Harmony proposes shutting down Layer 1 and migrating ONE tokens to Ethereum

Quick view of core points

Why did Harmony choose to shut down?

• Harmony proposes to shut down its Layer-1 blockchain and migrate its native token ONE to the Ethereum network.
• The move came weeks after its main network suffered a major security breach that resulted in more than 109,000 transactions being rolled back.

How will ONE token migration work?

• The verifier must stop node operation before September 10. Harmony has set aside $1.372 million to reward verifiers for smooth transition.
• Harmony plans to use the migrated tokens to transform into an AI video "mixed-cut economy" business.
• Users must exit all smart contracts by September 10 because the Multisign Safes and liquidity pools cannot be migrated.

Harmony announced the shutdown of Layer-1 and migration to Ethereum

Harmony proposed to terminate its Layer-1 blockchain services and migrate its native token ONE to the Ethereum network. This announcement has been seven years since the network's main network was first launched. The proposal was released on Platform X (formerly Twitter) on Sunday. Harmony said it will take a final snapshot of the network, issue ERC-20 standard ONE tokens on Ethereum, and migrate its exchange listing list.

Harmony described the plan as a non-binding proposal. The production time of the final block has not yet been announced, and it is not clear whether the shutdown decision will be voted on through the validator-led network governance process.

Under Harmony's existing governance rules, elected validators can create proposals. Unelected verifiers have voting rights, and their voting weight is based on the total pledge amount. The proposal needs to reach 51% of the total pledge amount to participate in the voting, and obtain a support rate of 66.7% after the voting period ends.

Why Harmony chose to shut down

Harmony pointed out that security threats were an important factor in making this decision. "The threat posed by state actors and artificial intelligence agents is too great," the team wrote in the announcement. "Since the launch of the main network in 2019, our community has shown resilience to attacks and changes, but now is the time to completely shut down the Harmony network."

team said validators will get a new role in the proposed AI video initiative. This new business will revolve around a small group of AI video creators who publish open prompts and footage. Fans can then fork or "mix" these original works, and AI agents will convert each fork into more video clips. Harmony said the plan is expected to generate advertising revenue from a large user base.

Specific plan for ONE token migration

According to the plan, all ONE balances will be recorded at the final block of the network. Subsequently, new ERC-20 tokens will be airdropped to the same wallet address on Ethereum. The scope of snapshots covers wallets, pledge commissions, verifier rewards, smart contracts and centralized exchanges. Harmony said the holder does not need to take any action or carry out a claim operation.

However, multi-signature vaults, liquidity pools, and on-chain applications cannot be migrated. Harmony urges users to withdraw from all smart contracts by September 10.

Verifiers can shut down nodes starting September 10. Harmony set aside $1.372 million to compensate validators who stopped operations on time, retained pledged shares, and agreed to take on a governance role in the new initiative. It is reported that the total supply and emission rate of tokens will remain unchanged. The newly issued tokens will be used to fund AI video initiatives. As of Sunday, ONE was trading at approximately $0.00073.

Background: Review of recent security incidents

This proposal follows a security incident that occurred less than four weeks ago. On August 12, Harmony said it was investigating a rollback incident after reports that an attacker minted nearly 4 billion unauthorized ONE tokens. Subsequent review found that the attacker actually minted more than 3 trillion ONE tokens in six transactions. External accounts estimate that approximately 2.8 billion tokens have entered the exchange.

This vulnerability stems from a flaw in Harmony's cross-shard receipt verification system. This flaw allows valid receipts to be processed multiple times, allowing attackers to mince new tokens without a corresponding debit record. On August 17, Harmony announced that it would roll back the blockchain to its August 11 checkpoint. This rollback discarded 109,126 regular transactions and 315 pledged transactions.

This is not the first time that Harmony has experienced a major security incident. In June 2022, its Horizon Cross-Chain Bridge was attacked and the attackers stole nearly $100 million worth of encryption assets. The FBI later blamed the 2022 cross-chain bridge attack on North Korea's state-backed hacking group Lazarus Group and APT38.