Nano

  • Cryptoasset Report
  • June 3, 2019

Nano is a cryptocurrency whose network’s design does not require distributed agreements, enabling low-latency, feeless transactions and fewer scalability challenges.

Overview

Nano is a cryptocurrency whose network’s design does not require distributed agreements, enabling low-latency, feeless transactions and fewer scalability challenges. The Nano network went live in 2015—prior to rebranding, Nano was known as RaiBlocks and the token traded as XRB. NANO, the project’s token, was distributed through a captcha-based faucet system, which ended in October 2017. No token sale was held and the token cannot be mined. The project was started a side-project by Colin LeMahieu (CEO) in 2014, and claims to have processed fourteen million transactions since release. In 2018, $170 million worth of NANO was lost in a hack on the BitGrail exchange.

Protocol Details

Nano uses a block-lattice architecture based on a Directed Acyclic Graph (DAGs), where transactions are managed separately from the main chain—each account has its own blockchain. This blockchain will record the user’s account balances and information related to the balance history and can only be updated by the owner. The user’s blockchain is updated asynchronously to the rest of the block-lattice. Transactions on Nano uses PoW as a spam prevention mechanism, with each participant computing PoW to confirm and broadcast transitions, rather than paying fees to miners.

For consensus, Nano uses ‘Open Representative Voting’ (ORV), a form of delegated proof of stake (DPoS). A representative node verifies signatures for blocks, and, if required, votes for the valid transactions. Votes are weighted by account balances, with holdings of 0.1% of token supply (133248 NANO) required to directly participate in consensus. Nodes with insufficient holdings can also indirectly participate by selecting a representative node (any other node), with the selecting Node’s account balance added to the weight of that representative’s vote. Nanode offers a real-time breakdown of the voting weight distribution among node’s eligible to vote in consensus. (At time of writing, five nodes’ combined votes represent 54.17% of total, with Binance’s vote alone at 25%.)

Weighting voting by account balance minimizes the risk of Sybil attacks in Nano; one user can create many nodes, but, without adequate funds, new nodes have no disproportionate effect on network votes. Nano views ORV as minimizing the risks of 51% attacks as well by making such attacks self-destructive; Nano writes “Those who have more funds in the system are inherently incentivized to keep the system honest; a dishonest system would make their investment worthless.” Conversely, tying representation to account holdings has also entailed that nodes who lost funds to malicious activity, such as occurred in the BitGrail hack, also lost their ability to rectify such events through Nano’s chain governance.

Asset Details

Nano’s token, formerly XRB and now NANO, is designed for use as currency. The token was not distributed through a token sale, but via a captcha-based faucet distribution system, which ended in October 2017. NANO is not mined (i.e. used to incentivize the verification of transactions), nor functions as ‘Gas’ (i.e. used to execute network computations)—no one can earn NANO by performing network critical tasks. NANO has a fixed maximum supply 133,248,290, with 0.1% of that supply (133248 NANO) required for direct participation in ORV based consensus/network governance.