The ongoing battle between layer 1 blockchain products is beginning to really heat up. There is a huge demand for scalable, quick and cheap blockchains from institutional and retail investors alike.
This has been demonstrated in huge increases in total value locked across all chains whilst native cryptocurrencies on these platforms have experienced some impressive price action.
It is glaringly obvious now that the future is a cross/multichain world and in my opinion, the industry will be all the better for it. Utilising specific chains that excel in specific areas of security, scalability, speed, fees etc. just makes sense.
There tends to be a trade-off that comes with layer 1 projects known as the blockchain scalability trilemma. This states that as a blockchain scales, security and decentralisation usually tend to suffer as a consequence.
Harmony (ONE) tends to fly in the face of this statement.
For the uninitiated, Harmony is a blockchain that utilises sharding to enable quick, cheap and secure transactions. Sharding is the preferred scaling solution that Ethereum is working towards to enable their 2.0 blockchain to operate at scale. Who knows how long that is going to take, with Harmony it is here, now.
Given the majority of blockchains have been derived from existing projects from forking, Harmony is a truly uniquely blockchain that was built from the ground up. Despite their brilliance in completing such a mammoth task, the team retained the interoperability with EVM compatibility.
This enables DApps and projects that are built using Ethereum’s coding language to easy deploy onto the Harmony blockchain. The allows projects and users to gain access to lightning-fast transactions with 100x cheaper if the same transaction were to be performed on Ethereum layer 1.
And yes, your MetaMask and ledger will work on the Harmony blockchain.
The projects native token is the ONE token which is a utility, governance and staking token. Holders of ONE can delegate their ONE to an active validator node to help secure the network and in return earn rewards.
To check out the handsome rewards achieved by those who delegate their ONE head to the Staking Rewards Calculator here.
You can also choose a validator on our handy list of Harmony delegators here.
Given Harmony’s seamless interoperability with EVM compatible chains, this has lead to the development of cross-chain bridges to Ethereum and the Binance Smart Chain. This has enabled ONE holders to gain access to some of the industries most popular DeFi protocols across both chains.
Bancor is one of those protocols. It is a hugely popular DeFi protocol with over $1.6bn TVL!
The attraction to Bancor’s automated market maker (AMM) comes from the protocols ability to protect its liquidity providers (LPs) against the dreaded impermanent loss (IL).
On top of that Bancor also enables single-sided staking for all supported assets. Recently Bancor has begun to support ONE (ERC20) staking thanks to huge interest from the Harmony community.
The beauty of this is that ONE holders can now stake their tokens on Bancor and earn trading fees as they would if they were providing a liquidity pair in other protocols. This enables holders to maintain their full position in ONE without having to break up their position into a dedicated liquidity pair.
It is a complete win-win for ONE holders when using Bancor. What I have found over the past few years is that I am reluctant to hold my favourite projects native tokens in a liquidity pair with another token for a few reasons.
1) IL is real and I don’t want it to eat into my holdings of my preferred token.
2) If and when the token begins to climb with positive price action, I want to stay fully exposed to that upside.
With Bancor this is completely possible with the added benefit of increased yield via single-sided staking.
Let’s take a look at how to stake ONE on Bancor
You will need –
- ETH (to pay for transaction fees)
- MetaMask web3 wallet.
- Laptop or computer
Note – This tutorial will begin from scratch. We will start with Ethereum, use the Bancor AMM to trade ETH for ONE and then stake ONE. If you already have ONE you can skip steps (1-5).
Step 1 –
You will need to deposit ETH into your MetaMask from your exchange of choice. To do this head to your MetaMask and click copy address under your account name.
Send ETH from your exchange of choice to your MetaMask address using the Ethereum Network.
Top tip – Be sure you are withdrawing using the Ethereum Network (ERC20). Withdrawals using other networks may cause issues and not arrive at the correct destination.
Step 2 –
Once your ETH arrives in your MetaMask, head to Bancor.Network.
Select “Trade” If you already have ONE in your MetaMask, you can skip to Step 6.
Note: Even if you have ONE already in your MetaMask, be sure to also have ETH to pay for transaction fees and deposits etc.
Step 3 –
From the “Swap” landing page make sure your MetaMask is connected. If it isn’t connected, simply hit “Connect Wallet” and select MetaMask.
Once connected, it will show your wallet address as below.
Step 4 –
Make sure ETH is in the top box and the bottom box ensure ONE is selected. Simply search for “ONE” in the drop-down box below. Select ONE.
Step 5 –
Enter the amount of ETH you wish to trade for ONE. You must remember to keep a residual amount of ETH to pay for the swap and for the staking process which we will cover below.
Once you are happy, hit swap. You should be prompted to confirm the transaction in your MetaMask.
Your ONE should now be available in your MetaMask balances.
Step 6 –
To stake your ONE head to this link –
From here, simply enter how much ONE you wish to stake and hit “Stake and Protect”.
Finally, confirm the transaction in your MetaMask.
Step 7 –
To monitor your stake and returns you can use the “Portfolio” tab.
This is where you can monitor returns and also your current coverage. This is the amount of IL coverage you are entitled too dependent on how long you have staked your ONE.
The Bancor IL protection will begin 30 days after your initial deposit at 30% of your deposit. From there on out, you will receive a further 1% protection per day until you hit 100% (100 days after your deposit).
This way, if you have your ONE staked for 100 days, you are completely covered from any IL that you would otherwise be subject to in other DeFi protocols.
Step 8 –
Once you have successfully staked your ONE on Bancor. You can sit back, earning yield and not have to worry about IL.
With the current market sentiment being particularly positive for layer 1 blockchain projects, it would be a shame to have to give up some upside potential to earn a yield on your ONE tokens. Bancor allows its users to be a liquidity provider and earn transaction fees without the risk of IL.
This is the best of both worlds in my opinion and Bancor makes it possible for ONE holders to achieve this.
Despite the current high gas fees on Ethereum at the minute, staking ONE can earn you some impressive yields, so be sure to take into account the cost-benefit of the full process before partaking. For the majority of people, the upside will outweigh the current gas fee hike.
It would be interesting to see how the Harmony and Bancor relationship develops with Harmony’s interoperability. It would be great to see Bancor follow in Sushi swap’s footsteps and deploy on Harmony’s blockchain to enable a greater DeFi user experience for all.