1. What is ETH 2.0 and why should people expect ETH 2.0?
Since 2020, DApps on Ethereum have flourished, and the number of DApps on Ethereum has now reached 407. The Ethereum network is limited to 15 transactions per second (TPS), and as the volume of transactions grows, the network is easily blocked by a large number of exchanges, causing Gas fees to soar.
Source: Footprint Analytics - Number of protocols per public chain
Source: Footprint Analytics - Ethereum transaction transaction fees
Gas fees are execution fees incurred by a user due to trading activity on Ethereum. This fee is to incentivize and compensate for the computing power required for this trading activity.
Therefore, Ethereum urgently needs to increase the limit of its blocks to enhance the scaling scheme of TPS. This is why Ethereum 2.0 is highly anticipated, improving Ethereum's scalability through network upgrades.
Ethereum 2.0 includes the following 3 upgrades to improve Ethereum's scalability, security, and sustainability capabilities:
The Beacon Chain: Introduces proof-of-stake (PoS), a consensus algorithm used to generate new blocks and reach consensus with other nodes. At the same time, the beacon chain also provides the infrastructure for the sharding mechanism.
- Shard Chains: Increase Ethereum's scalable extensibility and carrying capacity by creating 64 new sharded chains.
- The Merge: Refers to the process of gradually migrating Ethereum from the mainnet to the beacon chain. When the upgrade is complete, the entire Ethereum network will all start the Consensus mechanism of PoS.
The Ethereum 2.0 upgrade will still take years to complete. On October 27 this year, the Ethereum 2.0 beacon chain has completed its first mainnet upgrade and is expected to consolidate in the second quarter of 2022.
In view of the multiple obstacles encountered in the transformation of Ethereum, the market is also thinking about other solutions, and many public chains have also stood out.
Sharding technology is the expansion scheme chosen by most public chains at present. Harmony is one of the applications of sharding technology.
2. About Harmony
Harmony is a high-performance public chain project based on state sharding and PoS, each shard is equivalent to a separate blockchain, but the ability of different shards to interact with each other and transfer information to each other enables multiple shards to be connected into a consistent network. The project aims to build a next-generation blockchain network: a highly scalable, secure, low-energy blockchain based on a sharded architecture.
If it's just the application of sharding technology, how can Harmony be a strong competitor to ETH 2.0?
In addition to sharding technology, Harmony has some unique features designed to solve the challenges faced by other blockchain protocols.
- Deep sharding system: Deep sharding is a multi-layer sharding of the network, transactions and state, coupled with the introduction of kademlia routing protocol, so that block data can be transmitted to the destination through the shortest path, on this basis, it can also allow small nodes to join, maximizing the degree of decentralization.
- PBFT Consensus Mechanism: Harmony actually uses the Consensus Mechanism of PoS+FBFT, mainly making a lot of improvements to Zilliqa's PBFT. The PBFT consensus protocol has validators and leaders, and each communication needs to be broadcast to all validators and nodes, and the more nodes there are, the complexity of the communication increases at multiple levels. The improved algorithm leader runs a multi-signature signature process to collect validators' votes, greatly reducing the complexity of communication.
- Distributed Random Generation (DRG): This is a mechanism that simplifies the communication process of the platform. A Harmony cleverly combines the cryptographic properties of VRF (Verifiable Random Function) + and VDF (Verifiable Delay Function). In this protocol, all validators first produce random numbers, and then the leader performs secondary calculations on random numbers, a process that ensures that malicious nodes cannot predict or interfere with the results of random numbers in advance, and the whole process is of low complexity and can be completed in a short period of time.
- Kademlia Cross-shard Communication: The introduction of the Kademlia routing protocol greatly reduces the network overhead of cross-chip transactions. Harmony creators call it a platform to power the decentralized economy of the future.
3. The development of Harmony since its launch
TVL has an Mcap/TVL value of 3.88, the valuation is moderately high, and it is expected that TVL needs to have higher growth. However, Harmony's positive performance in launching development funds and expanding external cooperation and deploying multiple projects (Curve, etc.) has raised expectations for Harmony TVL.
Source: Footprint Analytics - Harmony TVL
TokenHarmony announced a $300 million ecosystem development fund on September 9, which brought the price of ONE up nearly 2 months.
Source: Footprint Analytics - Harmony Token ONE price trends
04. DeFi projects on Harmony
Although Harmony officially published a large number of projects on the eco map, from footprint Analytics data, the number of DeFi projects is limited. And there are still many gaps in the subdivision tracks such as Dex type, lending class, yield, etc., and the richness of Harmony's ecology is still relatively lacking.
In addition, the current highest TVL project on Harmony is Defi-kingdoms, which is a play to Earn game with the game as the carrier and DeFi as the core. But after large partners such as Curve, Anyswap, and Sushiswap are deployed in Harmony, TVL is not high.
Source: Footprint Analytics - TVL distribution for DeFi projects on Harmony
Source: Footprint Analytics - Percentage of DeFi project types on Harmony
05, Harmony's future
Currently, Harmony TVL is still low, ranking 20th among public chains, and about 50% of TVL is concentrated on Defi-kingdoms. As a new public chain, Harmony is still in the process of ecological construction, and there is still huge room for growth.
The incentive plan announced by Harmony in September is still being promoted, and the future ecological incentive is perfect, and there is still a chance to achieve higher growth. (This article was originally published in ChainDede, authorized by Titanium Media App, author: Footprint)