Harmony Team - Please Explain "Wallet 2" Staking Procedures

There are several staking/delegating practices by the Harmony team which have raised questions within the community. I would like for Harmony to address the following issues.

According to Smartstake, there are at least two Harmony-controlled wallets. My questions pertain to “Harmony Wallet - 2”, which is staking 90.4 million ONE to 13 validators. Some of these validators are community validators that many within the Harmony ecosystem are familiar with. But a few of these validators raise some concerns.

ISSUE 1:

Wallet 2 is staking 5 million ONE with MyCointainer.com2 validator. This validator has NEVER been elected. The 5 million ONE was originally staked with MyCointainer’s previous validator, MyCointainer[dot]com (no “2”), but transferred to the “new” validator during epochs 967-968. MyCointainer[dot]com’s first validator was last elected during epoch 708. In other words, Harmony has been staking 5 million ONE with validators who haven’t been elected in over 300 epochs (~8 months)!

That is nearly 300,000 ONE rewards (non-compounding) from staking that is lost. Why is Harmony throwing away funds? These are funds that could potentially be used to pay the VDAO Term 1 governors that Harmony refuses to fully pay, and/or pay other Harmony DAO governors that Harmony had frozen funding for.

ISSUE 2:

Harmony Rocket is another validator that Wallet 2 stakes with. This validator has less than 4.3 million ONE delegated to them. However, they routinely abuse the BLS key feature of EPoS and have attempted multiple times to bid 4 and 5 keys. This behavior directly blocks other small validators from being elected. Harmony Rocket validator is only able to do this due to Harmony’s Wallet 2.

To make matters worse, Harmony Rocket sometimes bids so low that they become unelected (e.g., epochs 1006 and 1016). Other times they’ll bid too low and only have a portion of their requested keys allotted. This causes inconsistent and missed rewards.

Another Harmony Rocket issue: Back during epoch 999’s hard fork, where it was imperative for validators to monitor their nodes and ensure a smooth upgrade, Harmony Rocket bid on and was allotted 5 keys. But they only signed 0.19% of their blocks! How is a validator with this type of performance acceptable to Harmony when Harmony’s own funds are involved?

ISSUE 3:

Of the 90.4 million ONE being staked from Wallet 2, 60 million of it is being staked with two Stake DAO validators. One of them has 50 million ONE from Wallet 2 and charges 100% commission. The other has 10 million ONE and charges 5% commission. I understand that Harmony entered a partnership with Stake DAO, where Harmony funded Stake DAO with $3 million USD. But I don’t see mention of staking 60 million ONE as part of that deal. Can Harmony explain why they are staking 60 million with Stake DAO and why the one validator charges 100%?

ISSUE 4:

A majority of the validators Wallet 2 stakes with charge the minimum 5% commission fee. However, besides the one Stake DAO validator that charges 100%, there are two other validators that charge 10%, and one apiece that charges 8.99% and 6%. There doesn’t appear to be a standard that Wallet 2 follows in their staking choices.

ISSUE 5:

Wallet 2 also does not claim their staking rewards. There is currently 5.3 million ONE in unclaimed rewards. Are these not funds that could/should be better utilized by the core Harmony team?


*How does Harmony determine which validator to stake with?

*How does Harmony determine how much to stake with each validator?

*Does a validator’s commission % factor into the determination?

*Does a validator’s sign rate/up time factor into the determination?

*Does a validator’s BLS key behavior factor into the determination?

*Can Harmony claim it’s staking rewards at regular intervals in order to either compound staking rewards or to put back into the ecosystem via other means?

*If these policies aren’t already in place, will they be put in place? If yes, when?

*Should the community be involved in determining these policies?

As a blockchain committed to “Radical Transparency”, this information should be explained. The policies that Harmony uses to determine their staking actions should be defined and available to the public.

@lij @Jacksteroo @StrongMindsHold

9 Likes

I have been looking into this along with some other community members and the entire construct of how this staking has been done makes very little sense from the outside looking in.

There are very few details surrounding this partnership with Stake DAO I could find and further the 100% commission here is super confusing. What exactly happens to the staking rewards being handed out here?

Apart from this there seem to be a myriad of issues here that seem to directly affect better decentralization by being a detriment to smaller, unelected validators. It’s somewhat concerning that this post has pretty much gone unnoticed. There definitely needs to be a more open discussion about this.

Thanks for shining light on this @TrickLuhDaKidz. Hoping some Harmony Team member chimes in to explain what’s going on here @lij

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More discussion would be great. An acknowledgment by and response from Harmony would be even better.

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WHAT A COINCIDENCE

MyCointainer is elected for the first time in 8 months within 4 days of me creating this post…

Imo, there’s near-zero chance the MyCointainer team read my above post. Why do I say this? The VDAO has reached out to them several times over the last few months, and MyCointainer still hadn’t fixed their node! The only reasonable explanation is that someone from Harmony read this and reached out to MyCointainer, or maybe someone from Harmony is MyCointainer…

Despite 8 months of wasted rewards, Harmony is still staking with them? Despite likely having read this and realizing their months-long and numerous follies, the Harmony team still hasn’t bothered to reply to this post or the post I made on Reddit? Harmony doesn’t have the decency, the courtesy, to do THAT? It’s DISRESPECTFUL.

"RADICAL TRANSPARENCY"? Just no. This is Harmony’s typically poor transparency and communication. Such a shame. The way the core team operates causes the entire community to lose confidence in the future of this protocol. There are too many persistent issues.

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What issues are those?

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WE ARE ALL PAINFULLY AWARE OF THE NUMEROUS DAO FIASCOES:

(But it’s much worse than everyone’s favorite “vegan dao” whipping boy):

  • For starters, who states a goal of creating 10,000 DAOs without realizing you didn’t have enough funds to actually fund all 10,000 in the first place?

  • Kind of like how Harmony agreed to pay core DAO governors $75/hr, but didn’t provide enough funding to actually pay the governors for their full term (one of the DAOs had to point this out to Harmony last year).

  • Harmony still hasn’t fully paid the term 1 VDAO governors what they are owed; the Harmony team REFUSES to complete the payment and has been ghosting those governors for months. This is well-documented on the Talk forum.

  • MORE core DAOs funding issues: Harmony froze funding for the current term, so all governors (CDAO, VDAO, etc.) have been working for free and have no idea when/if they’ll ever be paid. Except, the Ambassador DAO was funded last month. And Blu3 DAO is reportedly being funded for $150k in Q3. So why the inconsistencies?

  • Except it turns out that not all core DAOs have had their funding frozen. Ambassador DAO is still being funded. Why? Why the inconsistencies? Why the lack of communication? Why do none of these decisions make any sense?

  • Are Harmony team members allowed to be on Harmony-funded DAOs? CDAO had a poll on this (54/46). Is this a centralization concern?

  • Does it look poorly when DAOs that Harmony members are part of continue to be funded while other core DAOs have their funding paused?

  • Obviously Harmony’s funded many worthless DAOs that brought zero new users to the community and did nothing but drain funds. One of MANY such DAOs was approved for $500k USD in funding despite being on ETH and not mentioning Harmony once in their funding proposal. What? How? Harmony still has not said how this specific DAO will benefit Harmony despite numerous requests for such on Talk. Core Harmony team members are using this DAO as a personal vanity project and charity.

  • Why does Harmony have to control payments to the core DAOs? Shouldn’t the DAOs be self-sustaining/self-funding? Yes, they should be! That’s the point of decentralization. Why does Harmony refuse to take this step?

  • How do you create a whole bunch of DAOs and not give them the initial start-up funds to be self-sustaining? Why was that not one of the very first milestones? Why did Harmony not build out the multi-sig wallet infrastructure to allow DAOs to stake their funds with a validator in order to earn rewards and be self-funding?

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THE COMMUNICATION:

  • It takes months for the Harmony team to reply with feasibility reviews on VDAO matters.

  • It takes months for Harmony to approve and fund bounties brought forward by its own core DAOs.

  • The shuttering of Harmony extension wallet was a bleep-show that unnecessarily created panic and confusion in the community.

  • January’s 30x increase in minimum gas fees per tx was forced on the community without a governance vote. DECENTRALIZED.

  • The Blue Metaverse was a horribly conceived, promoted and communicated marketing fail. The sad thing is, if Harmony actually had a BAYC/Yuga Labs-related project to announce, it would’ve all been worth it. But you had nothing and wound up looking like fools.

  • The community has been asking for “marketing” for as long as I’ve been in the community (> 1 year), and just now Harmony is attempting to hire people/firms for the marketing and communication roles? That level of responsiveness to the community is impressive.

  • The year-long RPC issues. My word. That is a primary function of the blockchain and it hasn’t been fixed yet? Think about all of those users who came to Harmony last year because of DFK, and then think about how unlikely they are to return to Harmony for anything else given all the constant RPC issues. There was talk last year of adding up to ~4 RPC partners similar to Pokt; what happened?! Why couldn’t Harmony and DFK figure out a way to create a DFK RPC in order to alleviate some of those issues and paint Harmony in a better light?

  • Multiple DeFi and gaming projects have either left the chain outright or have called out Harmony for the way they’ve conducted their funding and other practices. Defimons, Ragnarok, Defira/Tranquil, Cosmic Universe, MTop, and Cerebral Gaming, to name most of the notable ones. This is not how you do business. This is not how you grow the community and attract new users.

  • Recently a project was denied funding by a mysterious, internal, 3-person vote. Harmony has refused to say who the 3 people were and explain the reasoning behind their votes. Radical transparency.

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EPoS, Governance and Validators:

  • How does Harmony launch this with limited safeguards in place? Who’s idea was that?

  • By not restricting validator growth from the beginning, a validator could grow excessively large? Until HIP-16 there were no parameters in place to prevent a validator from growing large enough to completely overtake a shard and/or halt the protocol. Even with HIP-16 now in place, validators are allowed to have 6% of all BLS keys. This allows for the possibility of Harmony having only 17 elected validators. That’s. Not. Decentralization.

  • And when a validator inevitably did grow excessively large, they’d cause great risk to both consensus and governance voting? Just look at Binance validator. They currently have over 900 million ONE staked (> 16% of all staked ONE). That’s more than the next 3 largest validators combined, and more than the bottom ~112 validators combined!

  • As a consequence of the Binance problem, current governance has screeched to a halt. Despite HIP-25 receiving 99.85% YES votes, 0% NO votes, .15% ABSTAIN votes, the HIP failed because of Binance’s non-participation. This issue has been ongoing since February.

  • Governance was also migrated from gov.harmony to snapshot org. But there’s another issue with governance because snapshot doesn’t allow for the same voting options and features as gov harmony. There are multiple issues preventing governance on Harmony. It’s been over 3 months since the snapshot migration but the issues affecting governance voting have yet to be fixed:


  • Four of the 7 largest validators are run by/have ties to core Harmony team members. And there are more validators run by other Harmony contributors. I’m not suggesting any wrongdoing, but perception-wise it’s an easy target. For transparency, would all Harmony employees disclose which validators they operate?

  • Harmony promotes EPoS as a way to prevent “stake centralization”, but it doesn’t prevent it. The 10 largest validators on Harmony have 50% of all staked ONE.

stake centralization2
stake centralization

  • EPoS incentivizes elected validators to lower their effective stake by acquiring additional BLS keys. Among other things, there is an aspect of security that this provides to the network. However, it also has the consequence of limiting the total number of elected validators. Elected validators, whether intentionally or not, are able to block new/small validators from being elected. Issues related to this have been discussed on the Talk forum for over 2 years: Discussed in May 2020. And discussed in March 2021. There have been countless other discussions on here as well.

  • There has been zero increase in the number of elected validators in the last 8 months. Without Harmoforce, a grassroots group focused on supporting new validators into election, there wouldn’t have been a single newly elected (and stable) validator in MONTHS. Yes, the current market conditions play a role in the recent number of validators. But the bigger issue is how Harmony’s election process makes it prohibitively difficult for new validators to become elected, and how easily it allows elected validators to prevent any increase (whether it’s done intentionally or not).

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The community wants Harmony to have a clearly defined, coordinated vision. We want significantly more devs to build the tech. We want transparency and decentralization. We want Harmony to engage with and respond to the community’s concerns. When someone in the community creates something like the OP, don’t ignore it. We want action and follow through, not words and promises.

@lij @Jacksteroo @Sam @giv @papi @leo @sophoah @ganesha @sahil @dpagan-harmony

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There is a 10-tag limit, also tagging @rongjian

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Not to mention the total lack of communication and transparency to the VDAO. Now we have multisig staking the core team seems to have no inclination of providing the VDAO resources to help bootstrap their network - yet Harmony touts ‘decentralization’ but their actions (more inaction) is contradictory to their goals. Hopefully the team will be more transparent but I set my expectations appropriately based on their past lack of communication or transparency.

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The idea that a big validator can simply “push a button” and kick out of election a group of validators is seriously concerning. Core team needs to consider this.

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To be fair, it’s not only big validators who bid like that. But it’s easier for them because they can add more keys before having to worry about going too low and risking election. And the more keys they add, the more potential validators get knocked out of election.

For example, the Harmony Rocket validator, whom I listed in the OP, regularly partakes in this behavior despite being a smaller validator. I can only assume that Harmony must condone Harmony Rocket’s actions seeing as they continue use their company wallet to stake with them. Since it doesn’t appear Harmony is interested in addressing the questions asked.

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some proper follow up required here from the core team…

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Harmony Rocket with <6.3 million total ONE but has 3 keys. In this environment where long time validators are unelected.

But Harmony continues to stake with them! Even though Harmony’s continued support of Harmony Rocket directly contradicts the purported goal of the 200 million ONE initiative.

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