Developers and users across the world are excited for a fundamental shift in NEO’s underlying governance structure. Earlier this year, the team announced it would gradually allow organizations to set up consensus nodes, following a guide called ‘How to Become a NEO Consensus Node’, opening up the ecosystem to a wider community of passionate NEO users and builders.
So far, NEO’s ecosystem has been operated with seven consensus nodes, all of which were controlled by the NEO Foundation. In July 2018, the team announced it would accept the ecosystem’s first independent consensus node operated by the City of Zion.
The City of Zion is a group of independent open source developers spread across the world. The team has worked on creating a NEO wallet (NEON), a NEO block explorer (NEOScan), and a monitoring tool (NeoMon). The fact that CoZ was the first group the NEO team selected indicates they prefer experienced technical players with a track record of helping the NEO community to become consensus nodes in this initial stage.
“NEO is embarking on its next phase, which will see far more public involvement in efforts of greater decentralization,” said Peter Lin, Director of Research and Development at NEO Global Development.
However, the process is delicate and must be closely monitored to ensure a smooth transition. The team has already developed a new security monitoring system to support the network over the next few years, as users from across the world apply to become consensus nodes.
The application process for consensus nodes also involves a pre-screening and approval process managed by the NEO Foundation. The team will decide the eligibility of each application every three months. Their published schedule is as follows:
30th Nov, 2018 – 28th Feb, 2019
28th Feb 2019 – 31st May, 2019
31st May, 2019 – 31st Aug, 2019
31st Aug, 2019 – 30th Nov, 2019
Successful applicants will have to spend six months on the testnet before moving onto the mainnet. According to NEO’s economic framework, consensus nodes can jointly set the transaction fees for transactions on the network. The amount collected through transaction fees will be distributed between consensus nodes. This effectively makes consensus nodes miners with an economic incentive that is closely tied to the success of the NEO project
There is little doubt that the economic and technical incentives of becoming a consensus node on the world’s 18th largest blockchain network by market capitalization will attract a swathe of new developers, investors, companies, and institutions to the platform. As the decentralization strategy forges ahead, NEO’s ambition of becoming a smart economy will get one step closer.