Internal Network

The Internal Network is a virtual blockchain implementation within Nexus that enables token operations without requiring actual blockchain transactions. It serves as an alternative and complement to traditional blockchain networks, providing a more efficient way to handle certain types of token movements while maintaining full compatibility with the Nexus platform.

Overview

The Internal Network (INTERNAL blockchain code) functions as a virtual ledger that tracks token balances and transactions entirely within the Nexus platform. This approach offers several advantages for specific use cases while maintaining the familiar account and token operation patterns used with traditional blockchains.

Key Characteristics

• Off-Chain Operations: Transactions occur within Nexus without blockchain confirmation delays
• No Gas Fees: Operations do not incur blockchain network fees
• Instant Settlement: Transactions complete immediately upon successful validation
• Full Audit Trail: All operations are tracked and recorded in Nexus
• Token Definition Support: Works seamlessly with multi-blockchain token definitions

How It Works

Virtual Accounts

Virtual accounts (account type VIRTUAL) are the primary mechanism for using the Internal Network. These accounts operate by default in two modes:

1. Address-less Virtual Accounts: Pure off-chain accounts without any blockchain presence
2. Hybrid Virtual Accounts: Virtual accounts with an optional blockchain address for receiving on-chain transactions

For the Internal Network only address-less virtual accounts are supported.

Token Definitions and Cross-Blockchain Operations

The Internal Network integrates with Nexus' Token Definition system, allowing a single token to exist across multiple blockchains, including the Internal Network. This enables:

• Cross-Network Transfers: Move tokens between different blockchains using Internal Network as a bridge
• Unified Token Management: Single token code across different networks
• Flexible Liquidity: Balance between on-chain and off-chain holdings

NOTE

Cross-chain transfers between different blockchains (e.g., Algorand to Stellar) require the Internal Network as an intermediary. Direct blockchain-to-blockchain transfers are not supported. The typical flow is: Blockchain A -> Internal Network -> Blockchain B.

Supported Operations

The Internal Network supports most standard token operations, but executes them off-chain:

Operation	Internal Network Support	Notes
Account Creation	✔️	No blockchain address required
Token Connection (Opt-in)	✔️	Virtual connection, no on-chain trustline
Funding	✔️	Off-chain balance increase
Customer-to-Customer Payments	✔️	Between virtual accounts or virtual-to-blockchain
Payouts	✔️	Off-chain balance decrease
Clawbacks	✔️	Administrative balance adjustments
Balance Queries	✔️	Real-time balance information

Transaction Flows

Virtual-to-Virtual Payments

Payments between two virtual accounts on the Internal Network are purely off-chain:

1. Validation of sender and receiver accounts
2. Check sender's available balance
3. Create balance mutations (debit sender, credit receiver)
4. Record payment with SubmissionCompleted status
5. No transaction envelope or blockchain interaction required

Virtual-to-Blockchain Payments

When sending from a virtual account to a blockchain account:

1. Virtual account balance is debited off-chain
2. On-chain transaction is created from the token's issuer address
3. Transaction envelope manages the blockchain interaction
4. Balance mutations reflect the virtual account debit

Blockchain-to-Virtual Payments

When a virtual account with an address receives on-chain tokens:

1. External blockchain transaction detected (if scanner feature enabled)
2. Payment recorded in Nexus
3. Virtual account balance credited
4. On-chain tokens held at the issuer address
5. Virtual balance tracks the user's entitlement

Blockchain-to-Internal Network Payments

To transfer tokens from a blockchain account to an Internal Network virtual account:

1. Make sure you have a virtual account on the Internal Network
2. Send tokens from the blockchain account to the issuer address
   • Without an Internal Network virtual account this will result in a regular Payout
3. Nexus detects the incoming transaction
4. Record payment in Nexus
5. The Internal Network virtual account balance is credited off-chain

Cross-Blockchain Transfers

To transfer tokens between different blockchains (e.g., from Algorand to Stellar):

1. Transfer from source blockchain to Internal Network virtual account
2. Token debited from blockchain account, credited to virtual account
3. Transfer from Internal Network virtual account to destination blockchain
4. Token debited from virtual account, credited to blockchain account

This two-step process ensures proper tracking and reconciliation across different blockchain networks.

Use Cases

1. Internal Wallets and Custody

Virtual accounts on the Internal Network provide an efficient custody solution:

• Hold customer tokens off-chain
• Reduce blockchain transaction costs for internal transfers
• Instant settlement between customers

2. Payment Processing

High-frequency or small-value payments benefit from off-chain processing:

• No blockchain confirmation delays
• Zero gas fees
• Batch settlement to blockchain when needed
• Improved user experience with instant confirmations

3. Multi-Blockchain Token Management

Use the Internal Network as a bridge between different blockchains:

• Accept tokens on Algorand, Stellar, Ethereum, etc.
• Move to Internal Network for efficient processing
• Redeem on customer's preferred blockchain
• Single token definition across all networks

Account Type Compatibility

The Internal Network works with specific account types:

Account Type	Internal Network Support	Address Required	Notes
Managed	No	N/A	Not compatible with Internal Network
Unmanaged	No	N/A	Not compatible with Internal Network
Virtual	✔️	Not compatible with Internal Network	Primary account type for Internal Network

* Virtual accounts on the Internal Network do not support having a blockchain address. If receiving tokens from a blockchain is required you need to create a Virtual Account on that blockchain and then send to the internal network virtual account from there.

Configuration

Token Definition Setup

Ensure your token has an Internal Network variant through the Nexus Portal:

1. Navigate to the Token Management section
2. Create or edit a token definition
3. Add the token to each desired blockchain (e.g., ALGO, XLM)
4. Add the token to the Internal Network (INTERNAL)
5. All variants share the same token code and definition ID

NOTE

The Internal Network token variant uses the same issuer address concept as traditional blockchains, but the address only exists logically within Nexus and not on any actual blockchain.

Blockchain-Specific Features

Some blockchain-specific features are not available on the Internal Network:

• No Smart Contracts: Limited to token transfer operations
• No Blockchain Explorer: Transactions not visible on public explorers
• No External Verification: Balances cannot be independently verified on-chain
• No Decentralization: Fully centralized within the Nexus platform

Account Type Restrictions

• Ethereum and Polygon: Virtual accounts on these blockchains can only be created without an address
• Managed Accounts: Cannot send to virtual accounts (temporary restriction)
• Cross-Blockchain: Direct transfers between different blockchains are not supported; use Internal Network as intermediary

Integration with Blockchain Scanner

The blockchain scanner feature can automatically detect and process transactions involving virtual accounts with blockchain addresses. When enabled, the scanner:

1. Monitors blockchain transactions for addresses associated with virtual accounts
2. Automatically creates payment records in Nexus
3. Credits virtual account balances for received tokens

NOTE

The blockchain scanner feature must be enabled for your organization to automatically process external transactions involving virtual accounts. Contact support to enable this feature.