Harmony hack: Can the project survive another crisis?

Where did four billion ONE come from?

Around 4 billion new ONE tokens suddenly appeared on the Harmony network. According to an analyst known as Juiceberg, the tokens were minted by an attacker without authorization from the team. That amount represents roughly 26% of ONE’s supply before the attack. According to an initial theory, the exploit may have involved the creation of empty blocks, although Harmony has not yet disclosed the technical cause of the vulnerability.

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Most of the newly minted ONE tokens were sent to exchanges almost immediately. According to Juiceberg, the attacker transferred around 2.8 billion tokens to trading platforms. Only about 115 million ONE remained on addresses linked to the attack, while most of the rest may already have been sold or remained in exchange deposit wallets.

ONE’s price fell sharply amid these transfers. At one point, the token traded at around $0.00056, losing more than half of its value. ONE is now worth about $0.00076. At that price, the full 4 billion-token amount is valued at roughly $3 million.

Harmony confirmed the exploit and said it is working with crypto exchanges to stop the movement of funds and freeze assets linked to the attack. The team is preparing a fix for the vulnerability and is also considering rolling back the blockchain to its state before the attack.

From an Ethereum rival to a $100 million hack

Harmony is far from a newcomer to the market — its mainnet launched back in 2019. The project positioned itself as a faster and cheaper Layer 1 blockchain compared with Ethereum. The network uses a Proof-of-Stake mechanism, while the ONE token is used for transaction fees, staking, and governance.

One of the key components of the ecosystem was the Horizon bridge, which allowed users to transfer assets between Harmony and Ethereum. In June 2022, the bridge was hacked. Attackers stole roughly $100 million worth of crypto assets, including ETH and stablecoins. Harmony halted the bridge and contacted law enforcement agencies.

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In January 2023, the FBI linked the attack to North Korea’s Lazarus Group and APT38. According to the agency, the hackers later attempted to launder part of the stolen funds through the privacy protocol RAILGUN. Around $60 million in ETH passed through the protocol, while some of the assets were frozen.

Problems also emerged within Harmony itself after the hack. Validators complained about the leadership’s slow response, cuts to funding for Community DAO and Validator DAO, and the departure of some participants from the project. Governance through Snapshot became another issue: decisions required participation from 51% of nodes, while a significant amount of staked ONE was held by Binance, which rarely participated in voting. As a result, some decisions were effectively stalled.

What is left of Harmony?

Harmony’s current scale is nowhere near what the project aimed for several years ago. According to DefiLlama, only around $176,000 is locked in the network’s DeFi protocols. Over the past 24 hours, decentralized exchanges on Harmony recorded roughly $700 in trading volume, while the network counted 244 active addresses and 3,309 transactions.

Even the largest applications in the ecosystem remain small. For example, Swap Country has around $47,000 locked, DeFi Kingdoms about $40,000, and lending protocol Tranquil Finance roughly $33,000.

The decline is even more striking when looking at ONE. In October 2021, the token reached an all-time high of around $0.38. Its price is now almost 99.8% below that peak.

Harmony is still operating, and developers are trying to deal with the consequences of the latest attack. But simply fixing the vulnerability is no longer enough: after two major hacks, the team will have to bring users, liquidity, and developers back to a network where DeFi activity is now measured in just hundreds of thousands of dollars. Whether Harmony can become a notable blockchain project again will depend on that, not only on what happens to the stolen ONE.

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