Harmony, an Ethereum-compatible layer-1 blockchain, has published a proposal to sunset its own network and migrate the native ONE token to Ethereum as ERC-20 assets. The move would effectively end Harmony’s independent blockchain roughly seven years after its mainnet launch, turning token issuance and transfer infrastructure over to Ethereum while winding down validators that currently secure Harmony’s chain.
The proposal, shared on Sunday, describes a final network snapshot, the issuance of ERC-20 ONE tokens on Ethereum, and the migration of exchange listings. Validators would be offered several paths: stop operating their nodes, continue in a governance role, or join a new AI-video initiative backed by Harmony’s team. Harmony called the proposal non-binding and did not specify when the final block would be produced or whether the shutdown would be submitted to the network’s validator-led governance process.
How Harmony’s governance would handle a shutdown
Harmony has published formal governance rules that would govern any decision to close the network. Under those rules, elected validators can create proposals and unelected validators may vote, with voting power based on total stake. For a proposal to pass, at least 51% of the total stake weight must participate, and 66.7% of votes cast must support the measure after a seven-day introduction period and a 14-day voting window.
Because Harmony is a proof-of-stake network, validators hold significant responsibility for both block production and network security. The proposal acknowledges that winding down an L1 chain is not an isolated technical event; it requires coordinated action by every participant who operates infrastructure. The non-binding nature of the current proposal leaves room for the validator ecosystem to debate whether migration is preferable to continuing to run Harmony as an independent chain.
ONE migration and token snapshot
Under the proposed migration, all ONE balances would be recorded at Harmony’s final block, and new ERC-20 tokens would be airdropped to the same addresses on Ethereum. The snapshot would cover wallets, staking delegations, validator rewards, smart contracts, and centralized exchanges, with no claim process required. That design aims to reduce the burden on ordinary ONE holders and ensure that tokens are not stranded when Harmony’s chain stops producing blocks.
The proposal also addresses obligations to users who hold ONE through third-party services. By including centralized exchange balances in the snapshot and asking exchanges to migrate their listings, Harmony hopes to avoid a scenario in which exchanges are left holding illiquid tokens with no market or withdrawal path. However, Harmony warned that some onchain use cases cannot be automatically moved.
Multisig safes, liquidity pools, and other onchain applications cannot be migrated, according to the proposal. Harmony urged users to exit all smart contracts before Sept. 10, which is the earliest date validators may begin shutting down. The proposal also sets aside a $1.372 million pool to compensate validators that stop their nodes on time, retain their stakes, and agree to serve as governors during the transition. That compensation is an attempt to incentivize an orderly transition rather than a sudden abandonment of the network.
Exploit led to rollback plans
Harmony’s shutdown proposal comes less than four weeks after an exploit created forged ONE tokens and led the team to plan a rollback that would wipe out more than 109,000 transactions. The incident marked a turning point for the project, shifting from repairing a compromised network to potentially ending it as an independent blockchain.
On Aug. 12, Harmony said it was considering a rollback after reports surfaced that an attacker had minted nearly 4 billion unauthorized ONE. That amount represented roughly 26% of the circulating token supply. An outside account later claimed that approximately 2.8 billion of the forged tokens had reached exchanges, but Harmony had not confirmed those figures at the time.
By Aug. 17, Harmony said it planned to revert the blockchain to an Aug. 11 checkpoint, discarding 109,126 regular transactions and 315 staking transactions. Investigators said they had traced nearly all of the forged tokens to specific wallets or service boundaries and were working with exchanges, bridges, and law enforcement to prevent the stolen tokens from being monetized.
A brief history of Harmony and its security issues
Harmony launched its mainnet in 2019 with the goal of providing fast, low-cost throughput for decentralized applications, using a sharded proof-of-stake architecture to increase capacity. The project positioned itself as an Ethereum bridge network and attracted developers building games, DeFi protocols, and NFT marketplaces. For a time, Harmony was viewed as one of many Ethereum-compatible alt layer-1s seeking to offer lower fees and faster finality than Ethereum.
Prior to the August exploit, Harmony had already faced a major security crisis. In June 2022, the Horizon bridge, which connected Harmony to Ethereum, was hacked, and around $100 million in cryptocurrency was stolen. The attacker moved funds to various chains and used mixers to obscure the trail. Harmony offered a bounty for the return of the stolen assets and eventually introduced a recovery proposal for token holders affected by the bridge breach. The bridge incident damaged confidence in Harmony’s security and contributed to a long period of declining activity on the network.
The recent exploit drew on the same kind of concern about token supply integrity. Forged ONE tokens could be used to manipulate markets, governance, or exchange balances, making it difficult for the network to continue with confidence. A rollback was one proposed response, but a rollback at this scale is disruptive because it reverses transactions that may include legitimate user activity. The decision to propose a full migration to Ethereum suggests that Harmony’s team sees little long-term value in maintaining a separate chain after repeated security challenges and shrinking network usage.
Why migrate to Ethereum?
Migrating a token from a layer-1 blockchain to Ethereum is not a new idea. Several projects that launched competing smart contract platforms have eventually moved their asset issuance to Ethereum to take advantage of its security, liquidity, and ecosystem depth. Ethereum is the dominant settlement layer for DeFi and tokenized assets, and an ERC-20 version of ONE would allow holders to trade, lend, or use the token in a broad range of applications without depending on Harmony’s own validator set.
Harmony has highlighted the benefits of migration in the proposal, pointing to Ethereum’s established infrastructure and the simplicity of ERC-20 tokens for exchange support. For many users, the practical difference between holding ONE on Harmony and holding an ERC-20 version of ONE on Ethereum would be minimal on a daily basis, especially if exchanges and custodians manage the technical transition on their behalf.
Still, the migration would mark the end of Harmony as a settlement network. Shutting down the layer-1 means no further native block production, no native smart contract execution, and no independent security budget. Any projects still building on Harmony would need to move their protocols to Ethereum or another chain. Harmony’s warning that smart contracts cannot be migrated is therefore a critical caveat; it places responsibility on users and developers to extract their positions before the network stops.
Validator incentives and regulatory context
The proposed $1.372 million validator compensation pool is relatively small compared to the costs of operating network infrastructure for years. But it signals that Harmony is aware of the need to retain validators through the transition. Validators that accept the offer would become governors, possibly providing a layer of oversight during the token migration. Others may simply choose to stand down, which could accelerate the shutdown if a critical mass of validators stops producing blocks.
Harmony’s approach also raises governance questions. If validators do not reach a consensus under the published rules, Harmony could face a contested shutdown or the emergence of an unofficial chain operated by dissenting validators. Token holders would then be forced to choose which network represents the true version of Harmony, potentially splitting the ONE asset. The proposal tries to avoid this by making exchange migration and token issuance contingent on a clear plan, but final authority rests with the community.
The migration plan also has regulatory implications. Exchanges and custodians that list ONE must agree to rebrand the token or issue the ERC-20 equivalent to their customers. Those decisions may require compliance reviews, especially if the token’s status changes as a result of the migration. Law enforcement involvement in the exploit case means that wallets associated with the attack may remain frozen or under investigation.
Harmony’s latest announcement is a sign of how severe the August exploit was. Instead of trying to patch the chain and restore trust, the project is now offering a path that effectively dissolves Harmony into Ethereum. If approved, the final snapshot will create a permanent record of ONE balances and produce a new token on Ethereum, while the original chain comes to an end. For users who still have assets on Harmony, the message is to act before Sept. 10 and ensure that any smart contract positions are closed in time. For validators, the message is to weigh the proposed incentives and decide whether to support the transition or oppose the shutdown. The coming days will determine whether Harmony’s proposal gains enough stake support to become binding.
Source: Cointelegraph News