Harmony Proposes Blockchain Sunset and Token Migration to Ethereum Amidst Recent Exploit

The Ethereum-compatible layer-1 network Harmony has put forth a significant proposal that could mark the end of its independent blockchain, seven years after its mainnet launch. In a move that signals a potential pivot, Harmony is suggesting to sunset its current blockchain and migrate its native ONE token to the Ethereum network, transforming it into an ERC-20 standard token.

The proposal, officially shared by Harmony on social media platforms, outlines a comprehensive plan to take a final network snapshot. This snapshot would serve as the basis for issuing new ERC-20 ONE tokens on Ethereum, with corresponding adjustments to exchange listings. This transition would effectively shift the ONE token’s operational base from Harmony’s proprietary blockchain to the more established Ethereum ecosystem.

Validators, the backbone of any blockchain network, are presented with several options under the proposed plan. They could choose to cease their operations by stopping their nodes, transition into a role as "governors" within the new framework, or potentially redirect their efforts and expertise towards Harmony’s emerging AI-video initiative. This multi-faceted approach aims to accommodate different stakeholder interests and facilitate a smoother transition.

Harmony has emphasized that this proposal is currently non-binding, meaning it is not yet a definitive decision. The exact timeline for the production of the final block on the Harmony blockchain remains unspecified, and it is also unclear whether the ultimate shutdown will be subjected to the network’s established validator-led governance process. This governance structure, detailed in Harmony’s published rules, empowers elected validators to initiate proposals, while all validators, elected or not, can cast votes. The weight of these votes is directly proportional to the total stake held by each validator. For a proposal to pass, it requires a minimum of 51% of the total stake weight to participate in the vote, followed by a 66.7% support threshold after a seven-day introduction period and a subsequent 14-day voting window.

The core of the migration plan hinges on a comprehensive snapshot of all ONE balances at the moment the final block is produced on the Harmony chain. These balances would then be mirrored by issuing new ERC-20 ONE tokens on Ethereum, which would be airdropped directly to the same wallet addresses that held ONE on the Harmony network. This snapshot is intended to be all-encompassing, covering not only individual wallet balances but also staking delegations, accrued validator rewards, smart contract states, and holdings on centralized exchanges. Crucially, users would not be required to make any claims to receive their migrated tokens.

However, the proposal does come with certain limitations. Harmony has explicitly stated that multisig safes, liquidity pools, and on-chain applications will not be directly migratable. In light of this, users of these functionalities are strongly urged to exit all smart contracts and associated services before September 10th. This date also marks a potential starting point for validators to begin shutting down their nodes. To incentivize timely compliance and acknowledge the contributions of validators, a dedicated pool of $1.372 million has been set aside. This fund is earmarked to compensate validators who cease their node operations on time, retain their stakes, and agree to serve as governors in the post-migration era.

The timing of this proposed blockchain sunset is particularly noteworthy, as it emerges less than four weeks after a significant exploit that led to the creation of forged ONE tokens. This incident prompted Harmony to consider a network rollback, a drastic measure that would have resulted in the deletion of over 109,000 transactions. The current proposal to sunset the blockchain may represent a strategic shift from attempting to repair and maintain the existing network to a complete transition to a new operational paradigm.

The exploit, which came to light on August 12th, involved an attacker allegedly minting nearly 4 billion unauthorized ONE tokens, an amount representing approximately 26% of the total supply. While an external account claimed that around 2.8 billion of these forged tokens had reached exchanges, Harmony had not officially confirmed these figures at the time. Following these reports, Harmony publicly stated that it was considering a rollback to address the exploit and the creation of these fraudulent tokens.

Subsequently, on August 17th, Harmony announced its intention to revert the blockchain to a checkpoint established on August 11th. This rollback was planned to discard a substantial volume of transactions, including 109,126 regular transactions and 315 staking transactions. The network indicated that its investigators had managed to trace nearly all the forged tokens to specific wallets or service boundaries. Efforts were underway to collaborate with exchanges, blockchain bridges, and law enforcement agencies to mitigate the impact of the exploit.

The decision to propose a blockchain sunset and token migration, especially in the wake of such a significant security incident, underscores the complex challenges and strategic decisions faced by blockchain networks. It highlights a potential pathway for Harmony to leverage the robust infrastructure and established ecosystem of Ethereum for its ONE token, while potentially enabling its development team to focus on new initiatives like its AI-video project. The success of this proposal will ultimately depend on the consensus reached through Harmony’s validator-led governance process, a system designed to ensure community participation and collective decision-making in the network’s future.