Nexus Docs

Decentralization and Nexus

Decentralization is often used as a general term in crypto for describing trust-less, permission-less and immutable blockchains. The words Decentralisation and Web3 are used ambiguously in every blockchain. Nevertheless, the distinctions are technically significant: the consensus and topology of networks determines their properties. This article will help you decipher the difference.
The above diagram illustrates three different topologies. Centralized and Decentralized are concepts of authority, whereas distribution is a spatial concept, meaning it relates to the physical network topology. A network can be distributed, as well as being centralized or decentralized. An ideal network topology has a decentralized consensus process, with a distributed node topology.
A decentralized cryptocurrency network is a system of many different people using computers or mining hardware, called ‘nodes’ to verify transactions. This type of network is also known as a ‘peer-to-peer network’. None of the nodes or peers have a relative authority over any other. The higher the number of nodes, the more resilient the system is to outside attack or consensus manipulation. Therefore, the more people that contribute resources to a decentralized network, the more secure, resilient, and robust it becomes.
Many blockchains market themselves as decentralized technology. However, ICOs, Security Token Offerings (STO), venture capitalist backing, corporate partnerships, and authoritative consensus implementations, all create favourable conditions for centralization.
Likewise, challenges faced by the original blockchain protocol have also led to cryptocurrencies creating ‘off chain solutions’ that require central nodes or servers. This essentially gives control back to a third-party. Similarly, blockchains that have developed ‘Delegated Proof-of-Stake’ (DPoS) consensus mechanisms have also become more centralized.

Decentralized Protocol Chain Attributes

Most believe that everything in crypto world is decentralized, but the reality is completely different. Crypto world is filled with buzzwords and marketing which creates a lot of confusion. To analyse if a project is truly decentralized, we need to look at it's attributes.
These attributes apply only for protocol or base chains:
  • No ICO or Premine.
  • Decentralized consensus.
  • Distributed physical network topology.
  • Anyone should be able to run a node without permission.
  • DAO based on-chain community governance.
  • On-chain treasury to fund the project.
  • Justifiable tokenomics, inflation and gamification (Compensation to Network actors)
  • Transactions should be Peer-to-Peer (P2P).
  • No Venture Capital (VC) direct funding.
  • No single point of centralization in the P2P chain.
  • In-built monopolistic safeguards.
  • No off-chain or Layer-2 Transactions.
  • Interoperability with chains which don't adhere to decentralization and similar security standards.
  • Normal users should be able to access blockchain solutions directly, without a third party and abstracted from technical complexity.

Nexus and Decentralization:

Nexus is designed with emphasis on connections between people and inspired by Satoshi's ethos. It is this vision which drives innovations to adhere to the decentralized authority and P2P values. We have made sure that every innovation and solution we provide maintains and furthur strengthens decentralization.
Nexus was mined into existence similar to Bitcoin and there was no ICO or premine. It has three channel consensus which consists of two mining channels Prime, Hash and one staking nPOS. This helps to balance mining monopoly with ASIC miners like on Bitcoin. Staking on Nexus is based on Trust and the time spent securing the network is calculated with a trust score and its the product of the number of staked NXS and the trust score which determines the 3% max stake rate (compensation) and if the user stops staking, the trust score decays at a ratio of 3:1. This Trust-based staking design prevents a whale from taking over the network even if he manages to own 51% of the tokens.
Nexus is run by a worldwide community and this ensures nodes are distributed all over the globe, this brings in the physical distribution of the network and makes it resilient to internet downtime in some part of the globe or some countries banning crypto.
Nexus is of the opinion that off-chain or layer-2 transactions sacrifice decentralization and to increase scalability has designed 3DC as a scaling solution for the future. Even the Nexus mobile wallet is an extension of the network using the lite node.
Nexus governance is driven by the community and has recently bootstrapped a starfish based DAO powered by the social stack. Today the DAO is not an on-chain DAO, as the design needs validation, after rigorous testing will be mathematically encoded into the blockchain with the 7.0 update later this year.
Nexus has a on-chain treasury and that is used to fund the various development activities on Nexus. The funding and expenses are transparent to the community. Nexus does not accept direct external funding and is working with a very small but effective team.
Nexus will not be interoperable with other chains and this was a conscious design decision from the team. The wallet, also known as Interface can run as a full node or as a lite node. Users can use the Interface or mobile wallet to easily create transactions with usernames or built QR code scanner. Users can also issue tokens, assets, tokenize assets, namespaces, global names and also use the template contracts to run standard contracts from the wallet itself. This abstracts the user from the complexity of blockchain, while providing all options to the average user.
Nexus is not a running a business and we are building something really unique and special, a network which people can build upon, anyone can build utility around the Nexus ecosystem and gain from the decentralized and open source nature. Network participants are compensated, which helps keep the network functioning smoothly and securely. We are also building a lot of utility in the chain which will organically increase the value of the network.