What is Harmony?

Jan 6, 2022 2 min read
What is Harmony?

Harmony is a blockchain network working on scaling transaction throughput and maximising interoperability whilst minimising fees. It is one of many scaling solutions attracting users from the congested Ethereum mainnet.

While the Ethereum network can be thought of as the home of DeFi, the rise in popularity of its applications has led to high fees and slow transactions as the network becomes overloaded with activity. This is a result of Ethereum’s decentralised design in that nodes must revise and approve all transactions to be processed for each block, leading to a limited number of transactions per second. Users are willing to pay a premium in gas to have their transactions prioritized in a congested system, only up to a point.

Some of the earlier ideals of DeFi, such as opening up financial products to people who had previously been priced out, no longer apply. The high gas fees caused by congestion are pricing out users with smaller budgets, and interacting with DeFi on the Ethereum mainnet requires significant capital to be worth it.

Harmony’s focus is improving scalability whilst maintaining a high level of decentralisation. This is a challenge for blockchain technology because of the scalability trilemma; a problem which states that blockchain networks are unable to grow in the following three areas at once: decentralisation, scalability and security.

The Harmony network’s underlying technology, detailed in the whitepaper, combats this by using a method known as ‘sharding’ along with an Effective Proof-of-Stake (EPoS) consensus mechanism. EPoS ensures that validators staking large quantities of tokens must run extra nodes, while stakes are split across shards, avoiding the potential for financial centralisation.

Harmony’s sharding in three dimensions (state, network and transaction) is different to other Layer 2 methods, such as roll-ups, which act as discrete systems in which transactions are executed before relaying information back to the mainnet.

In order to maximise interoperability, Harmony is compatible with the Ethereum Virtual Machine (EVM), allowing smart contract deployment and execution which functions just the same as on Ethereum mainnet. This allows applications built on Harmony to be fully compatible with many other chains via its native bridge.

As with other PoS networks, validators on Harmony stake the native token in order to participate in the validation of the system and receive rewards. Stake DAO offers Staking-as-a-Service (SaaS) for ONE, the native token of the Harmony blockchain, via its retail validator. Users can conveniently delegate their ONE tokens in order to receive a share of the validator’s rewards.

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