Nervos Network

What is Nervos Network (CKB)?

The Nervos Network is an open-source public blockchain ecosystem and collection of protocols that create the foundation for a universal internet-like public network.

Early internet applications lived on segregated networks needing different ways to access and interact. With decentralization, this is again apparent, with different ecosystems forming without significant interoperability.

The Nervos Network attempts to solve this problem by offering a suite of integrated solutions that allow developers to build Universal apps. This means access to any asset on any blockchain, operating dApps (decentralized applications) from any wallet, and coding with true flexibility.

Who are the Founders of Nervos Network?

Nervos Network was co-founded by Terry Tai, Kevin Wang, and Daniel Lv in 2018. The project boasts 60 core developers in a team of over 86, with representation from 14 countries.

Tai is well-known as the co-founder of Teahour.fm, one of China’s most popular tech podcasts. Wang co-founded Launch School and previously worked at IBM, while Lv also co-founded ruby-china.org and KOL.

How Does Nervos Network Work?

Nervos is a layered network purpose-built to support the needs of the decentralized economy. This design approach was chosen because, rather than solve challenges and trade-offs like the “blockchain trilemma” with a single chain, the Nervos team can address different concerns at different layers.

Therefore, the Nervos Network has a layer 1 protocol called the Common Knowledge Base (CKB), which serves as the value preservation layer of the entire network. It is inspired by Bitcoin and is an open, public, and proof-of-work (PoW) based blockchain designed to be secure and censorship-resistant.

This layer 1 blockchain is the decentralized custodian of value and crypto assets, and layer 2 protocols can leverage its security. Thus, these layer 2 protocols can focus on unbounded scalability and minimal fees and also allow for application-specific trade-offs regarding trust models, privacy, and finality.

Nervos refers to “Common Knowledge” as what is known to everyone or really everyone. In the context of the Nervos Network, common knowledge refers to a state verified by global consensus and accepted by all network actors.

The Nervos CKB stores all kinds of common knowledge, not just money. It can store user-defined crypto assets, such as fungible and non-fungible tokens (NFTs), as well as cryptographic proofs that provide security for higher-layer protocols.

Nervos CKB has full smart contract capabilities similar to Ethereum, but its economic model is designed for common knowledge preservation rather than payment for decentralized computation.

The Nervos virtual machine, thanks to its low-level nature and usage of RISC-V tooling, makes it possible to compile down other VMs, such as the Ethereum Virtual Machine, directly into the CKB-VM. This makes Nervos uniquely interoperable since smart contracts running on any other VMs can easily be ported to the CKB-VM.

How is the Nervos Network Network Secured?

Nervos CKB uses a consensus mechanism derived from Bitcoin’s Nakamoto consensus. It retains most of the merits of Bitcoin but addresses two perceived drawbacks in the form of low throughput and vulnerability to selfish mining attacks.

The algorithm used by Nervos CKB measures connectivity across the network using the blockchain’s orphan rate, or the percentage of valid blocks that are not part of the canonical chain.

A fixed orphan rate is targeted by the protocol. If the orphan rate is low, target difficulty is lowered, thereby increasing the rate of block production. If it’s high, the target difficulty is increased, and block production rate reduces. This allows for the utilization of the network’s entire bandwidth capabilities.

The Nervos CKB consensus protocol also eliminates the block propagation bottleneck by modifying transaction confirmation into a two-step process.

Transactions must first be proposed in the “proposal zone” of a block. It will then be committed if it appears in a block’s “commitment zone” within a defined window. This also creates a very limited time window for attackers, eliminating de facto selfish mining. As a result, Nervos miners are compensated with both block rewards and transaction fees.

What is the Use of CKB?

CKB, or the “Common Knowledge Byte,” is the native token of the Nervos CKB. Also called CKByte, these tokens entitle their holders to occupy part of the total state storage of the blockchain. By holding a certain amount of CKB, a user can create a cell with that many bytes of capacity or multiple cells adding up to that same number of bytes of capacity.

This occupation of storage by a user actually creates an opportunity cost to CKByte owners since they then can’t deposit occupied CKB into the Nervos DAO to receive a share of secondary issuance.

Therefore, users are actually incentivized to voluntarily release state storage to meet network demands. When they do so, they receive an amount of CKB equivalent to the size of the state their data was occupying.

As mentioned, token holders can also deposit their CKB into the Nervos DAO and receive a portion of secondary issuance that is designed to exactly offset inflationary effects. This is often referred to as an “inflation shelter.”

How Much CKB is In Circulation?

The genesis block of the Nervos Network contained 33.6 billion CKBytes, 8.4 billion of which were burned immediately. New issuance is subject to a halving schedule similar to that of Bitcoin, meaning that the amount issued is halved every four years or so. Its circulating supply is currently over 33.3 billion CKB.

The portion of secondary issuance that doesn’t go to miners or long-term holders with CKB locked in the NervosDAO goes to the Nervos treasury. These funds are directed toward supporting ongoing research and development of the protocol as well as building the ecosystem of the Nervos Network.

How Do You Buy CKB?

You can buy CKB on a variety of cryptocurrency exchanges. It is often traded against stablecoins like USDT, but you can also use BTC to buy it.

How Do You Store CKB?

Nervos has several wallet options for CKB tokens, including the native network wallet, Neuron, the imToken digital wallet, and the Ledger hardware wallet.

Is CKB a Good Investment?

CKB is a cryptocurrency that can be used as a store of value but also provides plenty of utility. It can be used to store, execute, and even rent space on the Nervos blockchain with CKBytes.

Significant utility is key to the value proposition of a token like CKB, and it will no doubt be a big beneficiary as Nervos itself continues to gain adoption. However, a significant amount of CKB tokens were given to private investors like Polychain Capital, Sequoia, and Multicoin Capital.

More still went to the team behind the project and strategic partners, with these three allocations totaling 34% in all. As previously mentioned, 25% of the supply was burned, meaning that these private investors and team tokens constitute far more of the token supply than their original proportions.