The biggest weaknesses of NKN

I’m a long term token investor (not miner) simply because I believe in the fundamentals of this project. I have enough coins in this project to buy a house, but I’ve never sold a single one. However, I think it suffers from certain drawbacks largely stemming from its origins as a nerd coin. Hopefully this will spark some discussion about we might more effectively grow the community.

First of all, if sparse random consensus is so fast (and it seems like it should be), then why is NKN being more or less exclusively marketed as a network service token? Yes, network services are an obvious application, but if the latency and transaction costs are so low, then we should think of it as a form of money, and moreso than any slower coin such as Bitcoin or Ethereum 2.0. Much has been made of how proof-of-work is more secure than proof-of-stake, but that’s like saying a 1000-digit random password is more secure than a 500-digit random password; the distinction is irrelevant in light of plausible adversaries.

You might be tempted to point out the recent hackathon products, such as nRide. They’re inspiring and serve to illustrate where the token could go. But they’re also an indication that NKN has been improperly branded from the getgo. We should think of it as money – full stop – which just happens to have immediate utility in the network optimization area.

The second major problem is social in nature. We’ve seen the number of network nodes grow and shrink, then grow again, in fits and starts, month after month. I suspect this is due to the abysmal economics of NKN as a network token; it takes amateur miners some time to realize this. In its early days, Filecoin had the same problem: the token compensation was far too small to adequately compensate storage nodes for their services. However, as awareness of the project grew (thanks largely to an expanding social footprint on multiple platforms and listing on multiple exchanges), it appreciated enough to create a truly sustainable ecosystem. The only thing preventing NKN from achieving the same breakthrough is its tiny and awkward media presence, largely here on this forum.

The difference between successful meme coins (such as Shiba Inu and Dogecoin) and NKN could hardly be starker. To a certain extent, this is a good thing because we don’t want the project management to be overrun by coin shillers and salesmen. But we can learn from their success. Meme coins have major cryptocurrency analysts covering them on YouTube because their armies of fans contact those analysts. They have a massive presence on Twitter. (Even the detractors sometimes help to improve the ecosystem.) They have Facebook groups, TikTok videos, Telegram channels, etc. Social media is a mountain of garbage. But as much as it pains me to admit this, it’s also how revolutions are born, and NKN is a revolution desperately wanting to happen.

What do people think about these issues?

Hi Fred, I am glad someone raised this issue and I think it’s important that we think of ways to grow the community. But I disagree on some points.

But they’re also an indication that NKN has been improperly branded from the getgo. We should think of it as money – full stop – which just happens to have immediate utility in the network optimization area.

I disagree with this statement. Before NKN and similar projects, the impossibility of establishing direct p2p communication between mobile devices (including IoT) without relying on centralised solution was a major hurdle preventing the development of truely decentralized apps. To me the consensus algo is an implementation detail (still super cool though) and the token derives it’s value only from the demand for the services that are provided by the network. I don’t think NKN should divert its efforts to concentrate on competing on the distributed ledger/money turf with the miriad of other coins outhere. It is so much more than that, and maybe that’s where we need to focus branding efforts. How to explain to crypto enthusiast why NKN’s overlay network is very important for Web3?

I think if we want to grow the community, we need to attract more developers to start building on top of NKN, even just for fun. That’s how other networks bootstrap a community. For that, I think the NKN foundation should invest more in supporting projects. Projects like Ethereum and Cosmos have given out many grants which gave birth to many little companies that went on to built a lot of stuff and eventually became a massive ecosystem, thereby driving the value of the underlying token. The Hackathon was a good initiative, but there was no follow up in terms of funding or supporting the participating projects.

Also, it’s great that the core NKN dev team has its head down, working hard on the codebase, but someone needs to think about all the other devs out there who are eager to participate in one way or another, for fun and profit.

There are definitely enough nodes out there to support more apps and activity on the network. In my opinion, the sustainable way to reach a point where mining becomes financially interesting is to boostrap a community of developers, apps and users that will bring more traffic and push transaction fees up (they are still at 0 now, which indicates that there is no competition to get transactions included).

Pumping the token on social media might work in the short term, or might even help spark this bootstrapping thing, but it is by no means a substitute to attracting manpower on the project.

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Hell of a lot of good points made there.

To be honest I have been mining NKN for a while, used to have a lot of nodes, now have a few but the vast majority of my portfolio is Cardano and has been since a few years ago (yeah I was looking for the next great thing after somehow missing out on Bitcoin entirely early on and glad my judgements at the time are proving to be correct).

However, I still really like this project but my biggest gripe is that I can’t do anything with the Mainnet Tokens I mine apart from a few times a year when I can swap them for ERC-20 tokens but only if I have enough, so if I just want to cash out $50 or $100 from mining I may have to wait until I have substantially more before I can swap. I’m sure I’m not alone here but imho, this project really takes off when you kiss goodbye to Ethereum and Mainnet NKN can be traded on exchanges.

“impossibility of establishing direct p2p communication between mobile devices (including IoT) without relying on centralised solution was a major hurdle preventing the development of truely decentralized apps” – Clearly there is such a thing as IP-to-IP, so I’m afraid I’ve missed your point.

How is it that sparse random consensus isn’t revolutionary and therefore amenable to the establishment of a currency? Bitcoin’s revolution was proof-of-work. Ethereum’s was proof-of-stake. Solana’s was clock-from-hash. NKN’s is sparse random consensus, which should have the highest block retirement rate of any major coin, so it’s not “just another trivially different algorithm”. Besides, we don’t need to convince everyone to dump everything in favor of NKN; just provide another compelling altcoin to use as money. If you start with the assumption that NKN is a network token first and everything else second, then there is little reason to invest in it at all, unless you happen to be Netflix or Disney. I might as well invest in prepaid phone service cards from AT&T. I don’t deny that NKN is well suited to the purpose, but it needs to grow to the point where it subsumes this role rather than being driven by it. There is nothing about sparse random consensus which makes this untenable. Or am I mistaken?

“How to explain to crypto enthusiast why NKN’s overlay network is very important for Web3?” – Right now, it’s not, precisely due to the lack of network congestion at the moment, as you pointed out. So don’t bother trying. Instead, explain why it’s a better currency than anything else on the mainstream radar.

“if we want to grow the community, we need to attract more developers to start building on top of NKN” – This won’t happen if we keep beating the “network optimization” drum. Nobody cares that much, frankly, because again, networks aren’t that congested. (This situation won’t last. Eventually the world will be clogged with IoT traffic, but it’s hard to compel developers to move in anticipation of that abstract future reward. Much easier to say “this is better money, so build on it, and customers will come”.)

“it’s great that the core NKN dev team has its head down, working hard on the codebase” – It’s good, but it’s not so great. NKN has its technical shortcomings, but they would be better off focussing on the community than optimizing the latency down by another few percent. This is how Yearn Finance exploded, for instance. The lead dev is a brilliant guy in the DeFi space, but he was constantly engaged with users and developers on what needed improvement. He wasn’t sitting there trying figure out how to get another 0.1% return all day. Introversion only gets you so far in engineering. It works early on when nobody will listen and you have to produce a proof of concept, but it’s unhelpful when it comes time to grow a grassroots revolution.

“Pumping the token on social media might work in the short term” – This is true, but I don’t advocate pumping. An army of greedy morons will emerge from the woodwork and do that for you, with zero liability to the core team. All I advocate is raising awareness, as in “Learn why this token is a technical game changer!”, not “Buy this token!”. The moron army will show up and take it from there. Correct, they won’t directly contribute to long term price appreciation because they think in terms of days rather than years, but they will put NKN on the map for major crypto social media influencers and their followers, who could then go on to expand a useful ecosystem. Seriously, who hasn’t heard of Gamestop or Dogecoin now? They’re household names, and they can raise money to fund development or ecosystem growth very easily. They got there because of idiots shouting “To the moon!” and “Buy the dip!” all day. Useful idiots may be idiots, but they are indeed useful. But the idiots who hold might not be so foolish, after all. I hope to be one of them if NKN can overcome these existential issues.

Finally, I realize that my tone is confrontational. It’s borne of frustration with a great coin that has been held back by an obsession with protocol engineering at the expense of social engineering. Don’t read this like I’m angry at you. I’m angry about the situation and I want to put your assertions to the test. Maybe there’s a serious flaw in my thesis. Let’s see, but it’s not a good sign that I signed up here just a few days ago and yet the username “Fred” was still availble LOL!

“used to have a lot of nodes, now have a few” – Ah ha! This echoes what I’ve observed about the NKN node count, which swings back and forth wildly from month to month. Why did you reduce your node count at all? And if you did, why didn’t you shut them all down? What makes one node better than another, especially if they’re run by the same person with presumably the same infrastructure?

I wonder if part of the node churn is also due to the advantages and disadvantages of certain geolocations. I take it that there’s no quick and easy way to determine which geos are the most profitable. If there were, then we could reduce the waste and frustration due to setting up unprofitable nodes, only to earn blowback from miners disgusted with their lack of profits. (It’s clear from other threads that router performance is also a big differentiator, but surely geo plays a role, and yet that role appears to be opaque with respect to profit.)

“I can’t do anything with the Mainnet Tokens I mine apart from a few times a year” – So I’ve read. This situation is just embarrassing, even for a “small” token like NKN. If there’s no way to unify both tokens at this point (and realistically, there isn’t, because NKN needs to be super efficient, but the exchanges live on ERC20 at this point), then at least it’s worth opening the window more often (probably in an automated fashion) and ultimately 24/7. This would vastly reduce economic fiction for the miners, which is probably much more important than other optimizations at this point.

Ultimately, if NKN successfully reorients itself as “money, full stop”, then we will undoubtedly be able to trade the mainnet variety on exchanges.

It was never my intention to maintain a large number of NKN nodes. I used up a bunch of free credit on Google, DO, Scaleway and some other hosts I can’t remember. I maintain a number of other virtual & dedicated servers 24/7 - 365, a few of which have a lot of spare capacity so I decided to keep a few nodes going to support the network and for a bit of trickle income.

(This turning free credit into NKN all finished a long time ago though, I’ve been running 3 nodes for 1.5-2 years now if memory serves, but for around a year or more back then I was running up to 50 nodes).

To discuss your other points a little: in my experience mining NKN, and I’m no expert, but my most successful period of mining was when I did have a high number of nodes. That sounds fairly obvious but what I mean by that is pound-for-pound or dollar-for-dollar if you like an individual node was more successful because it was within a small cluster of nodes within a subnet on the same server, on the same rack, in the same datacenter etc etc. Can’t remember what I was reading the other day, may have been in this forum but it made mention of having network neighbours with low latency increasing your chances of winning the block lottery.

Because I had a lot of free credit and multiple accounts across 5 or more big hosts I tried a lot of different locations, across every continent I could and ultimately, if I recall correctly I didn’t have much luck in Asia (inc. Australia), Africa or Northern Europe, Western Europe & USA seemed to be the most profitable. Obviously, that was all iterations of NKN ago, there have been a lot of updates to the node software since then.

In the last few months, for the first time, I went a very very long time without receiving any rewards for the 3 nodes I still maintain, 2 in London and 1 in Amsterdam. Typically these nodes had given me at least 1 reward each in a month on average and sometimes a little more. I think there were issues with version 2.1.6, maybe 2.1.5 too. Not sure on the exact timeframe but I think it was basically 2 months I went without any rewards. Now after updating to 2.1.7 a couple of weeks ago 2 of those nodes got rewards.

Recently, I actually decided to try a server in the USA again and paid for one for 2 months in San Francisco as well as the NKN cost to create a new mining address (that was an unpleasant surprise that I now had to pay to do that). Unfortunately that was throughout versions 2.1.5 and 2.1.6 in the last few months as well and I didn’t receive a single reward through that time but spent $50+ on that server. At the time my impression was that the West Coast must be a bad location but now I realise things will probably be ok there with version 2.1.7 as all of my nodes struggled throughout those last couple of versions.

But yeah, London seems to be a pretty decent location (my theory is it’s bridging the gap between nodes in the USA and Europe) and Amsterdam does well too because they imho have the finest internet infrastructure and tier 1 transit providers in Europe and amongst the best in the World.

For anyone wondering where to locate I’d love some more network neighbours in both locations so come join me :slight_smile: - I’m hosting on Leaseweb’s network but any datacenters in these two capitals will share low latency with mine and other nodes there.

“impossibility of establishing direct p2p communication between mobile devices (including IoT) without relying on centralised solution was a major hurdle preventing the development of truely decentralized apps” – Clearly there is such a thing as IP-to-IP, so I’m afraid I’ve missed your point.

IP-to-IP only works when you can configure all the NATs and Firewalls in the middle. Typically your phone or laptop will be under multiple layers of NATs controlled by third parties (the cafe’s wifi, the ISP, the cellular networks,…etc) so you can’t expose endpoints directly on the internet. For example, in nRide a driver needs to expose a public endpoint to receive requests from passengers. You wouldn’t be able to do that without some kind of relay service. The options are quite limited, you can route all traffic through a central entity (like Uber), use something like WebRTC to try your luck with NAT traversal, use some kind of dynamic VPN… or use NKN which is more akin to a dynamic VPN with the interesting properties of being fully decentralized, permissionless and incentivized.

So if you believe that the internet is evolving to a more collaborative model where users are directly connecting to eachother, than NKN makes a lot of sense as an investment because it is a fundamental building block.

Ethereum’s revolution was smart-contracts, not the underlying consensus algo. It offered something that developers needed to build things.

IPFS/Filecooin introduced another missing piece, with storage.

The next missing piece was networking. And NKN is in a good position to lead that.

Not at all, this is a healthy debate so far :slight_smile:

The other way to think about it is that you had the vision to get in very early…

Soon you ll be able to add a few lambos :slight_smile:

What I gather from your post is that NKN is back to delivering rewards very infrequently as opposed to virtually never. I suppose that’s progress, but there’s plenty of psychology research demonstrating that people tend to be less motivated to work for a few big rewards rather than many small ones, even when the net present value of both choices is the same. So for what it’s worth, I would vote for more frequent small rewards, if the question ever comes up. Miner involvement is critical so it deserves compensation scheme optimization in addition to absolute compensation optimization.

In all this, I have to wonder whether the NKN devs have considered this at all, or whether the improvements in 2.1.7 were just a fluke due to parameter tweaking. It seems that the slow rewards are well documented on this site, but I don’t see anyone questioning why they should be slow (unless it’s impossible to run efficiently otherwise).

The other thing I glean from your research is that perhaps it’s useful to be on one end of a transoceanic cable. If that’s really the case, then Tokyo and Hong Kong ought be lucrative, but based on your comment about Asia, it’s likely not. That pushes me toward the alternative hypothesis that Internet in London just sucks, which would also explain your profits in the US.

The West Coast has horrible internet, but OTOH it’s crawling with nerds and therefore competition among NKN miners.

And finally, it sounds from your comments as though it will never be economical to run NKN at home, even though the entire network would benefit from enhanced geodiversity; instead, one needs to run in a datacenter. That’s not necessarily bad, but it ends up concentrating failure susceptibility in the hands of a few major providers.

OK now I get what you meant about peer-to-peer. That makes sense. And yes I suppose I was wrong; Ethereum’s claim-to-fame was indeed more about smart contracts.

But Lambos? They won’t arrive unless and until we stop alienating miners every other month with slow rewards that leave them unable to cover their costs. Perhaps one solution is to have a geo heatmap which indicates to them where they should set up their next nodes. We need to stop the churn of setup and teardown due to insufficient rewards. It’s costing everyone, even token holders like me, directly or indirectly.

I’s a bit of a circular problem. Mining will become profitable when the price of the token increases. This in turn might induce more miners to join the network and have a positive effect on the price. But I think this reflexive thing is only a small factor in driving the token price. I still think that the token price is mostly driven by investors who see value in the combined scarcity and utility of the token. By utility I mean that it gives you access to a useful service.

I suspect that at the moment the network could still satisfy demand with a fraction of the current miners, because there seems to very little traffic. Relaying messages is always free for the end-user, but there is at least evidence that the pub-sub feature is under-utilized because transaction fees are 0. There is a lot more supply than demand. What we need now is more developers and users… they will in turn need to compete to use the network and compensate miners. So it’s another way to get to what you want.

Taking your comment at face value, it then goes back to what wrote about reaching out to social media. NKN could do a much better job of that. Even taking out strategic Google AdWords or the like would help, so that for example you target corporate users who are looking to optimize their content delivery latency. This is all just Marketing 101, but it still matters in the Web3 economy.

Your comment also reads exactly like Filecoin about a year ago, the only difference being that Filecoin made the horrendous error of minting coin supply to keep up with total storage volume, so the buying power of the currency will decay with Moore’s Law. NKN does not seem to have made this mistake (correct me if I’m wrong), so it’s even better positioned for a massive rally which will only end when the coin accurately represents the value of its services in the real world. It just needs marketing. (Is there even a marketing team member?)

Seems like it was a false-positive. Now out of my 3 nodes I have one that last delivered a reward over 1 month ago and 2 that have delivered no rewards for over 2 months now.

Hang on a sec. NKN does not use proof-of-stake, does it? It uses, as stated in the design paper, “proof-of-relay”. I’m not sure the comparative analysis between proof-of-work and proof-of-stake is relevant for NKN.

Sorry I wasn’t clear. My point was just that if Ethereum is “secure enough” to supplant Bitcoin because PoS generally is faster and cheaper than PoW, then NKN should also be “secure enough” to supplant Ethereum and other altcoins for the purpose of being money. (Obviously there are lots of other advantages to various altcoins, but sparse random consensus should be enough to facilitate secure monetary transactions with lower latency than ETH, for one.)

In other words, I would prefer to think of NKN as money first and a means of payment for network services second. Hedera Hashgraph, in particular, is probably better still at behaving like money (thanks to its “gossip about gossip” design which eliminates a lot of synchronization among nodes), but it was never designed to facilitate better network performance. NKN might accomplish both.