White paper

1. Introduction

Despite the high volatility and cyclicality, the market for decentralized technologies and applications continues to grow and becomes more complex. The interest in them is increasingly showing both large and small investors, as well as traditional financial systems and central banks. However, there are a number of restrictions on the development of decentralized technologies, such as:

  • Lack of real-time transactions calculations;
  • Low scalability;
  • Blockchain incompatibility;
  • Weak decentralization.

All this requires new infrastructure and ecosystem solutions, which are being developed by the Netsbo project team.

Netsbo is a scalable, decentralized and modular Layer-1 blockchain and smart contract execution framework. Netsbo’s goal is to become a convenient and understandable tool for running decentralized applications and for the exchange of digital values.

The disadvantage of most solutions on the cryptocurrency market is a weak UX / UI and inconvenience for the users, so the team places great emphasis on the following aspects of the project:

  • Lowering the entry threshold for users, developers and validators;
  • Development of and ecosystem of decentralized applications with more convenient interfaces and user paths;
  • Increasing decentralization through the integration of DAO mechanisms, in particular, the launch of a separate token for voting;
  • Launching various programs to maintain and develop the community;
  • Open source.

2. What is Netsbo

The cryptocurrency market has many categories and directions of development. Some projects are trying to solve the problems of scalability and delays on the blockchain through new methods of consensus or other architecture. For example, L2 solutions (second level solutions), projects with sharding technology or projects with a different type of distributed ledger and consensus are gaining popularity.

Another issue is blockchain interoperability, which is partly solved by creating Layer-0 solutions or a proprietary ecosystem of decentralized applications that can easily interact within the same network.

Also, the Netsbo project is developing its approach to solving these problems by:

  • Using the aBFT consensus algorithm based on DAG for high performance;
  • Modularity of the blockchain, due to which, on top of the base level with the mechanism of a aBFT consensus can work as an EVM compatible blockchain, such as the Cosmos SDK;
  • Creating a two-coin system to increase decentralization and network security.

2.1 Lachesis consensus mechanism

Netsbo is based on the Fantom protocol and brings all of its benefits, in particular the high speed and security of the Lachesis consensus and EVM compatibility.

Lachesis is an asynchronous Byzantine Fault Tolerant (aBFT) consensus algorithm based on an Directed Acyclic Graph (DAG) that has better performance than both the classical BFT model and the Nakamoto (Proof of Work). aBFT is the highest standard of consensus algorithms, in which nodes can independently reach consensus without exchanging final blocks among themselves. In general, the BFT mechanism is one of the types of Proof of Stake consensus, in which, instead of randomly choosing a validator, there is a vote for it.

In the Lachesis protocol, each node in the network maintains a local Directed Acyclic Graph (DAG) consisting of blocks of events, which in turn consist of transactions. Nodes also vote for a transaction or block and make a decision based on reaching a quorum.

Thus, Lachesis is asynchronous, leaderless, and final, as well as Byzantine failure tolerant.

2.2 Network performance

Netsbo’s mechanisms provide users with network speed and scalability by eliminating time-consuming block confirmation. First of all, Netsbo solves the problem of scalability thanks to a different way of sorting data - an Directed Acyclic Graph (DAG). Instead of a traditional chain of blocks, DAG blocks are linked into a whole set of chains of the same direction that do not form closed loops. Such blocks contain information about transactions, smart contacts and values of previous blocks.

DAG Lachesis scheme

Our team has never relied on theoretical system performance calculations. Dozens of load tests were conducted in conditions as close to real as possible. During the tests Netsbo network showed a speed of more than 1000 transactions per second. At the same time, Netsbo’s high throughput does not compromise network security and allows you to keep fees to a minimum. As the community grows, the team plans to increase the throughput of the blockchain.

2.3 Two-coin system

Unlike the Fantom protocol, Netsbo blockchain uses two coins: the native NETS cryptocurrency for network maintenance and the CBR token for governance.

NETS coin can be used as a commission when conducting transactions related to sending funds, when interacting with smart contracts and when making formal proposals. NETS is also used as a reward for staking CBR. Commissions and rewards are distributed between network validators and those who delegated tokens to them. In other words, NETS is used to pay for the services of validators and to prevent transaction spam.

CBR token (CyBeRnetics - Greek κυβερνητική “the art of governance”) is an ERC-20 token on the Netsbo network that can be staked or delegated by validators. Staking rewards are issued in NETS. They are dynamic and decrease as stake participation increases. On the one hand CBR is used to protect the network, on the other for voting.

Use of CBR and NETS scheme

The network is protected by the fact that validators, like other users who delegate their CBR in their favor, receive a certain percentage of staking in NETS. Validators risk losing their funds if they try to cheat the network. By blocking their CBR, validators help the network to be decentralized and secure.

Due to the governance function, CBR tokens are a reflection of the power of the vote when voting. Votes are weighted according to the number of CBRs one to one. By using CBR as a governance token, validators and delegators can jointly decide on network setting or how to use Netsbo Foundation tools.

In general, the use of two coins in the project allows increasing the decentralization and security of the network, increasing the stability of the system, flexibility and adaptability to new conditions, as well as creating the most favorable conditions for all participants.

2.4 CBR Staking

Staking is a way of passive income, where coin holders ensure the performance of the blockchain on the Proof of Stake algorithm. Staking is an alternative to mining, which consumes a lot of computing power. Netsbo blocks CBR tokens when staking, not the native cryptocurrency. Therefore, the CBR token is responsible for governance at all levels, including at the level of consensus mechanism.

In order to become a validator, you need to block at least 500 CBR. CBR coins are tie to specific validators that support the Netsbo network. For blocking coins in the network for a certain period, the validator receives a reward in NETS coins, including those collected from commissions.

The selection of a group of validators occurs in periods called epochs. Validators stakes are fixed for an epoch period. The validators themselves are randomly selected from registered users with the above number coins. An unlimited number of validators can participate in protecting the network.

The distribution of remuneration takes place in the following proportion:

  • 90% NETS is distributed among validators and delegators according to the rules of the network.
  • 10% of the coins will go to the Netsbo Foundation. The funds of this fund will be directed to the development of the results of voting (for marketing, network development, and so on).

2.5 Decentralized applications

Netsbo is an open source network. Anyone can connect to Netsbo and build their decentralized applications. The code of smart contracts and the protocol is publicly available, which makes it possible to mutually check, prevent the appearance of erroneous or fraudulent services.

The long-term goal of the Netsbo team is to create a rapidly growing ecosystem of decentralized applications (dApps). The most demanded of them will be able to receive support through the Netsbo Foundation, in particular, projects related to decentralized finance, oracles, NFTs and metaverses, DAO and others.

The Netsbo team strives to attract as many crypto enthusiasts and developers as possible, who could further participate in the development of the project and create their own dApps on the Netsbo blockchain.

3. Governance

Netsbo DAO is a decentralized autonomous organization for digital democratic governance, created to ensure the rapid and sustainable growth of the Netsbo project.

With a two-coin system, Netsbo can leverage the power of DAO mechanisms more effectively, such as Netsbo Foundation fund management and voting. The attitude of participants in Netsbo DAO is built on the principle of equal partnership. Each CBR holder has the opportunity to take the proposals put forward. To put forward the proposal, you need to spend 100 NETS as a commission, which will be burned at the same time.

Netsbo has governance smart contracts that allow validators and CBR token holders to determine the development of the project, as well as approve changes to underlying consensus through hard and soft forks. The entry threshold (500 CBR) and the complexity of the calculations are low enough that participants can become validators without having expensive equipment. Thanks to this, a wider audience of crypto enthusiasts can participate in the development of the project.

The voting power of an account will depend on both the tokens held and the activity of that user. One or another, the user needs to have a certain amount of staked tokens.

Active participation in the voting process in a certain way increases the user’s share in the reward for delegated tokens. The exact parameters for how votes are calculated will be determined later.

Among the main parameters that can be changed by voting are the following:

  • Reward per second in NETS - from 0.1 to 64;
  • Issue of new CBR coins - from 500 to 1000000;
  • Base minimum CBR to NETS ratio - 1 to infinity;
  • The minimum amount for the validator is from 500 to infinity;
  • Expenses from the network fund - size and purpose;
  • The minimum voting time is 1 hour by default;
  • Quorum (minimum numbers of votes) - from 10% to 75%;
  • The minimum delegation period is from 14 to 90 days.

    • When voting, a period can also be set (from 1 hour to 14 days), a quorum (changeable/unchanged, but not less than 25% of the locked coins). Winning the vote will be determined by the majority of votes cast.

    The network will also have moderators responsible for submitting questions and proposals for voting, setting the main agenda for the administration. This is an important role as putting too many issues up for a vote can lead to a loss of focus and therefore poor decisions.

    In future, the Netsbo network is expected to be integrated into one or more SSI (Self-Sovereign Identity) platforms. Accounts that are linked to a real person via SSI will carry a higher weight than unidentified accounts.

    Community development is very important at Netsbo, as technology itself has no value without the products being created that have users. By having a separate coin that is fully responsible for all levels of network management, and that will never be openly traded and subject to speculation in the market, we can have a network whose development is completely controlled by the interested community.

    4. Tokenomics

    NETS is the native cryptocurrency of the Netsbo blockchain and is used as a utility coin for paying fees and staking rewards (gas for transactions and interactions with smart contracts).

    The CBR token is an ERC-20 token with the following features that will be rolled out gradually:

    • Financing the development of the Netsbo ecosystem;
    • Participation in voting for protocol updates and distribution of funds, and participation in the Netsbo DAO community;
    • Staking and network security.

    Additional CBR coins will only be issued based on voting results. They can also be obtained in exchange for NETS, which will then be burned.

    The first CBR coins were issued to keep the Netsbo network running. In order to start the genesis block the development team decided to distribute the first coins to validators using Airdrop (free distribution of coins to those who wish to take part in the community and promote the network). Each Validator has received 1000 NETS and 1000 CBR.