Harmony, an Ethereum-compatible layer-1 network, has proposed the eventual shutdown of its own blockchain and the migration of its native ONE token to Ethereum as an ERC-20 token. The proposal, announced Sunday, could bring an end to Harmony's independent mainnet roughly seven years after launch and is the latest development in a turbulent period for the network.
The proposal calls for a final snapshot of the Harmony blockchain. At that moment, all wallet balances, staking delegations, unclaimed validator rewards, smart contract holdings, and exchange balances will be recorded. Using that snapshot, new ERC-20 ONE tokens will be minted on Ethereum and airdropped to the same addresses. Harmony said no claims will be required, meaning users do not need to visit any website or file any request to acquire the migrated tokens.
Harmony emphasized that ordinary wallets and exchange balances will receive broad support, but the same cannot be said for more complicated onchain positions. Multisig safes, liquidity pools, and onchain applications are not compatible with the migration path. The network has issued a warning: users should exit all smart contracts before September 10. If funds remain inside DeFi or application contracts, they may be left behind or become inaccessible after the network halts.
Validators are also being asked to make a decision. Under the proposal, validators may stop their nodes and receive compensation from a designated pool. Alternatively, they can remain involved as governors, supervising the transition and future token-related decisions. A third option is to pivot into Harmony's new AI-video initiative, a path that is less clearly defined. Harmony has set aside $1.372 million as compensation for validators that stop on time, keep their stake in place, and agree to continue serving as governors during the migration.
The proposal is explicitly non-binding. Harmony did not present a final block number or timestamp, and it remains unclear whether the shutdown plan will be submitted to the network's validator-based governance process. That process is highly structured. Elected validators are allowed to submit proposals, while unelected validators can still vote. Voting power is proportional to total stake. For a proposal to pass, at least 51% of total staked ONE must participate, and at least 66.7% of those votes must favor the proposal. The voting procedure includes a seven-day introduction period followed by a 14-day voting period.
Harmony's move toward decommissioning its layer-1 chain comes in the aftermath of a major exploit that shook confidence in the network. Less than four weeks before the shutdown proposal, Harmony announced it was investigating an incident involving forged ONE tokens. The attack reportedly involved the minting of nearly 4 billion unauthorized ONE, around 26% of the total supply. At the time, Harmony did not confirm every number, but outside analysts and accounts claimed that roughly 2.8 billion of the forged tokens had made their way to various exchanges.
On August 12, Harmony said it was considering a rollback to undo the damage. By August 17, the project had settled on a plan. It intended to revert the blockchain to a checkpoint taken on August 11. This would discard 109,126 regular transactions and 315 staking transactions. The rollback was intended to remove forged tokens and restore the ledger to a state before the attack began causing widespread disruption.
Harmony also stated that investigators had traced nearly all of the forged tokens to wallets or service boundaries. It was cooperating with exchanges, bridges, and law enforcement to prevent the attacker from cashing out and to recover what could still be reclaimed. The decision to roll back was itself controversial, as reverting a proof-of-stake blockchain has broad implications. Transactions that occurred after the checkpoint would be erased, potentially affecting legitimate users and applications. But Harmony argued that cleaning up the forged supply was necessary to protect the network's accounting.
The shift from rollback to retirement became clearer after the exploit. Rather than invest more resources in securing an independent chain, Harmony now appears ready to let Ethereum handle the security and liquidity layer. This aligns with a broader trend in the crypto industry where smaller layer-1 blockchains face an uphill battle attracting users and developers. Many have chosen to become Ethereum-compatible or to focus on interoperability. Some have gone further, deciding that a custom layer-1 network is no longer sustainable as a standalone initiative.
Harmony was launched in 2019 as a sharded proof-of-stake blockchain with a focus on scalability and cross-chain interoperability. The project claimed to offer high throughput and low transaction fees through a radical state-sharding design. Its ONE token has multiple uses, including paying network fees, participating in staking, and voting on governance matters. The network also had an Ethereum bridge, which supported the movement of assets between Harmony and Ethereum-based ecosystems. That bridging functionality is part of what made the chain appear attractive for DeFi projects seeking to avoid high Ethereum gas costs.
Like many projects, Harmony was dealt major blows through bridge-related exploits. In 2022, the Horizon bridge was hacked for approximately $100 million in cryptocurrencies. At the time, Harmony chose not to shut down but to continue searching for a path forward. It explored decentralized governance, community-led recovery plans, and compensation programs. The more recent exploit appears to have functioned differently, targeting the native token sale and creating counterfeit ONE from within the network itself. The cumulative effect of security incidents seems to have changed the calculus for Harmony's leadership and validators.
If the proposal passes or is acted upon, the migration to Ethereum would make ONE a standard ERC-20 asset. That means lower security overhead for Harmony as a project and potentially greater access to Ethereum's established DeFi infrastructure. The token would be able to appear in Ethereum-based decentralized exchanges, lending protocols, and wallets. It would also remove the requirement for a separate validator set to secure Harmony's own chain. Some token holders might view this as a positive outcome because ETH as a settlement layer is more trusted than a smaller proof-of-stake network with a relatively limited validator set.
However, the proposal raises significant governance and technical questions. Since the proposal is non-binding, it may not automatically trigger a validator vote. That means the future of the project could hinge on official channels and community coordination. Even if validators and token holders approve the plan, the execution window is short. Users are urged to exit smart contracts by September 10, which could force many DeFi positions to be closed quickly. Those who do not act in time may find their funds stranded in contracts that cannot participate in the snapshot.
The snapshot itself is designed to capture balances at the final block. But defining the final block is still an unresolved matter. There is no explicit governance proposal, at least not yet, to assign a future block number. The ability to capture centralized exchange balances is also dependent on cooperation from those exchanges. Harmony would need to ensure that exchanges holding ONE recognize the new ERC-20 token and credit it to their customers. That process is rarely seamless and can lead to delays in trading or withdrawals.
Harmony's history and the market pressures around it make the proposal a significant case study in the evolution of blockchain protocols. Many layer-1 projects from the same 2019 era have struggled to maintain momentum as the industry matured. Ethereum, thanks to its large developer ecosystem and reliable security, remains the default home for many digital assets. Rather than compete head-on with Ethereum and other larger chains, a growing number of smaller projects have concluded that interoperability or direct integration is a better strategy.
The proposed shutdown is also notable because Harmony previously positioned itself as a platform for sovereign digital communities. It was designed to serve as a separate layer-1 chain with its own governance. The decision to migrate might be interpreted as an admission that independent layer-1 chains need substantial real-world adoption to justify their operational overhead. In Harmony's case, a major exploit, coupled with a challenging crypto market, may have made it impractical to continue running an independent validator network.
While no official final block has been chosen, the broader timeline has been stated clearly. Validators may begin shutting down on September 10. The $1.372 million compensation pool is intended to incentivize an orderly wind-down. That pool appears to be funded within the network ecosystem and would reward validators for leaving their node responsibilities behind only after fulfilling governance duties. The proposed governor role suggests that some validators might still have a light oversight function after the main chain ceases to exist.
Supporters of the proposal argue that a token migration is a less painful outcome than a prolonged collapse. If the migration is executed properly, ONE holders would keep their claims. Whereas a rollback could undermine trust in the network's immutability, a same-address ERC-20 airdrop preserves the idea that ownership is respected. At the same time, the inability to migrate multisig safes and onchain applications means that a substantial portion of the ecosystem's activity might be lost. Beyond the raw balances, community-driven projects would have to start over on Ethereum or abandon their plans.
Harmony has asked users to act before the September 10 deadline. That leaves only a brief window to withdraw assets from staking contracts, liquidity pools, and custom smart contracts. Token holders also need to decide whether to support the proposal in whatever formal or informal vote follows. The network's governance guidelines require a minimum participation rate of 51% of total staked supply and a 66.7% approval threshold, but only if the proposal is actually submitted to the validator governance process.
The broader lesson from Harmony's transition is that chain-level resilience depends on more than technology. In the years following its mainnet launch, Harmony built partnerships, attracted NFT projects, and hosted several DeFi protocols. But repeated security incidents and financial strain can erode the foundation of any blockchain. Migrating to Ethereum may provide a safe home for the ONE token, but the original vision of Harmony as a self-sovereign network would come to an end.
The recent exploit and the subsequent decisions have forced participants within Harmony's ecosystem to think about the long-term viability of the network. With the pending shutdown, the project signals that it is more interested in protecting token holders than in preserving the boundaries of its original chain. Whether the plan receives the required validator votes remains to be seen, but the direction is clear: the Harmony layer-1 experiment may soon be folded into Ethereum's broader ecosystem.
As validators and users await more details, the crypto industry will be watching to see how the migration is handled. If successful, it could serve as a model for other struggling tokens and layer-1 networks. If not, it could become another cautionary tale about the hazards of sophisticated blockchain attacks and the difficulty of winding down a decentralized network.
Source: Cointelegraph News