This guide addresses as many questions you might have about NCOG as possible. Please refer to this NEC section before asking questions on Discord. If your question is still unanswered, please reach out to us through the chat function in our website after login or join our Discord.
General questions #
What is a consensus algorithm? #
A consensus algorithm is a mechanism to reach agreement among nodes in distributed networks. It removes the need for a central authority and allows the whole network to agree on data and the ordering of events in a trustless way.
Nodes participating in the network maintain an exact copy of the ledger, allowing applications built on top of the consensus protocol to function correctly.
What is BFT? #
Byzantine Fault Tolerance method has been used as a consensus mechanism. It works well with asynchronous systems, with a time limit on when your request will be granted! BFT was created with minimal overhead in mind, and its application areas include distributed computing and blockchain technology. That means it’s ideal for answering inquiries about how blockchains function or what they’re used for.
Practical BFT allows nodes in the network to confirm event blocks containing transactions without depending on any timing assumptions. This makes the confirmation of transactions by the network faster, without compromising security or decentralization. When a transaction is confirmed by the network, it achieves complete finality and can’t be changed nor reverted. BFT consensus reaches agreement on transactions even when some of the messages between nodes are lost, which makes the network more resilient
Blockchains such as Ethereum and Bitcoin are synchronous, meaning that transactions are appended into blocks, one at a time. They follow the longest-chain rule in which the chain with the most number of blocks determines the final ordering of events. Transactions in earlier blocks have a much higher probability of being part of the final ordering of events compared to more recent transactions. Therefore, these networks require multiple confirmations to ensure that a transaction is permanently part of the blockchain. This behavior leads to a slower confirmation of the transactions than in BFT consensus.
What is finality? #
Finality means that a transaction cannot be changed or reversed by any party. BFT consensus algorithms such as Forest have a very low time to finality because they achieve absolute finality. Absolute finality means that a transaction is considered final once it is included in a block.
In the case of NCOG, Photon Chain can accomplish finality in 1 to 2 seconds. TxFlow can achieve finality in less than a second.
Conversely, Nakamoto consensus protocols rely on probabilistic finality. In this case, the probability that a transaction won’t be reverted increases with time. The more blocks that are created on top of a block, thereby confirming it as correct, the more difficult and costlier it would be to revert a transaction in that block. At some point it becomes theoretically impossible to alter older blocks, increasing the probabilistic finality to near 100%.
Bitcoin has finality of 30 to 60 minutes; when using Bitcoin you have to wait a few block confirmations before considering the transaction final and irreversible. Ethereum has a finality of a few minutes.
What is TxFlow? #
TxFlow is an BFT middleware protocol designed for responsiveness. It runs together with a traditional consensus algorithm such as Forest, which guarantees network security.
What is finality? #
TxFlow can achieve sub-second latency, which makes it ideal for any application that requires instant confirmation. Check the github and the TxFlow introduction
What’s the purpose of the NEC token? #
The NEC token has a number of use cases within the NCOG ecosystem. It plays an essential role for a well-functioning, healthy network.
1. Securing the network #
NCOG uses a Proof-of-Stake system that requires validators to hold NEC. Anyone with at least 1,000,000 NEC can run their own validator node to earn epoch rewards and transaction fees. Every NEC holder has the option to delegate their tokens to a validator (while keeping full custody of their funds) to receive staking rewards. Validators then take a small fee for their services.
By locking in their NEC, validators help the network to be decentralized and secure.
2. Paying for network fees #
To compensate validators for their services and prevent transaction spam, every action performed within the NCOG network costs a small fee. This fee is paid in NEC.
3. Voting in on-chain governance #
Decisions regarding the NCOG ecosystem are made using transparent on-chain voting. Votes are weighted according to the amount of NEC held by an entity. Basically, 1 NEC equals 1 vote.
With NEC as the governance token, validators and delegators can vote on network parameters such as block rewards as well technical committees and so forth.
4. Additional use cases #
NEC is used as a collateral on the NCOG DeFi suite
How can I stake NEC? #
Check out this guide
Can I stake NEC on exchanges like Binance? #
You can’t stake NEC on exchanges at the moment
