TVL drops from one billion to one million US dollars, former employees and developers expose the inside story of Harmony's downfall
The former contractor of Simple Rules Company, the development company behind the emerging public chain Harmony, has come forward to accuse the co-founders Stephen Tse and Li Jiang of improper conduct and mismanagement. According to DL News report, five former team members and developers of Harmony have made multiple allegations.
Table of Contents
1. TVL Plunges by 95%
At the beginning of last January, Harmony's TVL reached a record high of $1.42 billion, but now it's down to just $7.79 million, with the token price at $0.37 then and $0.024 now.
The well-known DeFi game, DeFi Kingdoms, had initially provided significant support to the Harmony ecosystem but is now planning to move to other public chains.
Many attribute the collapse to the cross-chain bridge being hacked for around $100 million last June, but former members and developers believe that Harmony's leadership is the root cause.
2. Bizarre Employee Management: Mandatory Daily Basketball
Former employees accuse Stephen Tse:
He would close employees' laptops during work hours and force them to play basketball for over an hour daily, regardless of how busy or efficient they were.
Former employees also revealed many anecdotes:
Stephen Tse would grab employees' hands, move them around as if playing chess, or criticize a particular employee in front of colleagues.
He would intrude and ask employees, "You have a few minutes, any questions for me?" If none, he would express disappointment and expect the employee to come up with questions a few minutes later.
He would abruptly demand employees to say or ask something, requesting them to tell a story that would make him cry.
Full-time employee status was not provided to team members; instead, contracts were signed. Former contractors accused them of severe overtime and lack of benefits like vacations.
3. Stephen Tse Assaulted in Office
Around July 5th last year, Stephen Tse was allegedly punched in the nose by Hochung Nam, co-founder of 1wallet, for failing to fulfill a $250,000 donation commitment.
Anonymous sources claim that 1wallet ended up receiving less than $100,000.
4. Poor Treasury Management: From a Billion to Fifty Million
Several anonymous sources state that Stephen Tse's inability to pay has reasons behind it, as poor financial management has left Harmony with very little funds.
On-chain data shows that Harmony's treasury is entirely composed of its native token, ONE, never holding stablecoins. The USD value has dramatically dropped from a billion during the bull market, considering ONE's liquidity, the actual value is definitely below $50 million.
5. Excessive DAO Incentive Issuance
Previous reports highlighted Harmony's excessive issuance of ecosystem incentives, with Stephen Tse seemingly overly obsessed with funding DAOs. He mentioned during a speech at the 2022 Ethereum ETHDenver Developers Conference:
We will not only allocate governance and treasury funds to 10,000 DAOs, but we also realize that DAOs are the correct structure to sustain the future.
Several developers tried to dissuade Stephen Tse, and both Harmony co-founders pledged to invest $50 million each into various DAOs to establish the Harmony ecosystem.
Upon discovering that the threshold for applying for ecosystem funds was very low, many DAOs received six-figure funding by just drafting governance proposals. A former Harmony employee responsible for review stated:
At one point, we had to pull in 100 DAOs a month because Stephen believed more DAOs were better, but in my view, he didn't truly understand what DAOs were.
Another former employee mentioned that funded DAOs lacked evaluation criteria and were often projects favored by the two co-founders.
The most controversial was Blu3 DAO, an autonomous organization aimed at bringing more women into the Web3 space. They released a proposal on 2/18 last year and received $1 million in funding in less than 24 hours.
Core members of Blu3 DAO stated to DL News that they are no longer official partners of Harmony.
6. DeFi Kingdoms, a Well-Known Game, Jumps Ship
Harmony's excessive fund issuance further jeopardized ecosystem development, with projects previously promised funding by the two founders, like DeFi Kingdoms, being neglected, ultimately leading them to abandon Harmony.
Bolon Soron, a director at DeFi Kingdoms, stated:
For several weeks, our communication with the Harmony team has received no response. These various DAOs seem to be of great interest, while communication and technical collaboration with Harmony seem increasingly difficult, and they have not fulfilled donation commitments made several months ago, showing no intention of making alternative arrangements.
Co-founder's Response
Li Jiang told DL News that he strongly disagrees with the above accusations:
This sounds like a story fabricated by a former Harmony employee who is currently working under a competitor's umbrella out of dissatisfaction.
He emphasized that Harmony's main issues stem from the Horizon cross-chain bridge being hacked last year and the impact of events like Terra, 3AC, and FTX collapsing.
I will persevere with Harmony to return to prosperity. Recently, we have hired 10 full-time employees, including Ethereum ecosystem developers and students from schools like Berkeley. The roadmap has also been expanded to focus on scalability and user adoption, and we are concentrating on building.
Harmony had eight co-founders in 2018, but now only Stephen Tse and Li Jiang remain.
All former employees interviewed by DL News declined to disclose their names, with one stating, "Stephen Tse is someone who loves to sue."