NULS — Update I


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

Six months have passed since the initial BD Ratings article on NULS was published. Here is how that prediction has turned out so far.

2018-05-05: USD 3.82, Satoshis 39 281.

2018-11-05: USD 1.10, Satoshis 17 134.

The rating is so far a hit. Let's go through the important events within the NULS ecosystem for the last 6 months.

First off, as the last review ended, NULS was still in a beta stage without a proper mainnet. On the 21st of May 2018, the team informed everyone that the testnet needed further testing and so had to be delayed. A second iteration of testing was scheduled for 1st of June. Also in June, NULS signed a strategic partnership with MC Payment, a large fintech company from Singapore. The goal was to later establish a MC Payment subchain on NULS.

Mainnet was scheduled for 12th of July, and this deadline was kept. In the Medium post informing about the mainnet launch, information was also provided that Bitmain had invested in NULS. Furthermore, a marketing campaign was outlined during the event as well. On August 13th, the 1.01 version of the wallet was released, mainly fixing some bugs and stability issues. With the 1.10 beta release in September, smart contract functionality was added to the testnet. The latest release for mainnet seems to be the 1.02 Bugfix release.


The official subreddit is somewhat active, with community members discussing the project and team members providing continuous updates. A New York community meetup was recently held and NULS team members attended. On the event, a core developer of the team held a speech, emphasizing the high GitHub activity of the project. As NULS added a couple of new partnerships during the period as well, BD Ratings concludes that the overall community and business ecology around their blockchain seems stable enough. When looking at on-chain transactions on the newly launched mainnet, it is however a desert. A daily total transaction count of more than 8000 may seem active at first, but more than 95% seems to be newly issued NULS to agents/clients - in other word stakers.

During the July launch, the team stated that the first official mainnet service provided would be an application called Chain Factory. As the name suggests, the app makes it easy to create a subchain that is integrated with the NULS mainnet. These subchains can have their own tokens. At the same event, the announced marketing campaign and hire of a marketing agency may play out interestingly as at least the project now was live and not just a future promise. The extended bear market makes it more forgivable as the marketing is not just blowing up an obvious bubble on a non-existing product.

BD Ratings will revisit this rating in 6 months again, to see if real projects have sprung up to take advantage of the plug-and-play functionality of NULS.

Grade: 3

Reasons: Mainnet launched. Some community and team activity. Marketing plans.


During the launch in July, the NULS developer team apparently consisted of around 15 people. This is an expansion from earlier given numbers. A further expansion to up to 30 people was stated as a goal. Coupled with the fact that the main GitHub repository has shown a record breaking number of commits makes BD Ratings more optimistic regarding NULS technology. Needless to say, the number of commits is a gameable parameter, but the chance of such practice is generally low. It's not like code-focused cryptocurrencies historically have shot up in price shortly after a burst of commits- such effects have been reserved for projects focusing on extensive marketing.

A time of writing, there was recently high GitHub activity, which calmed down during the last two weeks. Additionally, mainnet is now launched without serious issues and there has been a number of software updates as well. Depending on how well the network responds to new smart contract functionality, and also to the Proof of Credit consensus mechanism, this Technology rating might very well improve later on.

Grade: 4

Reasons: Mainnet launched. PoC working alright so far. No serious bugs.


After mainnet launch, a number of masternodes (also known as agent nodes) sprung up that quickly gathered an aggregate of more than the needed 220 000 NULS (20 000 minimum owned and an additional 200 000 'delegated' from block reward-sharing clients). As an equilibrium quickly formed, some people in the NULS community noticed how hard it was for new agent node operators to attract clients as those had no incentive to switch to a non-profitable node. This issue ought to at least partially be solved as new interfaces for agent-client communication evolve.

At time of writing, 79 active agent nodes are maintaining the network and participate in the consensus process. This number is probably high enough to have some decentralization within the network, but it is not apparent how many nodes are controlled by large stakeholders. As mainnet now is live and the vested NULS start to be released to the NULS team, they gain more an more power over the network as they can fire up multiple agent nodes themselves.

The project still seems to have no clear 'leader' that makes most vital decisions. This is good for a decentralization-property to slowly develop.

Grade: 3

Reasons: Quite few agent nodes combined with the fact that NULS team own a lot of NULS tokens.


NULS have had a considerable price decrease despite a functional mainnet, a team expansion and some new partnerships. All in all, the fundamentals for the project have increased somewhat, resulting in a higher Valuation rating than before. The new rating can't be very high however, as the total valuation of all 100M NULS currently sits at more than USD 100M - a high value considering the almost non-existent on-chain activity.

One issue that dilutes otherwise acceptable fundamentals is an annual issuance of 5M NULS tokens. This results in inflation of approximately 5%, and to get down to gold/BTC inflation numbers during the next years, the network would have to run for more than 20 years. That is too long time. To act as a network where value can be at least theoretically properly stored, NULS has to lower the issuance while at the same time manage this in a decentralized manner. This might be harder than it seems should the project grow to include people and groups with different opinions on the subject.

Grade: 3

Reasons: High inflation. Considerably lower market valuation than at last rating.