Migration ​

Nimiq is transitioning from a Proof-of-Work (PoW) to a Proof-of-Stake (PoS) blockchain. This transition is being carried out through a special hard fork, and will happen in three phases: validator registration, pre-staking, and activation.

Each phase operates within a specified block window, enabling transactions to be sent to the network at specific chain points - all within the PoW chain.

Our approach consists of targeting a specific block height within the PoW chain designated as the 'transition block.' At this block height, blockchain state will be captured and used to generate the genesis block for the PoS chain. Instead of starting from block height 0, both chains will share the same block number.

The PoS chain starts once the conditions covered in this document are fulfilled.

Validator Registration phase ​

The transition begins by establishing the first validator list for the PoS blockchain within the PoW chain. This phase is open to all users. Being a miner is not a prerequisite to registering as a validator. Users who wish to participate must indicate their willingness to become validators via a set of transactions.

To become a validator, users must have three essential components: a validator account, a signing key, and a voting key. Additionally, the user must pay the validator deposit. Any contributed amount exceeding the deposit is assigned to the validator as stake.

This phase involves a series of six transactions to register the validator keys and an additional one to confirm by paying the deposit for the validator. Users must complete the entire sequence of transactions to have their validator included in the PoS genesis block. NIM spent on incomplete registrations will be burned.

To facilitate this process, Nimiq provides a two-mode tool. This tool allows users to generate validator keys and send properly formatted registration transactions to the blockchain. Users can either use our tool or send the transactions manually. Please refer to our guide to learn how to use the tool. Read on to learn how the registration transactions are structured.

Registration transactions ​

• Validator registration: The first 6 transactions contain the encoded validator keys. Each transaction must be sent from the account of the registering validator, and have a value of 1 Luna each.
• Deposit payment and commitment: The last step is to pay the validator's deposit of 100 000 NIM and commit to the registration. Unlike the other six transactions, this one can be sent from any account, but the data field must include the registered validator's address to identify the validator.

The validator generation transactions include the following data:

Due to the limited data capacity of a regular Nimiq transaction of 64 bytes, our validator keys, which are larger in size, are split up and distributed across six transactions. The initial transaction transmits both the signing key and the validator's address. Subsequent transactions are used to progressively send the remainder of the data, particularly the voting key. In addition, each transaction is numbered (1-6). This process ensures the secure transmission and reconstruction of the complete validator keys. Mind that only the public keys are included in these transactions. The private key components are meant to be stored safely.

The registration window takes place within a specific range of blocks. The count of validators and corresponding deposits is made at the last block of this phase.

Pre-staking phase ​

The pre-staking phase occurs within a specific range of blocks and is exclusive for staking. During this phase, validator registration transactions are not accepted anymore.

Users wishing to stake their NIM as soon as the PoS chain launches, can send a pre-stake transaction of a minimum of 100 NIM specifying which preregistered validator they want to stake with. Users can only stake for registered validators. Attempting to stake with non-registered validators will result in the loss of the sent NIM. Please note that once the NIM are pre-staked for a registered validator, unstaking is not possible in the PoW chain. Stake can only be recovered when the PoS chain begins.

For convenience, the Nimiq Wallet will feature an interface to facilite this process. Users can send one pre-stake transaction per address. This feature will provide users with the list of pre-registered validators, allow to select one and send their pre-staking transaction.

After the pre-staking phase, a clear overview of the registered validators and the total allocated stake will be provided.

Activation phase ​

Only preregistered validators can participate in this phase. The activation phase serves two primary purposes:

• Selecting the Transition Block: Validators target a block with a height corresponding to the next PoS election block as the candidate block for the transition.
• Executing the Transition: If, at the candidate block's height, at least 80% of stake is signalling readiness for the transition, the candidate block becomes the transition block. An activation tool takes charge of capturing the state of the PoW chain at the transition block and generating the genesis block for the new PoS chain.

During this phase, validators send a transaction signaling their readiness. The readiness transaction is as follows:

A migration tool has been developed to facilitate the transition process. This tool scans the PoW chain for readiness transactions and selects the valid ones. Valid transactions come from preregistered validators who have completed the registration process according to the abovementioned sequence.

The migration tool activates at the candidate block - the block height aligned with an election block corresponding to the PoS chain’s structure. At this point, the tool scans and analyzes transactions sent to the burn address. The transition starts if at least 80% of the total stake is ready.

If the transition does not succeed within the initial activation window, a new one is opened until the 80% readiness target is achieved. The new activation window starts at the block immediately following the candidate block. Each activation window spans 1440 PoW blocks, equivalent to one day.

Once the 80% total stake readiness requirement is reached, the candidate block becomes the transition block. The migration tool captures the state of the PoW chain at this block, including all accounts, the first validator list, and allocated stake, and generates the genesis block of the PoS chain. This block marks the beginning of the Nimiq PoS blockchain.

Nimiq PoS ​

To ensure the integrity of this process, Nimiq suggests a waiting period of 10 confirmations before the PoS chain officially begins. This precaution is taken into consideration for potential block rebranching.