Harmony is a fast and secure blockchain with key innovations in state sharding and peer-to-peer networking.
Harmony has designed a novel Proof-of-Stake (PoS) mechanism for network security and economics. Effective Proof-of-Stake (EPoS) reduces centralization and distributes rewards fairly to thousands of validators.
Staking mechanism supports delegation and reward compounding. To support 100% uptime but fully open participation, EPoS slashes validators who double-sign and it penalizes elected but unavailable nodes.
Harmony Economics Model caps the annual insurance at 441 million tokens (about 3% rate in long term). This model gives validators a simple and predictable return. All transaction fees are burnt to offset the insurance, naturally leading tozero inflation when network usage becomes high.
For those wishing to participate in staking without running a validator, delegation is the best approach to still get involved and earn block rewards. Harmony ONE holders can delegate their tokens to existing validators using staking explorer: https://staking.harmony.one/. If the tokens are delegated to an elected validator, a portion of the block reward earned by the validator will be credited to the delegator (according to section Block Reward).
The earned block rewards are stored in a separate reward balance of the delegator, which can be immediately withdrawn to the delegator’s account balance. The block rewards can also be staked again to achieve the compounding effect of staking.
Your delegated tokens are also associated with slashing risks of the validator. As a delegator, you should carefully choose validators based on their historical performance metrics such as APR, uptime and commission. In case of indifference or indecisiveness, you should distribute your delegations among multiple validators in order to minimize risk.
Currently there are 320 open validator slots, 80 on each shard, to validate new blocks and vote to reach consensus using FBFT algorithm where a 2/3 quorum of votes is needed for consensus.To be able to vote, validators need to have voting shares bonded to them. One bonded voting share grants one vote for a validator to cast in the FBFT consensus. As detailed in whitepaper, Harmony blockchain runs in epochs and one epoch lasts for every 16,384 blocks, which is roughly 1.5 days in current block time. Within an epoch, the validators in each shard stay the same and run consensus repeatedly.
Harmony’s Effective Proof-of-Stake (EPoS) is the first staking mechanism in a sharded blockchain that achieves both security and decentralization. EPoS allows staking from hundreds of validators and the unique effective stake mechanism reduces the tendency of stake centralization. Meanwhile, stake delegation, reward compounding, double-sign slashing, and unavailability checking are also supported.
You can go to Harmony Staking Dashboard to delegate/undelegate tokens, claim rewards and manage your delegations. Currently, staking transaction is supported on Ledger Nano S, Harmony Browser Extension and Math Wallet, you can log in or create a new address via those three wallets.
A validator in Harmony blockchain is a single person or entity who stakes tokens and runs nodes (validator client software) to validate blocks. A validator can specify one or multiple validating keys (a.k.a. BLS keys) which will be used to sign on validated blocks.
To become a validator in Harmony, you will need to do the following:
Setup a validator node(s) and let it fully synchronized with the latest blockchain.
Create an on-chain validator record by sending a CreateValidator transaction.
Start validating using the node(s) with the BLS key(s) you added in your validator record
There are many fields to configure for your validator. It’s worth clarifying some of the important fields in more detail:
amount: The amount of ONE tokens the validator will stake initially.
rate: The commission fee (%) the validator charges from the block reward.
bls-pubkeys: One or multiple BLS public keys the validator will sign with. Each BLS key will be used separately to bid for a slot and if successful, the key is obligated to validate blocks.