More than 2000+ crypto related projects are floating around on CoinMarketCap these days. Most of them are employing the most commonly used consensus algorithms at their core, either Proof-of-Work (PoW) or Proof-of-Stake (PoS). But more usage does not mean that these algorithms are perfect, there are still a lot of issues associated with them as of now. In order to make themselves different, many projects are trying to develop their own consensus algorithms with aims of eliminating the loopholes present in the previous ones, the PoW of PoS. Consensus algorithms carry too much importance as they ensure the decentralization aspect of a blockchain network.
One of the projects employing its own consensus algorithm is Nuls. Nuls is a project that aims to futurize and revolutionize the business and enterprise arena through the employment of blockchain technology. It employs a modified version of the PoS at its core termed as Proof-of-Credit (PoC). In order to get to know the details of the algorithm and the reason for choosing it, BlockPublisher got in touch with the Chief Executive Officer of Nuls, Liesa Huang.
Talking about the consensus algorithm, Liesa stated:
The consensus mechanism is the soul of blockchain and reaching consensus is the basis of blockchain. It is hard to balance the degrees of decentralization, security and high efficiency. NULS maintains the balance among these factors successfully. The mainstream consensus mechanisms all use existing ledger data to determine which node gets to generate a block or keep accounts at some time, so as to maintain the consistency of the whole system.
Regarding PoC, Liesa added:
NULS uses the POC (Proof-Of-Credit) consensus mechanism, which we invented. The basic requirement to create a node is to hold 20,000 NULS tokens. The main reason for setting this basic requirement is to prove that the agent wants to maintain the NULS network well. The stakers vote for the agent with his/her NULS tokens and participate in consensus according to the credit values and influence of the agent, and stakers get the commission accordingly. If the quality/credit of the agent node drops, the staker can unstake any time and give their vote to another agent node by staking there instead.
In order for creation of a node in the Nuls network, the user has to hold atleast 20,000 tokens. After the creation of the node it is upto the stakers to choose if they want to stake on a particular node or not.
Liesa further added:
The POC mechanism perfectly inherits the security and high efficiency of DPOS, and it solves some other problems too. For example, the system would automatically figure out the behavior of “mischievous” nodes and execute punishment. We’ve also solved some common problems like low participation with voting and inadequate motivation to participate. In the POC consensus mechanism, stakers are able to vote and receive commission just like agents do. To a certain extent, it ensures that people will choose nodes with high credit and better quality.
PoC essentially solves the issue of lack of participation of nodes in the network. Nodes that are not healthy for the ecosystem are automatically eliminated out of the network as the stakers hold themselves back from staking on these nodes because they also get commission. So, overall, PoC is a PoS-based algorithm with certain modifications to ensure a healthy ecosystem.