Welcome, Crypto Dummies!
If you’re new here, this substack focuses on educating those that know nothing about crypto and blockchain technology. If that’s you, you’re in the right place!
We’ve explored various protocols and chains here, and today we’re going to focus on one explicitly built for scalability and decentralization, Harmony.
What is Harmony?
Harmony is a decentralized layer 1 blockchain environment, that was designed to be a bridge between scalability and decentralization—developed with a primary focus on data sharing and the creation of marketplaces for fungible and non-fungible assets. Harmony comes with a promise to deliver high throughput, low latency, and low fees. Harmony launched as part of an initial exchange offering on the Binance Launchpad in May 2019 and has since seen a substantial amount of growth with the introduction of play-to-earn protocols such as DFK (Defi Kingdoms). Harmony promises access to an ecosystem with a focus on data sharing, decentralized marketplaces, supply chain tracking, ad exchanges, credit rating systems, and gaming.
What makes Harmony special?
Harmony was developed with the idea that no crypto platform has achieved a satisfying balance between decentralization and scalability. With that in mind, harmony aims to get rid of structural limitations that prevent cryptocurrencies from becoming genuine digital money. Harmony introduces the implementation of deep sharding technology, which will cover transaction validation, network communications, and the blockchain state. To achieve full scalability, Harmony aims to eliminate the modular approach and solve consensus ‘on scale'.
What is Deep Sharding, and how does it work?
Harmony’s deep sharding works by dividing its nodes into 4 equal groups (shards). If there are 1,000 nodes total, the nodes are divided into 4 shards consisting of 250 nodes. Nodes within a shard are regularly and randomly mixed. Randomness used with sharding is obtained through a distributed randomness generation algorithm. An unpredictable, unbiased, verifiable, and scalable solution.
In industry, Zilliqa [12] was the first sharding-based public blockchain that claimed a throughput of 2,800 TPS. Zilliqa uses PoW as identity registration process (i.e. Sybil attack [1] prevention). Zilliqa’s network contains a single directory-service committee and multiple shard committee (i.e. network sharding), each containing hundreds of nodes. Transactions are assigned to different shards and processed separately (i.e. transaction sharding). The resulting blocks from all shards are collected and merged at the directory-service committee. Zilliqa is not a state sharding solution because each node has to hold the entire blockchain state to be able to process transactions. In academia, publications like Omniledger [8] and RapidChain [7] have proposed solutions that feature state sharding where each shard holds a subset of the blockchain state. Omniledger employs a multi-party computation scheme called RandHound [25] to generate a secure random number, which is used to randomly assign nodes into shards. Omniledger assumes a slowly 4 adaptive corruption model where attackers can corrupt a growing portion of the nodes in a shard over time. Under such security model, a single shard can be corrupted eventually. Omniledger prevents the corruption of shards by reshuffling all nodes in the shards at a fixed time interval called epoch. RapidChain builds on top of Omniledger and proposes the use of the Bounded Cuckoo Rule to reshuffle nodes without interruptions [19]. Harmony draws inspiration from these three previous solutions [7,8,12] and designs a PoS-based full sharding scheme that’s linearly scalable and provably secure. Harmony contains a beacon chain and multiple shard chains. The beacon chain serves as the randomness beacon and identity register, while the shard chains store separate blockchain states and process transactions concurrently. Harmony proposes an efficient algorithm for randomness generation by combining Verifiable Random Function (VRF) and Verifiable Delay Function (VDF). Harmony also incorporates PoS in the sharding process which shifts the security consideration of a shard from the minimum number of nodes [7,8,12] to the minimum number of voting shares.
-Harmony Whitepaper
Each of its shards is capable of processing a fraction of the total transactions taking place, this means the platform can profit from the increased number of shards on it, and transactions can be managed by more units to take care of them.
Consensus
Harmony’s consensus algorithm is called Fast Byzantine Fault Tolerance (FBFT). A highly efficient and quick consensus algorithm built upon PBFT consensus.
Harmony boasts a consensus algorithm that can confirm blocks within 2 seconds. FBFT is also highly optimized with network message processing and block proposal pipelining. Allowing the consensus algorithm to scale to hundreds of validators at the same time. This is thanks to the adoption of aggregated Boneh-Lynn-Shacham (BLS) signature.
With FBFT, validator nodes on Harmony do not engage in vote broadcasting. The validators are appointed based on a Proof of Stake approach, their election depends on their stake of tokens.
$ONE
Harmony’s native cryptocurrency keeps the ecosystem up and running by enabling participation and serving as the payment vehicle for activities on the network. ONE functions as a governance token and a utility token. The token can be used to cover transaction fees, buying products or services, as well as staking the token for the sake of becoming a validator/delegator on the network.
Recap
Harmony aims to become the most popular financial cross-chain blockchain. They are actively looking to increase adoption through hackathons, workshops, and educational programs for developers and builders. Bridging the gap with interoperability, the Harmony team has been able to bring assets across chains through the introduction of Defi Kingdoms and the growth DFK saw in users. Harmony brings speed, scalability, and decentralization to the crypto space. Establishing themselves as another competitor to join the Layer 1 rankings.
That’s it for today's post! I’ll see all you crypto dummies next week!