Self-esteem is a judgment we make about our own worth.
If we judge ourselves to be valuable, we will have pleasant feelings about ourselves, if we judge ourselves to be worthless, we will have unpleasant feelings about ourselves. Pleasant feelings about ourselves are an important component of a state of happiness.
Negative self-criticism of ourselves evokes unpleasant feelings. High self-esteem is an effective defence against negative self-criticism because it generates pleasant feelings about ourselves.
Because of its ability to provide protection against negative self-criticism, self-esteem has long been seen as a cure for most psychological disorders. Today, however, it is clear that self-esteem is a controversial and double-edged weapon. We understand this best when we consider that we generally feel good about ourselves when we are above average in the qualities that are important to us. It is impossible for all of us to be above average, so if we base our positive self-perception on being above average, we are building on sand: we will often experience unpleasant feelings about ourselves. In addition, when we consider others to be worse than ourselves, in order to maintain our self-esteem we isolate ourselves from them, thus having the opposite effect to what we want. This isolation makes us feel even more uncomfortable.

Happiness is not related to the positive self-judgement (the intellectual component) that produces high self-esteem, but to the pleasant emotions (the emotional component) that the judgement evokes.
If we want to be happy, we should look for a psychic phenomenon that can induce pleasant feelings about ourselves without such a judgment. This is where the role of self-compassion comes in.
Compared to self-esteem, self-compassion proves to be solid ground. A self-compassionate person has pleasant feelings towards himself regardless of his performance and the measurement of his abilities in relation to others. We can feel compassion for ourselves whether we have successes or failures, whether we are above average, average or below average. Our self-compassion is based on our human dignity, which is absolutely unconditional. This does not mean that we should not strive to improve our abilities or to do well in different areas of life, but it is worth striving to ensure that the way we feel about ourselves does not stem from these external aspects. Moreover, if our feelings about ourselves are determined only by our performance, then all the things that have been our greatest pleasure in life start to feel like hard work, and what was pleasure becomes pain because we want to do well at them and are no longer doing them for themselves but for the performance they achieve.

In terms of emotion regulation systems, we can say that our emotions about ourselves come from the red system for self-criticism, the blue system for self-esteem, and the green system for self-compassion.
When we are critical to ourselves, when we experience an internal threat, our red system is activated and unpleasant emotions appear. When we are in the drive to achieve, our blue system is activated. When we are unconditionally accepting and tender with ourselves, our green system is activated. Each of these three has its own reason for being, but we are in healthy balance when, in the long term, our green system determines our emotions and regulates the functioning of the other two systems.
For our emotions about ourselves, pleasant emotions can come from both the blue and the green systems, and it is often not easy to distinguish between them.
When we fail at something or prove to be less than our fellow human beings, our red system is activated. This is when we find out that our pleasant feelings about ourselves are mainly coming from the blue or mainly from the green system. The pleasant emotions of the blue system are easily overwhelmed by the unpleasant emotions that arise in the context of failure, but the pleasant emotions about ourselves, regulated by the green system, can also prevent us from being pulled down by the whirlwind of disappointment and self-criticism in the face of failure.
We can ask ourselves what is the source of our pleasant feelings about ourselves.