POI Consensus Mechanism

* This is an extract from the book *

Different Types of Consensus Mechanisms

By Chris Wing

Chris talks about the different types of consensus mechanisms and here is his excellent section on Proof of Importance (POI)

Proof of Importance (POI)

At a glance: Proof of importance (POI) is a consensus mechanism which uses a node’s importance within the network to determine who should be validating new blocks. Importance of a node is determined by various factors, and the overall score of the node determines their mining efficiency.  POI is a consensus mechanism used within the NEM (New Economic Movement) cryptocurrency.

This consensus mechanism is used to determine which nodes within the network are eligible to commit new blocks to the Blockchain. This process is known within NEM as ‘harvesting’. In exchange for ‘harvesting’ a new block, a node is able to collect a transaction fee within that block. Nodes with a higher importance relative to others will have a higher percentage chance of being picked to commit a new block to the Blockchain. The initial criteria a node must meet before even being considered to be a ‘harvester’, is to hold at least 10,000 vested XEM (a cryptocurrency).

POI and POS work in similar ways in that, when deciding on what node should be chosen to commit a new block to the Blockchain that value of their holdings it has taken into consideration; however, POI has one subtle difference.

As explained in the ‘Proof of Stake’ section, POS limits a node’s mining range by their current stake in the cryptocurrency’s network. For example, if a node only owns 10% of a cryptocurrency then they are limited to mining 10% of each new block. This consensus model incentivizes nodes to save their coins to gain a larger percentage split of each new mined block.

Unlike POS, however, POI takes into account each node’s overall support – or importance – to the network. This assignment of importance is calculated using graph theory to work out each node’s rating within the system.

The NEM Network does this by using three key pieces of information on each node:

  • Vesting
  • Transaction partners
  • Number and size of transactions within the past 30 days.


  • For each node within the network, a minimum of 10,000 vested coins are required before harvesting.
  • A node with a larger amount of vested coins results in a higher POI Score.
  • A node must have had these vested coins in their account for X number of days before they are counted towards improving your POI Score.
  • 10% of currently unvested amount is vested each day to prevent coin hoarding between users.

Transaction Partners:

  • POI works by rewarding users who make transactions to other users on the NEM Network.
  • Nodes within the system cannot ‘game the network’ by trading back and forth between mutually owned accounts. This is because the POI algorithm only recognizes total net transfers over time.
  • Number and Size of Transactions within last 30 days:
  • Every transaction above a minimum size counts to the node’s POI Score.
  • The more frequently a node makes transactions, and the larger each transaction is, the greater their POI Score will be impacted.

Delegated Harvesting:

The NEM Network is the first of its kind to offer a feature called ‘delegated Harvesting’. Essentially this is an efficient way to pool together account power (here referencing individual node POI Scores rather than compute power) to increase the chance of harvesting a new block. For delegated harvesting, users will connect to a remote node and use that account’s computing power to compute blocks on its behalf. Because each node has its own POI Score which dictates its chances of harvesting a block, pooling nodes together and adding POI Scores together can be beneficial and help increase a node’s chance of harvesting a block.

Some of the key features of Delegated Harvesting include:

  • A person’s computer doesn’t have to be running 24/7 to harvest new blocks.
  • An account’s private key is never exposed while harvesting, so there is no risk attached to it.
  • Transaction fees can be collected for both multi-signature and messaging when harvesting new blocks.

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