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The decentralization of the NEO network has begun with the election of a City of Zion consensus node onto the NEO MainNet. City of Zion is a global, independent group of open source developers, designers and translators formed to support the NEO core and ecosystem.

The City of Zion consensus node has been running smoothly on the NEO TestNet for six months in preparation for election. Several other independent consensus nodes are also running on the TestNet and are planned to be voted in by the end of 2018.

These independent nodes include one hosted by KPN, one of the the largest telecom companies in the Netherlands. KPN announced its intention to host a consensus node at the first NEO meet up in Amsterdam on January 13th. KPN has 6.3 million fixed-line telephone customers; more than 33 million mobile subscribers in the Netherlands, Germany, Belgium, France, and Spain; and provides internet access to 2.1 million customers throughout Western Europe.

Fenbushi Capital is another company currently running a consensus node on the NEO TestNet in line for election. Fenbushi Capital was established in 2015 and was named one of the top 5 blockchain venture capital firms by CB Insights. The VC firm is said to have invested over USD $50 million in blockchain projects, and has Ethereum founder, Vitalik Buterin, as an advisor.

The KPN and Fenbushi Capital consensus nodes have been running on the NEO TestNet since April, 2018.

NEO has taken a methodical approach to decentralization, with founder Da Hongfei often acknowledging NEO’s centralized state. However, the gradual roll out of decentralization has been an intentional strategy, allowing the core development team to perform faster upgrades to the network.

Hongfei commented on this approach during his interview with Tyler Swope on NEOTALK @ DevCon: “We have to be very careful with decentralization of the consensus nodes, because the protocol of NEO is evolving very fast. We need those consensus nodes to act very quickly to upgrade, and if there is a bug or a security issue, we need them to respond very quickly. So we’re doing the decentralisation process slowly, gradually and very carefully.”

City of Zion also published an article in December of 2017 on “coopetition”, which is a philosophy where organizations who would otherwise be competitors cooperate in a shared project. This is an approach taken by many industrial open source and energy consortiums.

The article points out that in traditional Proof-of-Work or Proof-of-Stake networks, through the implementation of economic incentives and a range of second order off-chain interactions, such as access to cheap energy, ASICs or GPUs, on-chain oligopolies can be formed. Bitmain and its early access to ASIC technology is cited as one example of such an occurrence.

As there are no economic rewards for running a NEO consensus node, the only incentive is to ensure the integrity of the network. Therefore, it is in the best interest of organizations building and relying upon the NEO blockchain to deploy and maintain healthy nodes.

City of Zion explains: “In line with these ideas, NEO will begin its decentralization by allowing well known commercial projects and communities to run consensus nodes, forming an initial confederation of actors with a strong interest in guaranteeing the security and success of the network. While it might seem counterintuitive, this architecture will be less centralized than many other networks today. Through coopetition, we can ensure that all players are equal in the network by design. Their power won’t depend on how much money they have, or how cheap their electricity may be.”

In today’s announcement by NEO, a timeline of the decentralization process was laid out, beginning with the launch of the TestNet in 2015. The timeline states that NEO plans to open the network for public campaign and election of consensus nodes by 2019. A webpage for monitoring NEO blockchain status and information on consensus node candidates and their votes has been made available at: https://neo.org/consensus

All nominees for consensus nodes will be required to go through an identification process before they are voted in on MainNet, and will need to provide contact availability to ensure that time-critical events can be handled if they arise. Parties that prove that they can maintain outstanding uptime on the NEO TestNet will be eligible to be voted in as a MainNet consensus node by NEO holders.

The announcement from NEO and decentralization timeline can be found at the below link.

https://neo.org/blog/details/4089