What did Harmony propose?
The Harmony project has proposed sunsetting its own layer-1 network and moving the ONE token to Ethereum. Cointelegraph reported the news.
Layer 1 refers to a standalone base blockchain network that runs its own consensus and its own security (unlike a layer 2, which builds on top of another network). Shutting down a layer 1 therefore means ending the operation of standalone infrastructure and moving under someone else's, in this case under Ethereum.
According to Cointelegraph, the proposal comes just weeks after the network was hit by an exploit that led to a plan to discard 109,000 transactions. That is the key context: the decision is not being made in a vacuum, but in the wake of a security incident.
What is not yet known
Honesty is required here. A number of essential details do not follow from the available source, and we will not fill them in ourselves:
- Timeline. When the migration is supposed to take place is not clear from the source.
- The mechanics of moving ONE. Exactly how ONE holders would transfer the token to Ethereum, at what ratio and through which contract, is not specified by the source.
- The fate of the discarded transactions. How the proposal relates to the earlier plan to remove 109,000 transactions, and what that means for the affected users, remains unclear from the available information.
- Approval. Whether this is a finalized decision or a proposal still being voted on is not confirmed.
So for now this is a proposal, not a completed step.
Why does this fit a broader trend?
Harmony is not the only project announcing a shutdown during this period. According to The Block, the Coinbase-backed Router Protocol is also set to be wound down, with a plan to burn 303 million ROUTE tokens. The reason, according to The Block, was an unsuccessful effort to commercialize, license, or sell the technology in a way that would create a sustainable business.
One thing links both cases: running a crypto project on your own is costly and, in a demanding environment, not always sustainable. But that does not mean the causes are the same for both. At Harmony a security incident played a role, while at Router Protocol, according to The Block, it was business unsustainability. We are not blending these two situations into a single explanation.
What to watch out for with events of this type
This is not a recommendation to buy or sell. It is a list of things that are usually worth verifying when it comes to migrations and project shutdowns:
- The official source. Check whether there is a formal on-chain proposal or vote, not just a media report.
- The ratio and mechanics of the transfer. When moving a token to another chain, the exchange ratio and the technical process are decisive.
- Deadlines and dates. Migrations tend to have time windows after which the terms change.
- What happens to inactive holders. Someone who does nothing may fare differently from someone who migrates.
Once Harmony publishes binding details, we will add them and compare them with what was originally proposed.
A note on the market backdrop
This news comes at a time when, according to CoinDesk, bitcoin was trading slightly lower (by less than a percent) against a backdrop of geopolitical tension and rising oil prices. We have no evidence of a direct link between this macro backdrop and Harmony's decision. We mention it only as context for the day, not as a cause.