Harmony Proposes Shutdown and Migration to Ethereum Following 109,000-Transaction Exploit

Harmony wants out. The layer-1 blockchain, founded seven years ago and built to be Ethereum-compatible, just put forward a non-binding proposal to shut itself down and migrate its native ONE token to Ethereum as an ERC-20 asset. It’s a drastic call — and it didn’t come out of nowhere.

The trigger was a security exploit that hit the network less than four weeks before the proposal dropped. Forged ONE tokens were created, nearly 4 billion of them, representing roughly 26% of the total supply. An external account alleged that approximately 2.8 billion of those tokens made it to exchanges, though Harmony hadn’t confirmed those specific figures at the time. The damage was severe enough that the team initially floated a full blockchain rollback — a move that would have wiped out more than 109,000 regular transactions and 315 staking transactions. On August 12, Harmony flagged the possibility publicly. By August 17, it had announced plans to revert to an August 11 checkpoint. Investigators said they’d traced almost all the forged tokens to wallets or service boundaries, and were already working with exchanges, bridges, and law enforcement.

Not really a clean situation.

What the Migration Actually Looks Like

The plan, if it passes, works like this: Harmony records all ONE token balances at the final block — wallets, staking delegations, validator rewards, smart contracts, centralized exchange holdings, all of it. New ERC-20 ONE tokens get airdropped to the same addresses on Ethereum. No claims required from users. The snapshot is supposed to capture everything automatically, which probably makes the transition smoother for most holders who’d otherwise have to manually do something.

But there are limits. Multisig safes, liquidity pools, and onchain applications can’t be migrated. Harmony was pretty direct about that. Users are being told to exit all smart contracts before September 10. That’s the date validators can also start shutting down their nodes, if they choose to.

And Harmony is paying them to do it. A $1.372 million compensation pool sits ready for validators who shut down on time, keep their stakes, and agree to serve as governors going forward. Validators who don’t want to shut down have two other options: continue running as network governors without stopping their nodes, or join a new AI-video initiative Harmony mentioned in the proposal. No details were given on what that AI-video project actually is. Unclear what that means long-term for anyone who takes that path.

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Governance Rules and What Passes the Vote

The proposal isn’t binding yet. Under Harmony’s governance rules, elected validators can initiate proposals, and unelected validators can vote based on their stake weight. For something to pass, 51% of total stake weight needs to participate, and 66.7% of that participation has to support the proposal. There’s a seven-day introduction period, then a 14-day voting window. Harmony hasn’t said whether this specific migration proposal goes through that full process, or when exactly the final block gets produced. No timeline confirmed.

That ambiguity is kind of a big deal. Exchanges listing ONE need to know when to update. Token holders sitting in smart contracts need to know how much time they actually have. September 10 is the date for validators, but the broader migration timeline seems murky.

Stablecoin migrations and token wrapping on Ethereum aren’t new — plenty of projects have made similar moves when their native chains ran into trouble or lost user confidence. But a full layer-1 shutdown driven by a security exploit of this scale is a rarer event. The scale of unauthorized minting — nearly a quarter of the entire token supply — made the normal “patch and move on” approach basically impossible.

Read also: Blockstreams Liquid Network Suspended as 4,000 Bitcoin Bug Exposed, Draining $320 Million

Harmony says it’s been working with exchanges and law enforcement since the exploit surfaced. The rollback plan would have erased legitimate user activity to undo the damage, which is why the migration option probably looked more appealing. Wiping 109,126 real transactions affects real people. Moving to Ethereum at least lets the ecosystem survive in some form, even if the original chain doesn’t.

The compensation pool for validators sits at $1.372 million.

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