What is NULS AI POC?

POC (Proof of Credit) is an innovative consensus mechanism uniquely developed by NULS AI. It integrates the advantages of DPOS and POS while introducing a credit system. Compared to DPOS, POC offers a more flexible node election mechanism and a higher degree of decentralization. In contrast to POS, POC achieves greater efficiency and simpler, clearer algorithmic logic. The goal of POC is to establish a high-performance, decentralized, inclusive, fair, and universally rewarding consensus mechanism. Currently, the NULS AI network is maintained and managed by 107 consensus nodes. Its workflow is as follows:

A. Consensus Node Election

Nodes participating in block packaging and validation in POC are referred to as consensus nodes.

1. How to Create a Node?

• Anyone can create a node with a low entry barrier: locking a deposit of 200,000,000 NAI or more.
• The deposit must fall within the range of 200,000,000 NAI to 2,000,000,000 NAI. Amounts outside this range are invalid. Deposits are locked upon transaction confirmation and can only be unlocked after the node is terminated.
• Nodes do not expose their server IP addresses, reducing the risk of targeted attacks.

2. Parameters for Node Creation:

• Creator Address: Owns the authority to terminate the node (private key must be securely stored).
• Packager Address: Used for signing blocks (must be accessible by the running node).
• Reward Address: Receives consensus rewards (defaults to the creator address if unspecified).
• Node Name: Automatically derived from the creator address’s alias or the last 8 characters of the node ID.
• Deposit Amount: Must meet the specified range (200M–2B NAI). Deposits also yield consensus rewards.
• Commission Rate: Percentage of staker rewards claimed by the node (e.g., 10% commission deducts 10% from staker earnings).

3. Node Participation in Consensus

• Newly created nodes enter a “Pending Consensus” state.
• To join consensus, a node must accumulate at least 2,000,000,000 NAI in stakes, with a maximum stake cap of 20,000,000,000 NAI per node. This balances decentralization with network performance.

4. Staking Mechanism

• Staking requires a minimum of 20,000,000 NAI (adjustable via community governance).
• Staked funds are locked upon transaction confirmation and unlocked upon node termination or voluntary withdrawal.
• Stakers earn proportional rewards and may withdraw their stakes at any time.

5. Terminating a Node

• The creator address can terminate a node at any time.
• All staked funds are unlocked immediately, while the node deposit is released after a 3-day waiting period.

B. Node Operation Rounds

NULS AI POC organizes block production into rounds. For example, with nodes *a*, *b*, *c* and a 10-second block interval:

Round 1: Starts at *1970–00–00 00:00:10* and ends at *1970–00–00 00:00:40* (3 nodes × 10-second intervals).

1. Block Production Order

• The order is determined via pseudorandom calculation:
• Concatenate the round’s start timestamp with the packager address’s bytecode.
• Compute the SHA-256 hash of the concatenated result.
• Sort nodes based on the hash to determine the block order.

2. Yellow/Red Card Mechanism
POC enforces penalties for malicious or unreliable nodes, ensuring network security (assuming <50% malicious nodes).

Yellow Card:

• Issued when a node fails to produce a block (e.g., due to downtime, desynchronization, or local forks).
• Mitigation: Improve server/network performance, open ports, monitor node health, and update software.

Red Card Triggered if:

• Node credit score drops to -1 (due to prolonged downtime).
• Node attempts to fork the chain (e.g., producing conflicting blocks in the same height).
• Penalties: Permanent ban from creating nodes, locked deposit for 60 days, and exclusion from consensus.

Credit Score Calculation:

• Formula: *Credit Score = (Number of Valid Blocks in Last 100 Rounds — Yellow Cards) / 100*.
• Range: 1 to -1.

C. Reward Distribution

1. Consensus Rewards

• Rewards comprise transaction fees (minimum 10 NAI/KB) and annual inflation rewards (50B NAI/year ≈ 15,854.896 NAI/block).
• Rewards are distributed per round based on node weight (sum of deposit + stakes). Each node’s share is proportional to its weight relative to the total network weight.

2. Inflation Mechanism

• Initial annual inflation cap: 50,000,000,000 NAI.
• Post-community vote (June 2019), monthly inflation decreases by 0.41%, ceasing when total supply reaches 21,000 billion NAI (expected by July 2064).
• Actual inflation may be lower due to missed blocks (unclaimed rewards are burned).

3. Credit Score Impact on Rewards

• Nodes with a credit score of 1 receive rewards proportional to their weight.
• Lower credit scores reduce a node’s weight, decreasing its reward share while increasing other nodes’ shares.

4. Choosing Nodes for Staking

Prioritize nodes with high credit scores and stable performance to maximize returns.

Final Note:

Transactions on the NULS AI network are executed sequentially based on their submission order, inherently establishing a robust anti-MEV Bot mechanism.

Certain parameters of this mechanism are optimized through the NIP (NULS Improvement Proposal) framework.

This document reflects the latest parameter specifications as of its publication date.

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