The development of blockchain technology has not stopped since the launch of Bitcoin in 2009, and part of that development we can see come true in Harmony, a blockchain focused on offering specialized features for the decentralized application development (DApps) high speed and scalability.
To achieve this, Harmony resorts to a series of technological improvements in its blockchain, such as the state sharding and the development of a series of improvements applied to the Proof of Stake consensus mechanism (known in Harmony as EPoS – Effective Proof of Stake). All this, driven by the ONE token staking, the platform's native token.
Harmony's Origin
Harmony was founded in 2018 by Stephen Tse and co-founders Rongjian Lan, Nick White, and Sahil Dewan. They were all infrastructure engineers who used to work in Google, Amazon, Apple and Facebook. In its initial vision, Harmony was intended to provide a highly capable, scalable, and secure DApp development infrastructure.
With that in mind, Harmony raised a private round of $18,3 million. This was joined by another $5,5 million round of nodes (led by Binance Labs and HashKey Capital), and a $5 million initial exchange offering (IEO) via Binance Launchpad. So, with more than 28 million dollars for the development of Harmony, the team got down to work to make everything that your white paper promised.
After painstaking development, Harmony managed to launch its mainnet on June 2019 and enabled the staking system in May 2020. Currently, Harmony has managed to reach its maximum level of operation, with a network of 4 shards and 1.000 nodes, of which 800 are currently being managed by members of the community, such as part of a commitment to decentralization in the network.
The other 200 nodes are managed by the Harmony Foundation. However, the organization does not charge any rewards for staking, but instead uses these funds to carry out various development tasks and bounties in the community. In fact, as the network advances and develops, the Foundation assigns new spaces so that its nodes can be managed by the community and further promote decentralization.
How does Harmony (ONE) work?
However, Harmony defines itself as a network focused on offering smart contracts advanced for the development of DApps. This is possible because Harmony has a complete development stack that sits on top of the Ethereum technology and its EVM. In fact, standards such as ERC-20 or ERC-721 tokens have their counterpart in Harmony (known as HRC-20 and HRC-721 tokens). This indicates that Harmony's EVM is compatible with Ethereum's, and that there have only been huge improvements made to it in order to adapt it to Harmony's needs. In this sense, all DApps developers Those who build an application for Ethereum can also develop applications for Harmony, usually without major modifications.
Harmony Key Features
Next we are going to review the main features of Harmony.
Fully scalable architecture
The use of shards in Harmony not only works on network communication and transaction validation, but also on the state of the Blockchain. This makes Harmony totally scalable in all three aspects of the blockchain: network, storage and transaction processing.
Sharding in Harmony, known as state sharding, is another of the great features of this blockchain. In Harmony, each shard maintains its own blockchain and general state. Therefore, the validators of each shard only need to store a part of the global state of the network. Harmony is partitioned into 4 shards, that maintain a coherence of work thanks to the sharing of atomic data between each of the shards.
Safe Random Separation
The marketing process includesseveral phases that are reflected below: sharding of Harmony is secure against fragmentation attacks (a type of attack that seeks to divide the network into several parts, to try to control one or more shards, in order to drive malicious behavior in the network in general). For this protection, Harmony randomly assigns validators, not only at the node level, but also across network shards. In this way a weakness of the shards is avoided and network consensus is protected.
That is, the shards share certain cryptographic data among themselves, in order to use said data in the generation of blocks in each of their shards. In this way, the shards create "chains" between their blocks, even though the data that the shards store is incomplete. This way, even with the loss of an entire shard, Harmony can still provide assurance of data verification and maintain operation. This process is possible thanks to the use of Epochs (Epoch) and beacons, which allow generating a set of validators and cryptographic tests that ensure the links between shards (shards cross-links), thus maintaining the security of the chain.
Efficient and fast consensus
El Harmony consensus algorithm it is called Fast Byzantine Fault Tolerance or FBFT. The FBFT is a highly efficient and fast consensus algorithm built on the famous PBFT (Practical Byzantine Fault Tolerance) algorithm which is the cornerstone of distributed systems and consensus research for the last 30 years. Harmony's FBFT is able to confirm blocks in 2 seconds thanks to the adoption of the added signature BLS (Boneh-Lynn-Shacham). The FBFT is also highly optimized in network message processing and block proposal pipeline so that consensus can scale to hundreds of validators at the same time.
In general, blockchains use a BFT consensus scheme (eg Bitcoin or Ethereum). But this is not the only way to reach consensus, since there are other BFT algorithms that solve (completely or partially) the Byzantine Generals Problem. In this case, the Harmony developers, driven by their need for a fast network, have decided to use the algorithm as a base. PBFT (Practical Byzantine Fault Tolerance), a type of BFT algorithm that does not fully solve the Byzantine Generals Problem, but still offers a certain level of security and confidence. This new algorithm is known as FBTF or Fast Byzantine Fault Tolerance.
FBFT is designed to allow the construction of decentralized networks using sharding that can quickly reach consensus. In fact, FBFT is the key for Harmony to have confirmation times of 5 seconds between its blocks, which makes it one of the fastest blockchain networks in the ecosystem. Of course, this has a cost, and that is that FBFT is attackable with only 33% of the network power (remember, the 51% Bitcoin attack, only 33% is enough on Harmony). This makes it less secure, but that's where EPoS comes in as an equalization mechanism to prevent this situation from happening. An elegant solution to a problem, while enjoying the benefits of a fast consensus on the network.
Effective Proof of Stake
Unlike traditional blockchains that require PoW (Proof of Work) to reach consensus, Harmony has developed an algorithm enhancement Proof of Stake, who has called Effective Proof of Stake (EPoS). This algorithm is focused on offering decentralization guarantees between the shards that make up the Harmony network. To do this, validators with a large amount of staked tokens are forced to run more nodes to support the network, while validators with less stake run fewer nodes. In addition, EPoS is capable of randomly and evenly distributing bets across all shards, so that no shard is less secure than another.
Effective Proof of Stake allows Harmony to build a sharding-capable PoS network with additional security for sybil or partitioning attacks. The Harmony white paper tells us that the network is made up of 4 shards which can gather 1000 nodes. In this way, each shard is made up of 250 nodes, balancing the power of each of the shards, even at an economic level, since EPoS is designed to achieve balance.
This is essential, because as long as there is a balance of power between the shards, a sybil attack or partitioning attack will have virtually no negative effect on network security. In addition, this operating scheme allows the network to work asynchronously, so one shard can be working on validating a group of transactions while the rest can work on choosing a new validator for the next block.
In any case, EPoS is the epicenter of it because this algorithm is h-centric.Make sure that the staking within the network is balanced. For example, if shard A is staked higher than shards B, C, and D, EPoS will force shard A's stake to balance in such a way that staking between shards equalizes as soon as possible. Otherwise, shard A may see its participation in the choice of validators diminished, removing effective power from the shard and giving that power to the rest of the shards until everything is balanced again. The idea is clear: although economic power decides your participation in the network, if you have a lot of economic power, the network will look for a way to regulate it and make things equally fair for everyone, preventing the most powerful from abusing his position.
EPoS and FBFT they complement each other with the use of Boneh-Lynn-Shacham (BLS) constant-size signatures to commit blocks in a single round of consensus messages. In this way, Harmony manages to make network confirmations possible in just 2 seconds, and irreversible confirmations in 5 seconds.
Scalable network infrastructure
Harmony's network layer is built on top of the gossip protocol, using the libp2p library. Gossip is used for the broadcasting of messages on the network and the stream protocol for decentralized state synchronization. In order to achieve high performance, we adopt the RaptorQ source code and use the Dispersion Algorithm of the network between its nodes. In addition, a Kademlia routing scheme is also used to achieve that the data transmission between shards scale as the network grows in number of nodes and shards.
Randomness and Verifiable Cryptography
The use of shards in Harmony relies on a source of secure randomness so that validators can be assigned to shards in a truly random fashion to prevent attacks. Harmony has designed a distributed random generation (DRG) protocol which includes both VRF (verifiable random function) and VDF (verifiable delay function) to achieve the following key properties:
- Impossible to predict: No one should be able to predict the random number before it is generated.
- Impartial: The random number generation process must not be biased by any participant.
- Verifiable: The validity of the generated random number must be verifiable by any observer.
- Scalable: The random number generation algorithm must be scalable to a large number of participants.
Thus, Harmony creates the building blocks of reliable random and cryptographic functions to keep the network running smoothly.
Network Tokenomics
Harmony has the native token (ONE), which is used for:
- Staking on the network.
- Pay network commissions.
- Carry out operations with the smart contracts of the network.
- It will eventually be used in the decentralized governance of the project.
The token has a peak issue of 13,6 billion of tokens, of which were initially distributed:
- Investment seed round Tokens comprise 22,4% of the total supply.
- The total IEO tokens comprise 12,5% of the total supply.
- Team tokens account for 16,9% of the total supply.
- Protocol development tokens comprise 26,4% of the total supply (of this total, some 505 million tokens were sold in the Node Round to incentivize early entrants to join the network as validators).
- Ecosystem development tokens, which represent 21,8% of the total supply.
Currently there 12,8 billion tokens in circulation within the Harmony ecosystem.
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