Harmony is a fast and secure blockchain with key innovations in state sharding and peer-to-peer networking. Its sharding uses secure proof-of-stake and decentralized randomness, and its networking achieves optimal cross-shard routing and fast block propagation.
Built by a 12-person team featuring 7 engineers from Google, Apple, & Amazon and 2 PhDs.
Harmony implements deep sharding with innovations on both protocol and networking layers of their blockchain.
The Harmony token will function in the following aspects of the protocol:
Anyone can spin up a node, but it requires a minimum of 1 million ONE tokens staked. An individual/entity can run a maximum of 2 nodes for now.
In Harmony’s Effective Proof-of-Stake (EPoS), for every epoch (~ 1 day), the top 1600 stakers will obtain the 1600 seats (4 shards * 400 seats) and become the validators across the shards. Once the epoch changes, the new rank of stakes will determine the validators for the next epoch.
In terms of delegation, token holders can freely choose one or more validators to delegate their tokens based on their commission rate, uptime and their position in the rank.
The block rewards will be distributed to delegators pro-rata after the commission fee set by the validator is deducted. For delegators, it’s economically more rewarding to delegate to the validators with less stake as the return to stake ratio is higher, thus avoid the stake centralization too.
The ONE token.
In EPoS, the validators will be rewarded in proportion to their effective stake, which is defined in the formula below. We use median_stake to denote the amount of stake at median in the ranked list of top 1600 stakers, and actual_stake is the actual stake hold by the validator.
Here, c is a protocol parameter (for example, c = 0.15). The effective stake of a validator is basically its actual stake bounded by the upper limit of (1 + c) * median_stake and the lower limit of (1 — c) * median_stake.
Besides the block reward, the voting power of each validator in the consensus is also determined proportionally by the validator’s effective stake. The higher ranked validators are actually economically punished to stake too much in a single validator and the lower-ranked validators are enjoying extra reward for their stake. The effective stake is acting as an equalizer that pushes for a more evenly distributed stake among validators, thus avoiding stake centralization.
When a new block is confirmed, all validators will share the block reward (~ 30 ONE given a 6% annual inflation rate) and the transaction fees. The leader who proposed the block will get another 5% of block reward.
Block reward will increase with more signatures signed on the block to incentivize the leader to collect more votes.
Rewards are liquid.
All nodes are considered equal but those with more stake will receive a lower stake/return ratio to incentivize decentralization.
Minimum 2% slashing on the stake. The slashing increases linearly as the number of validators being slashed at the same time (e.g. 33% slashing if 1/3 of the validators double signing).
For every 3 hours of unavailability, the validator’s voting power will be leaked by 25%.
After 12 hours of continuously being offline, the validator will have no voting power to participate in the consensus and become inactive. Inactive validators will take 0.1% slashing on their stake. If the validator goes online again, its voting power will be fully restored.
For those validators with no voting power, they won’t be considered in validator election until they send a rejoin transaction.