnet is currently four-sharded. This parallel processing capability allows the network to achieve a much higher transaction volume, meaning it can process thousands of transactions per second. This helps prevent network congestion, especially during periods of high usage. Harmony aims to achieve full scalability by using this sharding technology not only for transaction verification and network communication but also for the blockchain's state. This deep sharding technique enhances the network's efficiency and scalability.

Low transaction fees

Another key advantage of Harmony is its low transaction fees and high speed. On the Harmony mainnet, blocks are produced every 2 seconds. Cross-shard transactions are finalized in 2 block times. This 2-second block time enables near-instant transaction finality. Compared to networks like Ethereum, Harmony's transaction fees are significantly lower. Low-cost and fast transactions make DApps in areas such as DeFi (Decentralized Finance), NFTs, and gaming more user-friendly. This makes Harmony an ideal platform for low-cost DeFi networks and other DApp categories.

The ONE token is at the heart of the network

In addition to the features of the Harmony network, the ONE token, the platform's native cryptocurrency, is at the heart of Harmony and serves various important functions. If you're wondering what the ONE coin is and what ONE token is used for, here are the answers:

• Paying transaction fees: The ONE token is used for all transactions on the network. Users must specify a certain amount of ONE as a transaction fee for transactions to be successfully processed and included in the blockchain. All coins collected as transaction fees are burned, which helps reduce inflation to zero as network usage increases.
• Securing the network through staking: Harmony is a Proof-of-Stake (PoS) blockchain. Therefore, the security of the network is ensured through staked tokens. The ONE token is the native token accepted for staking. Potential node operators must stake a certain amount of ONE tokens to be eligible for selection as validators. ONE token holders can also participate in the staking process by delegating their ONE tokens to existing validators. As more ONE tokens are staked, the network becomes more secure. Selected validators who successfully sign blocks receive block rewards in ONE tokens as compensation for their services. Harmony uses a new PoS mechanism called Effective Proof-of-Stake (EPoS) for its staking mechanism. This mechanism aims to reduce centralization and distribute rewards fairly among thousands of validators. EPoS supports delegation and reward compounding. It also penalizes double-signing validators (slashing) and selected but unused nodes. The answer to how the Harmony network works lies here.
• Participation in governance: ONE token holders have the right to participate in the governance of the network. This allows token holders to have a say in decisions regarding the future of the platform.

ONE token economy

Harmony's token economy (Harmony tokenomics) plays a very important role in the sustainability and operation of the network. The native token, ONE, is the fundamental building block of the system, akin to its currency. ONE has 18 decimal places, with its smallest unit called Atto (similar to Ethereum's Wei), equivalent to 0.000000000000000001 ONE. The next level up, Nano, is worth 0.000000001 ONE—similar to Gwei in Ethereum. Harmony has updated its economic model over time. In the new system, the total reward distributed across the network (new token issuance + transaction fees) is kept constant, regardless of block time or staking rate on the network.

Initially, the total ONE supply was set at 12.6 billion. As of February 2021, the circulating supply was approximately 9.49 billion. Looking at the distribution of tokens: 22.4% was allocated to the initial sale, 12.5% to the additional Launchpad sale, and 16.9% to the founding team and developers. Additionally, 26.4% is allocated for protocol development, and 21.8% is set aside for ecosystem growth.

The annual ONE token issuance is capped at 441 million — equivalent to approximately 3% annual inflation. This fixed and predictable structure aims to provide validators with a stable revenue model. Although the model is inflationary, all transaction fees on the network are burned. Thus, if enough transactions occur on the network, the amount of tokens burned can offset the issuance, and net inflation can approach zero over time. This creates a dynamic that supports token value in the long term.

Harmony's integration with Ethereum and other networks

Another major strength of Harmony is its Ethereum compatibility and inclusion in the list of EVM-supported networks. Harmony ONE is a blockchain that is 100% compatible with the Ethereum Virtual Machine (EVM). This means developers can easily deploy smart contracts written in Ethereum-based languages like Solidity on Harmony. Migrating existing Ethereum DApps to the Harmony network or developing new DApps is quite simple. Popular Ethereum libraries like Web3.js can be used to send transactions on Harmony.

Harmony was also designed for interoperability with other blockchains. Asset transfers between Harmony and networks such as Ethereum or Binance Smart Chain can be made through bridges such as Horizon. These cross-chain capabilities contribute to the integration of blockchain ecosystems.

Who is the Founder of Harmony?

The mastermind behind many cryptocurrency projects is often a topic of curiosity, especially among those considering investing in the project. So, who is the founder of Harmony? The person who laid the foundations for Harmony is Stephen Tse. He serves as the project's founder and CEO. In response to the question, “Who is Stephen Tse?”, it is noted that Stephen Tse previously worked as an engineer at leading technology companies such as Apple, Google, and Microsoft. This background has given Tse extensive experience in complex distributed systems and technology development, such as blockchain. Tse is also active in entrepreneurship, having founded the mobile search startup Spotsetter, which was acquired by Apple in 2014. Additionally, he has worked on a project called Voice AI in the field of voice artificial intelligence. Tse's interest in protocols dates back to his high school years; he reverse-engineered the ICQ and X11 protocols and has been writing code in the OCaml language for over 15 years.

Harmony's founding team includes Stephen Tse and Nick White. Nick White is one of the co-founders of the project and an active member of the Harmony community. Nick White holds a bachelor's and master's degree in electrical engineering from Stanford University and has conducted research on artificial intelligence and applied mathematics at Stanford. Outside of his academic career, he served as an AI expert at Zeroth.AI, an AI accelerator based in Hong Kong, and is said to have mentored more than 20 teams from five continents. He is also a yoga instructor and an avid surfer.

In general, the Harmony team consists of engineers who have gained experience at leading technology companies in Silicon Valley. This team, which has worked at companies such as Google, Apple, Amazon, and Microsoft, developed Harmony's core technologies such as sharding and consensus mechanisms.

For example, co-founder Rongjian Lan worked as a search infrastructure engineer at Google Play Store. Minh Doan was involved in Google Assistant and Play projects. Chief engineer Leo Chen worked on high-performance storage virtualization at Amazon Web Services and developed the first generation of Kindle Fire.

Frequently Asked Questions (FAQ)

In conclusion, Harmony (ONE) is an ambitious project that aims to overcome the current scalability and interoperability challenges of blockchain technology. When we ask what Harmony is, we find a high-speed, low-cost, Ethereum-compatible layer 1 and sharded blockchain network. Founded by engineers with Silicon Valley experience, such as Stephen Tse, Harmony uses innovative technologies like blockchain sharding and Effective Proof-of-Stake (EPoS) to offer high transaction volume and speed through parallel transaction chain capability. Still, you may have some frequently asked questions like the following:

• What is the Harmony network and how does it work? Harmony is a Layer-1 blockchain network designed to provide high-speed, low-cost transactions. Essentially, it uses sharding technology to divide the network horizontally and process transactions in parallel. This increases transaction speed and makes the network scalable. Harmony also operates using a special consensus mechanism called “Effective Proof of Stake” (EPoS).
• What is the ONE coin used for? ONE is the native token of the Harmony network. Among the features of Harmony coin, its use in paying transaction fees on the network stands out. Additionally, the coin is used to reward validators and participate in governance decisions. Users can also stake their ONE tokens to contribute to network security and earn passive income.
• What does sharding technology mean? Sharding is a method of dividing a blockchain network into small pieces (shards). This method allows each shard to process its own transactions and data in parallel. As a result, the network's transaction capacity increases significantly. Harmony is one of the first Layer-1 projects to implement this technology.
• How does Harmony staking work? To stake on Harmony, you need to transfer your ONE tokens to a supported wallet and then select a validator to start the staking process. The staking dashboard interface on Harmony's official website is easy to use and user-friendly. You will receive regular rewards in exchange for your staked tokens.
• Who is the founder and what is their background? The founder of Harmony is Stephen Tse. Tse previously worked as an engineer at tech giants such as Apple, Google, and Microsoft, and also sold his startup Spotsetter to Apple. He is a software developer specializing in protocol security and distributed systems. Another co-founder of Harmony is Nick White, a Stanford graduate. White has academic and industry experience in artificial intelligence and engineering.

To learn more about the role of the Harmony network and the ONE token in the Web3 infrastructure, continue following our JR Kripto Guide series.