NULS — The Lego Blockchain


TL;DR. Ecology:3. Technology:4. Decentralization:3. Valuation:2. Rating:3/10


(Update 2018-11-05: Please see the semi-annual ratings review of NULS here.)

NULS is a customizable and modular blockchain platform that aims at integrating businesses to blockchain technology through private networks. This modular design can act as a bridge between an external application and the NULS blockchain. The NULS team is represented legally as a Singaporean foundation.

The team, consisting according to themselves of at least 15 people, 5 being core developers, is mainly based in China. Prior to starting the ambitious project, some of the developers coded for the Inchain project. Inchain ran an ICO on Ethereum in 2016 but failed to reach the minimum amount of Ether due to the cold ICO environment back then. The funds received were returned to investors.

NULS is as of now trading as an ERC20 token on the Ethereum blockchain. There was no ICO conducted to issue the tokens based on contribution. What happened was that Inchain token holders that did not want to be reimbursed got NULS tokens airdropped to their Ethereum addresses instead.

The consensus algorithm utilizes what the team calls Proof of Credit for selecting which node can create the next block. It is essentially focused around master nodes. 2 000 staked NULS entitles the owner to block rewards. 20 000 NULS has to be staked to start pooling for a 200 000 NULS node that participates in the consensus process. The staking probability is also affected by a credit score in order to punish misbehaving nodes and reward loyal ones.

40M tokens are circulating at time of writing, and 60M tokens will be released continuously after mainnet launches. Out of these 60M tokens, 20M will fund developer efforts, 20M will help build the community and 20M will be used for business partnerships. Most of these 60M tokens are vested over multiple years. Also, 5M tokens are created each year for stakers to maintain the network.

The NULS team has launched a public testnet that is currently operating. As soon as that has been thoroughly tested, a mainnet date will be set. The ERC20 tokens will then be exchanged for real NULS tokens. This mainnet has a unique code base, with some elements taken from Bitcoin.


The sub-reddit is somewhat active. Since the mainnet is not yet live, BD Ratings inspected the ERC20 token contract to estimate how much network activity there is so far. At time of writing, around 100 transactions per day occurs which is negligible, but worth considering is that since the mainnet is not live, it is hard to measure the real interest in transacting and utilizing NULS.

The NULS team seems to have run paid press releases focusing mainly on price appreciation. This is generally a bad sign. But other than this occurrence, not much effort seems to be put in to marketing.

A blockchain that works as a modular platform is pretty hard to analyse from an ecology perspective as there are not many examples out in the wild where companies transparently showcase how they integrate parts of their business with a public blockchain through this kind of plug-and-play solution. BD Ratings looks forward to reviewing this ratings analysis once NULS mainnet has launched.

Grade: 3

Reasons: Few (ERC20) transactions. Somewhat active community. Customizable module system opening up for broad use.


The NULS GitHub repository is actively updated with a fast pace by at least four developers. On the whole, NULS has at least five core developers listed on their webpage. The NULS mainnet is yet to launch, so the code is not yet battle tested. There is a testnet but it is hard to replicate adversarial conditions as testnet tokens carry no value. Worth noting is that NULS has a unique code base, developed by the team. This generally speaks of some sound technical knowledge.

With regards to PoC incentives, the credit score might seem like a good addition to PoS on a first glance. However, one has to be very careful about these kind of things as it makes nodes not peers but unequal to each other. In the credit score formula, the number of prior created blocks affects the score, which means new PoC nodes are at a disadvantage. The PoC incentives have to be setup in a way that does not make them gameable, and this is something that will probably be hammered out in more detail as the mainnet is up and running and there is node data to analyse.

According to official graphics, NULS can handle up to 2 000 transactions per second. This is an astonishing feat if the chain is indeed decentralized. BD Ratings doubt it is. The high throughput may have to do with the fact that 200 000 NULS (or 0.2% of max supply) are needed to establish a consensus node. The dollar amount to setup such a node is very high, so there might not be many such nodes participating in the consensus process as mainnet launches, resulting in a smaller network with less of a transaction verification- and propagation burden.

Grade: 4

Reasons: Many core developers. High GitHub activity. Mainnet not yet launched. Unique code base.


A 40M token circulation is small compared to the 60M tokens that will be released in coming years. It is a huge inflation tax on token holders since they themselves are not the beneficiaries of these 60M tokens. Despite allocating the 60M tokens to different goals, there is no secure checks and balances to make sure the money does not end up in the pockets of a few people. The stake rewards somewhat dilutes this concentration, but only to some degree and years in the future.

When looking at the NULS developer team and the structure they have setup around the project as a whole, it is apparent that they do consider decentralization to be a goal. A foundation is generally a better framework than a company to get a decentralized blockchain on its feet. There also seems to be no self-appointed leader for this project, or some core developer that the whole project depends upon.

A decentralization aspect already brought up is the claimed high number of transactions per second that can happen on mainnet. This has to be analyzed more deeply once mainnet is live; if it is a result of just having a few master nodes, then the high throughput is explained by centralization.

Grade: 3

Reasons: Token concentration. The project has a Singaporean foundation. No extreme dependencies on certain developer.


Grade: 2

Reasons: Considering the total supply of 100M and not the circulating supply of 40M tokens, the project as a whole is worth 385M USD at time of writing. This is a high valuation for something that has no mainnet so far and that is competing with other module-focused blockchains.