Unless you are brand new to crypto, you are likely aware of the ongoing debate between Proof of Work (PoW) and Proof of Stake (PoS) as to which is a better consensus mechanism for securing a blockchain. At Nexus, we see the benefits of both and believe diversity is a strength. This is why Nexus incorporates both, leveraging multiple consensus channels to secure the state of the ledger. By diversifying the nature of our consensus structure, we avoid dependence on any one mechanism, improving our overall security.
Consensus in the Nexus Blockchain:
So what does this look like? Nexus consists of three channels, two PoW and one PoS. The first PoW channel utilizes a hashing algorithm (similar to many other blockchains) for its proof of work, while the prime channel employs an algorithm where miners are required to search for clusters of very large prime numbers, offering a unique variation of the PoW principle. Finally, the PoS channel adopts an energy efficient, simple function where the users’ mining “power” is determined by their staked balance and trust score. Though our two PoW channels are not the focus of today’s article, if you are interested in learning more about them you can check out the Nexus Mining Guide.
Why did Nexus choose to adopt a multifaceted consensus model? There are a number of advantages to this approach, but in short, it is more secure, more equitable, and provides a greater opportunity for us to adapt to future requirements. Maximalists will be quick to point out that for the time being, Bitcoin is the unquestionable king of blockchain security, and since it utilizes a PoW consensus model, many assume that means PoW is also the king of consensus. However, there are some glaring concerns with relying exclusively on PoW, without even including the common argument highlighting unsustainable energy consumption, as it will be rendered moot by breakthroughs in renewable energy.
Proof of Stake was first introduced by PeerCoin and quickly gained popularity among emerging blockchain platforms. Though heavily criticized by PoW maximalists, PoS consensus gained instant credibility when Ethereum, the second largest cryptocurrency by both market cap and network, announced plans to convert from a PoW to a PoS consensus model. However, PoS is not without flaws either and over the years has evolved into multiple variations, most notably, delegated PoS, but each variation has its own pros and cons.
Instead of being caught in the middle of the PoW vs PoS debate and hindered by either’s limitations, Nexus developers chose to implement both in order to benefit from the combined strengths, while simultaneously minimizing the flaws of each individual mechanism. In addition, Nexus implements reputation as a value, which is related to how much time a staker consistently contributes resources to the network. A mechanism called ‘Trust’ records past work to create a weighted reputation system, significantly improving overall security of the Nexus PoS (nPoS) channel,
The Nexus team is transforming these three separate consensus channels into one multi-layered processing system capable of computational data sharding. The Tritium Protocol is the first upgrade of the Three-Dimensional Chain (3DC) which is being deployed through the TAO framework.
Become a Staking Node:
From here on, we want to focus on why staking with NXS may interest you. Staking is enticing to many crypto investors because you don’t need to be a computer wiz or buy specialized hardware to be rewarded for contributing to the health of the network. However, unlike many projects that offer unsustainable rewards in order to gain attention, Nexus prefers to focus on a more practical, long-term perspective. This is why we don’t promise massive yields or unrealistic profit expectations.
By staking NXS you will be helping to support a unique blockchain network, that’s taking a sustainable approach to overcoming the failures of incumbent Digital Ledger Technology (DLT). Of course we also need to look at this from a wider view as almost all blockchain platforms feel experimental with a certain amount of ambiguity. This is why you, as a sovereign individual, must make your own decision on whether to stake or not. Our goal is to provide the information you need to make that decision as clearly as possible.
To date, the Tritium Desktop Wallet is the only official wallet software for interacting with Nexus, however the official lite node mobile wallet is currently under beta testing. You will find detailed guides on our website to learn how to send transactions, create fungible tokens, create Non-Fungible Tokens (NFTs), mine, stake and how to buy NXS. In addition, we encourage you to learn more about one of the core innovations of Nexus; Signature Chains (SigChains). These provide users an identity abstracted from the public-private key pair, which traditionally establishes ownership in crypto. In order to interact with the Nexus blockchain you must first create a SigChain after downloading the wallet, which is as simple as creating a username, password, and PIN.
Nexus Staking Rewards:
Rewards for securing the Nexus network depend on the consistency of the node. After receiving your genesis transaction, all stakers begin with a 0.5% annual reward, known as a stake rate. But as you build ‘Trust’ within the network, your stake rate also rises. It takes a year of consistent performance to reach the maximum reward of 3%. This number was chosen as a responsible balance between protecting against inflation/currency devaluation, and rewarding stakers for securing the network because it mirrors the emission rate of gold mining; gold being a globally accepted hedge against inflation. Here you can read more about Nexus economics.
To support the network via staking, you first need NXS, the native token that powers the Nexus platform. Rewards are earned for finding blocks, the first of which is referred to as your ‘genesis transaction’. From there you must continuously earn trust transactions in order to build trust and increase your staking rate. The amount of NXS necessary to ensure reliably consistent trust transactions varies due to network difficulty. Right now over 28 million NXS (more than 40% of the total supply) is being staked. However, at the moment only 100 nodes have achieved a 3% staking rate while approximately 300 staking nodes are in consistent operation. The current difficulty for staking is rather high, so a balance of approximately 17,000 NXS is necessary to build and maintain trust for continuous staking rewards.
What About the Little Guy?
We realize acquiring so many NXS may not be a viable option to many, which is why we have been hard at work developing a new consensus upgrade known as ‘pooled staking’. Unlike traditional ‘staking pools’ where you have to trust your funds to someone else, with Nexus, you retain possession of your funds. Also unlike delegated stakes, where only the delegate builds trust, our pooled staking design allows individuals with as little as 1 NXS to securely “pool” their stake with other nodes, increasing their collective weight and chances to find a block to earn a trust transaction. Block rewards are split proportionally to each staker’s contribution to the pool. In other words, this allows people with any amount of NXS to continuously build trust, which will play a significant role upon the future release of the DAO (Decentralized Autonomous Organization). Pooled staking is “code complete” but still requires more testing before its public release.
As a community, we strive to take a balanced approach towards progress, and we hope you’ll join us in supporting the robustness of the Nexus network. Our three-pronged approach to consensus (Hash PoW, Prime PoW, & PoS) enables Nexus to be more secure, more equitable, and provides a greater opportunity for us to adapt to the needs of the future. If you have any questions about the design or suggestions for potential improvements, we welcome mannered, critical discourse. Reach out on telegram, slack or contact us via our community twitter.
Resources
Nexus Blockchain Explorer: Network Statistics
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