NEO Aims to Realize Network Decentralization in 2019

In October of 2018, NEO Global Development (NGD) released a technical document titled “How to Become NEO Consensus Node”, containing a detailed description of how to host and maintain an NEO consensus node.

Recently, NGD updated the document to further elaborate on plans to “promote the decentralization process.” Node decentralization is the first step towards full decentralization.

At present, the NEO MainNet has seven consensus nodes. Netherlands-based telecommunications company, KPN, and open-source community group, City of Zion, host one node each. The other five nodes are currently hosted by the NEO Foundation in various regions around the world.

The latest version of How to Become NEO Consensus Node(v1.3) includes new information on the rules and election schedules of upcoming consensus node selection cycles. After nearly a year of continuous improvements, protocol upgrades, and exploration of decentralization paths, NEO is mature and stable enough to accelerate the decentralization process. It is expected that complete network decentralization will be realized in 2019.

Governance of the NEO network currently consists of two methods: on-chain governance and off-chain governance. On-chain governance is election through the votes of NEO holders, whilst off-chain governance relies on the election through the support of the NEO Foundation. In the near term, the NEO Foundation will focus on promoting decentralization through off-chain governance. The goal is to accelerate the decentralization process in an orderly manner by delegating consensus nodes to reliable and trustworthy parties.

Aside from maintaining current consensus nodes, NEO core development, and promoting the NEO ecosystem, the NEO Foundation will vote for consensus nodes hosted by qualified parties to support the NEO network.

The rules for consensus node selection are as follows:

  1. Candidates who are interested in hosting a consensus node should first e-mail their organization information and an operation and maintenance proposal to consensus@neo.org.
  2. The NEO Foundation will review all proposals and select candidates based on their qualifications and potential contributions to the NEO ecosystem. Successful applicants will be voted in as a consensus node on the NEO TestNet.
  3. A consensus node will be eligible to be voted in on the NEO MainNet only after six months of stable operation on the NEO TestNet and will replace one of the consensus nodes currently hosted by the NEO Foundation.

Below is the election schedule:

  • November 30th, 2018 to February 28th, 2019
  • March 1st, 2019 to May 31st, 2019
  • June 1st, 2019 to August 31st, 2019
  • September 1st, 2019 to November 30th, 2019

According to the selection rules and voting schedule, we can expect a capable candidate to be selected to host a TestNet consensus node every three months, which would then become eligible for MainNet election after six months. If all goes well, NEO is expected to complete its node decentralization in 2019. Applicants who are not selected for TestNet election will have the opportunity to improve their candidacy for subsequent selection cycles.

NEO is an open-source community blockchain project. With the continuous growth of the community and an improvement in the quality and quantity of applicants for consensus nodes, it is possible to add more than seven consensus nodes to the NEO network.

To ensure optimal fault tolerance under the delegated Byzantine Fault Tolerant(dBFT) consensus mechanism, each new batch of new nodes should be added in batches of three. That is, after the first seven consensus nodes are selected, the next number of consensus nodes should be 10, then 13, and so forth. Once the seven existing consensus nodes are fully decentralized, the number of consensus nodes is likely to increase through additional selection cycles at the discretion of the NEO Foundation.

To ensure the decentralization process smoothly, NGD is building a network-wide security monitoring system. We look forward to community members participating in the NEO decentralization process, and whilst we know that there are many challenges ahead, we are not afraid to face them together.

In order to fully decentralize, the aim is for on-chain governance to be the main source of consensus node governance in the future. This will be achieved by the NEO Foundation’s continued investment of tokens into the long-term development, operation, maintenance and ecosystem of NEO. NEO token holders can vote according to the number of tokens they hold and are the network owners and managers, managing the network through voting. Therefore, as the NEO Foundation distributes tokens through ecosystem funding, the amount of influence it holds on the voting process is diminished.

We quote a description of the NEO decentralization process from a blog post by NEO founder Da Hongfei in March of 2018: “We have already explained to the NEO community that it will take far more than a few months or weeks to completely realize decentralization, actually it will take several years. The road is not flat and spacious, and the sea is not calm, but for the enterprising people, this is the source of happiness. Let us enjoy this journey!”

This article only describes the NEO decentralization process. For details on how to apply to host a consensus node, please refer to How to Become NEO Consensus Node v1.3 [Documentation]