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What Is Harmony?
Harmony is a blockchain platform that developers can leverage to build decentralized applications. Harmony blockchain claims to solve issues with bottlenecks faced by Ethereum through the introduction of a new sharding-based blockchain that operates using a unique consensus algorithm. The system is designed to open doors for ultra-fast transactions and interoperability. Using Harmony’s block platform, developers can build and scale intuitive decentralized applications or dApps that can accelerate cross-chain token swaps.
Sharding makes Harmony Protocol a powerful blockchain platform; sharding allows the decentralized platform to scale while also maintaining security. The Harmony blockchain platform is like a mix of Ethereum, blended with the unique solution of the Harmony platform. These attributes make Harmony a platform that developers can select for its growth and scalability. The application of the Harmony bridge can cater to both decentralized finance (DeFi) and non-fungible tokens (NFT).
Developers will find familiarity in the Harmony blockchain platform, both Ethereum and Harmony use the Solidity programming language and Ether.js – for developers, coding on Harmony will feel just like they are building DApp on the Ethereum blockchain. On the user end, they can expect two-second transaction confirmation, and they have the ability to seamlessly swap between Harmony and Ethereum blockchain.
The background of Harmony starts with its founder, Dr. Stephen Tse. Dr. Tse is a skilled cryptographer who was also a core developer of Google Maps. Driven by his passion for blockchain technology, Tse developed his own programming language ‘Min’ to build blockchains. After developing Min, Dr. Tse founded Harmony in 2018 and raised over $20 million to develop the Harmony protocol. Harmony’s native token, ONE was launched through Binance’s initial offerings (IEO) in May 2019.
What Is ONE Coin?
Like many other Tier 2 platforms, Harmony has its own community token called Harmony ONE. Its name highlights Harmony’s vision to help open consensus mechanisms for billions of people around the world.
All activities and amenities on the platform are paid for by the Harmony One token: voting, transaction fees, gas fees, staking and receiving rewards.
Until March 2020, the Harmony One token was operating in a dynamic inflation schedule. This was later changed to a fixed annual inflation rate.
How Does Harmony Coin Work?
Harmony uses a different PoS mechanism, efficient proof-of-stake (EPoS) that allows many nodes to be involved in network operations, including improving sharding. The purpose of EPoS is to improve network delegation and provide the right reward combination without compromising the decentralization of the network. It allows validators to effectively stake tokens and secure nodes based on the value of those tokens.
To build consensus, nodes in Harmony identify similar nodes that could be important for consensus development so they can include them in the building process. This improves processing and cost effectiveness.
The Harmony developers’ use of sharding closely mirrors the technique used by Zilliqa, where each shard is allowed to process a fraction of the total mesh. The more transactions are made in the network, the more nodes become available to process it.
Seeing that the Zilliqa sharding technique does not account for the fragmentation of blockchain data storage, the developers at Harmony decided to add a deep sharding mechanism where both the transaction and consensus layers are subject to fragmentation. This added feature allows nodes to include other similar nodes in consensus building.
In the crypto world, every new entry is subject to hacking sooner or later. Knowing this, Harmony protects itself and its sharding network from malicious actors by assigning random nodes to each shard. Since it is almost impossible for the code to predict the piece to which it will be attributed, the probability of a successful attack is significantly reduced. Several crypto platforms have implemented this strategy, known as Distributed Randomization, or DRG.
After reviewing the solutions proposed by OmniLedger and RapidChain, Harmony identified a significant flaw. There was something missing from both of these systems: speed or security were compromised.
The DRG Harmony that was decided to use is a merger between Algorand’s Verifiable Random Function (VRF) system and the Verifiable Delay Function (VDF) proposed for the new version of Ethereum. The validator nodes generate random numbers and send them to another node type called the leader node. Of these options, the leading nodes issue a final issue using what is known as the BFT consensus. This is where Algorand’s VDF comes into play, as the aforementioned issue is delayed to ensure the security of the transaction.
Harmony’s system is better, faster, and more transparent than many other systems for verifying transactions because it leverages the strengths of multiple systems to mitigate the weaknesses of others while harnessing them.
What Is The Problem Harmony Is Addressing?
Ethereum was the first blockchain platform to use smart contracts. As with any pioneering technology, there were a couple of underlying problems with Ethereum-based smart contracts. Ethereum’s scalability and its 15 TPS (transactions per second) failed to support high-throughput applications, including gaming and decentralized exchanges. There have been several proposed solutions for the limitation of Ethereum, but they did not improve overall efficiency. If a project solved one problem, another problem became a hindrance.
A concept known as Sharding was proposed because it had all the features that could solve the scalability problem, the most prevalent problem with Ethereum blockchain. The first public blockchain to use this concept and solve the scalability problem was Ziliqa. However, the solution provided by them falls short in two ways. First, it did not divide the storage of blockchain data. It can limit the participation of machines with limited resources in the network. Second, Ziliqa relies on Proof-of-Work (PoW) as its randomness generation mechanism, which can lead to a single-shard takeover attack.
Addressing these issues, Harmony has brought the next-generation sharding-based blockchain, which is fully scalable. It is secure and energy-efficient. The team has been innovating on both protocol and network layers to support the emerging decentralized economy. Key takeaways from the vision of Harmony are to scale the trust of billions of people globally and create a radically fair economy.
What Are The Breakthroughs That Harmony Has Achieved?
The optimally tuned system of Harmony makes breakthroughs to solve the following aspects:
- Scalability: Usage of shards-type blockchain that enables sharding of both network communication and blockchain state. It makes Harmony blockchain fully scalable.
- Faster and efficient Consensus: The Harmony blockchain is based on Proof of Stake rather than Proof-of-Work used in other sharding-based blockchains which make it around 100x faster.
- Consistent Cross-Shard Transactions: Cross-shard transactions are supported by Harmony wherein the shards interact directly with each other. The atomic locking mechanism ensures consistency.
- Secure Sharding: Security is one of the primary focuses of any blockchain. Harmony uses a distributed randomness generation (DRG) process. It is unpredictable, unbiased, scalable, and verifiable.
Validation of transactions in the blockchain system is one major reason it is energy-consuming. One of the biggest cases against Bitcoin again is its energy consumption. Although, some findings show that Bitcoin does not consume as much energy as projected. Thanks to the lighting network that is creating an easier ecosystem for users to enjoy.
Proof of Stake used by Harmony is one of the models that has made it energy efficient. They went ahead to use Effective Proof of Stake, which combines the positive attributes of PoW and PoS making it suitable for mining activities especially… since transactions are verified in seconds. Apart from the TPS, the transaction fee is also drastically lowered when compared with Ethereum.
One of the best capacities of the Harmony blockchain is to share data across many blockchain networks be it a Proof-of-Stake or Proof-of-Work powered network. How? By enabling nodes on other networks to validate transactions. Horizon, a project launched in 2020 was targeted at making it seamless for assets to be transferred from one blockchain to another. Hence, encouraging interoperability.
According to the technical overview of the website, Horizon will aid the transfer-assets flow where assets can be locked on Ethereum and the equal amount of that asset is minted on Harmony or redeem-assets flow where a particular amount of a minted asset on Harmony is burned and the equal is unlocked on Ethereum. Leo Chen, VP of Engineering at Harmony, said in the press release: “We are living in a multi-chain world already and we are embracing the upcoming metaverse. The multi-chain world and the metaverse require inter-connected blockchains, not just the fungible tokens, but also non-fungible tokens. A bridging infrastructure may empower new kinds of dApps to be built, such as games that cross multiple chains.”
What Are The Concepts Fueling Harmony?
There are four major concepts behind this blockchain that makes it more efficient and secure. These are Harmony protocol, Sharding, cross-chain interoperability, and DRG.
Every blockchain is associated with a consensus protocol. It is responsible to determine how blockchain validators reach the next block quickly and securely. Bitcoin is powered by a PoW (Proof-of-Work) consensus. In this process, the first to solve the cryptographic puzzle gets to propose the next block and wins some token rewards.
Another type of consensus is PBFT or Practical Byzantine Fault Tolerance. In this one node is elected as a leader and others are validators. Harmony uses an improved version of PBFT called Fast Byzantine Fault Tolerance (FBFT). The validators of Harmony consensus are elected based on effective Proof-of-Stake (PoS) making it much faster and secure. Further, it uses both Variable Random Function (VRF) and Verifiable Delay Function (VDF) to verify randomness with validators on the network.
The Harmony blockchain is based on the Sharding mechanism. It uses four types of shards, the beacon chain (shard 0), shard one, two, and three. Each shard supports 250 validators which imply that Harmony has an upper limit of 1000 network nodes.
The blockchain boasts an unmistakable 2,000 transactions per second (TPS), which is multi-fold to the current Ethereum blockchain. It is stated that each new shard brings additional 500 TPS. The team aims to achieve 2,000 shards to facilitate 1 million transactions per second across the Harmony network.
This property of Harmony architecture opens up new possibilities. The bridges can connect any PoW and PoS chains. The FlyClient architecture is highly gas efficient. A plethora of digital assets over tens of millions across Ethereum and Binance Smart Chain are secured using Harmony bridges.
Distributed Randomness Generation (DRG)
Among all the approaches proposed to assign nodes into shards, randomness-based sharding has been recognized as the most evitable solution. In this, a mutually agreed random number is used to determine the sharding assignment for each node. The number possesses properties like unpredictability, unbiasedness, verifiability, and scalability. Harmony uses VRF and VDF to issue scalable randomness generation.
Harmony ( ONE ) is a somewhat newer blockchain network that is gaining more traction, as more and more developers and crypto investors see the capabilities of the network. The price of the ONE token, which fuels the network, is now at about $0.123 and roughly a $2.5 billion market cap, which represents an increase of more than 5,200% over the last year, and I see great potential going forward. Here are five things to know about Harmony.
1. Addressing core blockchain concerns
When some of the first cryptocurrencies like Bitcoin came along, their goal was to replace fiat currencies and serve as an alternative or replacement for the traditional financial system. They were outside the control of banks, the government, and the Federal Reserve. Now, that didn’t exactly happen, or at least it hasn’t happened yet. One reason for this is that it has been difficult for blockchain networks to maintain their core values such as security and decentralization while scaling and being able to handle all of the transaction volumes that come through a normal financial network.
Harmony believes it is able to scale while maintaining decentralization and security because its network is powered by sharding, which establishes several separate groups of validators and allows them to approve transactions and new blocks simultaneously. Harmony can currently process 2,000 transactions per second (TPS), comparable to Visa, one of the largest payment rails in the world. Long-term, Harmony thinks it could get up to processing 10 million TPS.
But even while scaling, Harmony does not sacrifice security or decentralization. The network uses a distributed randomness generation process to assign nodes, computers that connect to the network and validate transactions, to different shards. Harmony also maintains a low threshold of One tokens that nodes need to have in order to join the network as validators and maintain decentralization.
Harmony believes that the massive scalability of the network, coupled with decentralization and security, will enable the blockchain to accomplish feats that previously weren’t realistic on other blockchain networks such as setting up large decentralized exchanges, large payment rails, and “internet-of-things transactions.”
The original way that blockchain networks validated transactions, mined new tokens, and created new blocks was through proof-of-work, in which miners would see who could solve a cryptographic puzzle the fastest to get the opportunity to confirm transactions and reap the rewards of new tokens. However, the competition to get new tokens got so competitive on certain networks like Bitcoin that mining companies would use huge amounts of computer power to solve the puzzles, which started to be seen as a concern for the environment.
Now, a lot of blockchain networks are moving to a proof-of-stake concept, which Harmony has used from the beginning. Under this process, nodes put up existing tokens as collateral to have the chance to get picked at random to validate transactions. A number of validators must verify transactions for a block to get approved. Harmony stands out from other networks because its proof-of-stake consensus mechanism and architecture enable the network to finalize blocks in just two seconds.
3. Lower gas fees
Because of the TPS that Harmony can process and its use of proof-of-stake validation, the network rarely gets clogged like Ethereum and therefore does not have high gas fees — they are currently a very small fraction of a penny per transaction on Harmony. Now, obviously, a network like Ethereum is seeing much more overall demand and transactions than Harmony, but on its website, Harmony says that even if it gets to a point where the network is being fully utilized and seeing extremely high demand, it could solve congestion issues by simply adding more shards.
4. Cross-chain capabilities
Harmony’s technology has the power to share data across multiple blockchain networks, whether they run a proof-of-stake or proof-of-work governance, by enabling nodes on other networks to validate transactions. Toward the end of November, Harmony launched a bridge called Horizon, which allows cross-chain interoperability with Ethereum so assets can be transferred between the two networks. This feature is potentially huge for furthering cross-border payments and making cryptocurrencies easier to exchange among one another. Harmony has also made bridges with other chains like Binance.
5. Huge potential for NFTs
Harmony’s cross-chain capabilities open the network up to some interesting possibilities for non-fungible tokens (NFT), which are digital art, video, and audio files that are secured and can be transferred on a blockchain network. For one, with lower gas fees, the network may be more appealing for creators who want to mint NFTs. Harmony has pointed out that bridging NFTs from one network to another may be expensive at first, but then the following transactions will be cheap. Harmony also said on Twitter that it is developing other capabilities such as NFT Lending, NFT Verification, and rationalization.
Harmony’s developers are working on three other key features that could creatively disrupt the general DeFi space.
Special Noncustodial Wallet
Typically, to keep your crypto secure, you need a very strong password, and/or have to keep your private keys in a secure space to keep your crypto safe. Well, if Harmony gets it right, that’s about to change. The Harmony team is working on a noncustodial wallet you can access via 2FA (e.g., your email account and the Google Authenticator app). It remains to be seen how this would work on a security level, but we’re keeping our fingers crossed.
DeFi Protocol for Stablecoins
Harmony is also looking to produce a DeFi token which provides an interest rate of 20% on stablecoins every year. We’ve seen it done before with Terra’s Anchor protocol, and we’re excited to see how Harmony’s native protocol works out.
A Cross-Chain Platform for Bitcoin
The final plan in Harmony’s playbook is a bridge-like platform which allows transfers to be made between two different protocols — within three minutes. This is a huge task in the DeFi space, and so far, the only known protocol that has done it is THORChain.
How To Buy ONE Tokens
ONE can be bought on various cryptocurrency exchanges, most notably on Bybit.
To buy ONE on Bybit, follow these simple steps:
Step 1: Register an account (or log in) with the Bybit exchange.
Step 2: Visit the Spot Market section and search for the ONE/USDT pair.
Step 3: Make sure you have USDT in your Bybit wallet. You can acquire USDT by exchanging fiat money for it using methods such as credit card and debit card.
Step 4: Click on Buy, and then place your transaction at a limit order and price of your choice.
Harmony ONE: Pros And Cons
- Harmony is the first shared protocol which can be staked.
- Is Harmony really faster than its competitors? Yes, it is. Apart from boasting fast speeds, it also has the infrastructure needed for higher scalability and reliability.
- Harmony also seems to be getting it right with its partners. It first entered the crypto space via an initial exchange offering (IEO) and funding from Binance Labs — a sign that the team knew what they wanted.
- NFTs are a major phenomenon in the world of digital finance, but Ethereum’s high gas fees have discouraged many people from purchasing them. Harmony joins the list of altcoin alternatives working for an NFT marketplace with lower fees.
- The ONE token could be listed on Coinbase in early 2022. Should this occur, the ripple effects would be immeasurable.
- Ethereum and Zilliqa are already fixing the problems Harmony is trying to solve. Is Harmony better? Probably. But if there’s anything meme coins have taught us, it’s that solid use cases don’t necessarily make a cryptocurrency popular. Instead, the public gravitates toward hype — and which option the crypto market perceives as the “best.”
- The effectiveness of Harmony depends on powerful technologies like the 5G network, which is still unavailable in most parts of the world.
- In a recent interview, Harmony’s founder Stephen Tse didn’t explicitly state Harmony’s road map for the ONE token in the foreseeable future. For a token with this much hype, that could definitely add some unnecessary red candlesticks to its long-term charts.
Is Harmony Crypto (ONE) A Good Investment?
Yes. Although a lot still needs work, the Harmony project has been seen to solve the dilemma of poor scaling and interoperability, and offers DApp developers a good platform to scale their applications and transactions. Harmony aims to become a top crypto network known for its speed and effectiveness, and it’s currently on track to achieve that. The platform stays true to its promise of inexpensive gas and transaction fees.
As with every other token and platform, ONE will become more valuable as Harmony gains more mainstream acceptance. Perhaps then we’ll see more use cases in addition to buying, selling and staking. (Note: Please do your own due diligence/own research before investing.)
Although it’s in a crowded space, the Harmony network has done the smart thing by opting to leverage Ethereum’s huge user base, instead of competing with it. The space is still new, and there’s no clear-cut winner yet. Harmony’s decision to solve the fourth trilemma of the blockchain — privacy — might turn out to be its comparative advantage. That being said, it’s clear that Harmony is moving from a cross-chain solution to a fully decentralized platform. We’re interested to see if the Harmony token will still be in vogue when Ethereum 2.0 is fully rolled out.