diff --git a/src/NetworkOPs.cpp b/src/NetworkOPs.cpp
index 28afbdf08..408238f7d 100644
--- a/src/NetworkOPs.cpp
+++ b/src/NetworkOPs.cpp
@@ -1,8 +1,13 @@
 
+#include "NetworkOPs.h"
+
+#include <boost/bind.hpp>
+#include <boost/unordered_map.hpp>
+
 #include "Application.h"
-#include "NetworkOPs.h"
 #include "Transaction.h"
 
+
 // This is the primary interface into the "client" portion of the program.
 // Code that wants to do normal operations on the network such as
 // creating and monitoring accounts, creating transactions, and so on
@@ -14,6 +19,11 @@
 // code assumes this node is synched (and will continue to do so until
 // there's a functional network.
 
+NetworkOPs::NetworkOPs(boost::asio::io_service& io_service) : mMode(omDISCONNECTED), mNetTimer(io_service)
+{
+	setStateTimer(5);
+}
+
 uint64 NetworkOPs::getNetworkTime()
 {
 	return time(NULL);
@@ -26,10 +36,10 @@ uint32 NetworkOPs::getCurrentLedgerID()
 
 Transaction::pointer NetworkOPs::processTransaction(Transaction::pointer trans, Peer* source)
 {
-	Transaction::pointer dbtx=theApp->getMasterTransaction().fetch(trans->getID(), true);
-	if(dbtx) return dbtx;
+	Transaction::pointer dbtx = theApp->getMasterTransaction().fetch(trans->getID(), true);
+	if (dbtx) return dbtx;
 
-	if(!trans->checkSign())
+	if (!trans->checkSign())
 	{
 #ifdef DEBUG
 		std::cerr << "Transaction has bad signature" << std::endl;
@@ -38,10 +48,10 @@ Transaction::pointer NetworkOPs::processTransaction(Transaction::pointer trans,
 		return trans;
 	}
 
-	TransactionEngineResult r=theApp->getMasterLedger().doTransaction(*trans->getSTransaction(), tepNONE);
-	if(r==terFAILED) throw Fault(IO_ERROR);
+	TransactionEngineResult r = theApp->getMasterLedger().doTransaction(*trans->getSTransaction(), tepNONE);
+	if (r == terFAILED) throw Fault(IO_ERROR);
 
-	if(r == terPRE_SEQ)
+	if (r == terPRE_SEQ)
 	{ // transaction should be held
 #ifdef DEBUG
 		std::cerr << "Transaction should be held" << std::endl;
@@ -51,7 +61,7 @@ Transaction::pointer NetworkOPs::processTransaction(Transaction::pointer trans,
 		theApp->getMasterLedger().addHeldTransaction(trans);
 		return trans;
 	}
-	if ( (r==terPAST_SEQ || r==terPAST_LEDGER) )
+	if ((r == terPAST_SEQ) || (r == terPAST_LEDGER))
 	{ // duplicate or conflict
 #ifdef DEBUG
 		std::cerr << "Transaction is obsolete" << std::endl;
@@ -60,7 +70,7 @@ Transaction::pointer NetworkOPs::processTransaction(Transaction::pointer trans,
 		return trans;
 	}
 
-	if(r==terSUCCESS)
+	if (r == terSUCCESS)
 	{
 #ifdef DEBUG
 		std::cerr << "Transaction is now included, synching to wallet" << std::endl;
@@ -104,20 +114,20 @@ Transaction::pointer NetworkOPs::findTransactionByID(const uint256& transactionI
 int NetworkOPs::findTransactionsBySource(std::list<Transaction::pointer>& txns,
 	const NewcoinAddress& sourceAccount, uint32 minSeq, uint32 maxSeq)
 {
-	AccountState::pointer state=getAccountState(sourceAccount);
-	if(!state) return 0;
-	if(minSeq>state->getSeq()) return 0;
-	if(maxSeq>state->getSeq()) maxSeq=state->getSeq();
-	if(maxSeq>minSeq) return 0;
+	AccountState::pointer state = getAccountState(sourceAccount);
+	if (!state) return 0;
+	if (minSeq > state->getSeq()) return 0;
+	if (maxSeq > state->getSeq()) maxSeq = state->getSeq();
+	if (maxSeq > minSeq) return 0;
 	
-	int count=0;
-	for(int i=minSeq; i<=maxSeq; i++)
+	int count = 0;
+	for(int i = minSeq; i <= maxSeq; ++i)
 	{
-		Transaction::pointer txn=Transaction::findFrom(sourceAccount, i);
+		Transaction::pointer txn = Transaction::findFrom(sourceAccount, i);
 		if(txn)
 		{
 			txns.push_back(txn);
-			count++;
+			++count;
 		}
 	}
 	return count;
@@ -134,3 +144,137 @@ AccountState::pointer NetworkOPs::getAccountState(const NewcoinAddress& accountI
 {
 	return theApp->getMasterLedger().getCurrentLedger()->getAccountState(accountID);
 }
+
+void NetworkOPs::setStateTimer(int seconds)
+{
+	mNetTimer.expires_from_now(boost::posix_time::seconds(5));
+	mNetTimer.async_wait(boost::bind(&NetworkOPs::checkState, this));
+}
+
+class ValidationCount
+{
+public:
+	int trustedValidations, untrustedValidations, nodesUsing;
+	NewcoinAddress highNode;
+
+	ValidationCount() : trustedValidations(0), untrustedValidations(0), nodesUsing(0) { ; }
+	bool operator>(const ValidationCount& v)
+	{
+		if (trustedValidations >  v.trustedValidations) return true;
+		if (trustedValidations <  v.trustedValidations) return false;
+		if (untrustedValidations > v.untrustedValidations) return true;
+		if (untrustedValidations < v.untrustedValidations) return false;
+		if (nodesUsing > v.nodesUsing) return true;
+		if (nodesUsing < v.nodesUsing) return false;
+		return highNode > v.highNode;
+	}
+};
+
+void NetworkOPs::checkState()
+{ // Network state machine
+	std::vector<Peer::pointer> peerList = theApp->getConnectionPool().getPeerVector();
+
+	// do we have sufficient peers? If not, we are disconnected.
+	if (peerList.size() < theConfig.NETWORK_QUORUM)
+	{
+		if (mMode != omDISCONNECTED)
+		{
+			mMode = omDISCONNECTED;
+			std::cerr << "Node count (" << peerList.size() <<
+				") has fallen below quorum (" << theConfig.NETWORK_QUORUM << ")." << std::endl;
+		}
+		setStateTimer(5);
+		return;
+	}
+	if (mMode == omDISCONNECTED)
+	{
+		mMode = omCONNECTED;
+		std::cerr << "Node count (" << peerList.size() << ") is sufficient." << std::endl;
+	}
+
+	// Do we have sufficient validations for our last closed ledger? Or do sufficient nodes
+	// agree? And do we have no better ledger available?
+	// If so, we are either tracking or full.
+	boost::unordered_map<uint256, ValidationCount, hash_SMN> ledgers;
+
+	for (std::vector<Peer::pointer>::iterator it = peerList.begin(), end = peerList.end(); it != end; ++it)
+	{
+		uint256 peerLedger = (*it)->getClosedLedgerHash();
+		if (!!peerLedger)
+		{
+			ValidationCount& vc = ledgers[peerLedger];
+			if ((vc.nodesUsing == 0) ||  ((*it)->getNodePublic() > vc.highNode))
+				vc.highNode = (*it)->getNodePublic();
+			++vc.nodesUsing;
+			// WRITEME: Validations, trusted peers
+		}
+	}
+
+	Ledger::pointer currentClosed = theApp->getMasterLedger().getClosedLedger();
+	uint256 closedLedger = currentClosed->getHash();
+	ValidationCount& vc = ledgers[closedLedger];
+	if ((vc.nodesUsing == 0) || (theApp->getWallet().getNodePublic() > vc.highNode))
+		vc.highNode = theApp->getWallet().getNodePublic();
+	++ledgers[closedLedger].nodesUsing;
+
+	// 3) Is there a network ledger we'd like to switch to? If so, do we have it?
+	bool switchLedgers = false;
+	for(boost::unordered_map<uint256, ValidationCount>::iterator it = ledgers.begin(), end = ledgers.end();
+		it != end; ++it)
+	{
+		if (it->second > vc)
+		{
+			vc = it->second;
+			closedLedger = it->first;
+			switchLedgers = true;
+		}
+	}
+
+	if (switchLedgers)
+	{
+		std::cerr << "We are not running on the consensus ledger" << std::endl;
+		if ( (mMode == omTRACKING) || (mMode == omFULL) ) mMode = omTRACKING;
+		Ledger::pointer consensus = theApp->getMasterLedger().getLedgerByHash(closedLedger);
+		if (!consensus)
+		{
+			LedgerAcquire::pointer acq = theApp->getMasterLedgerAcquire().findCreate(closedLedger);
+			if (!acq || acq->isFailed())
+			{
+				theApp->getMasterLedgerAcquire().dropLedger(closedLedger);
+				std::cerr << "Network ledger cannot be acquired" << std::endl;
+				setStateTimer(10);
+				return;
+			}
+			if (!acq->isComplete())
+			{ // add more peers
+				// FIXME: A peer may not have a ledger just because it accepts it as the network's consensus
+				for (std::vector<Peer::pointer>::iterator it = peerList.begin(), end = peerList.end(); it != end; ++it)
+					if ((*it)->getClosedLedgerHash() == closedLedger)
+						acq->peerHas(*it);
+				setStateTimer(5);
+				return;
+			}
+			consensus = acq->getLedger();
+		}
+		// WRITEME switchLedgers(currentClosed, consenus, slNETJUMP);
+		// Function to call Ledger::switchPreviousLedger
+	}
+
+	if (mMode == omCONNECTED)
+	{
+		// check if the ledger is good enough to go to omTRACKING
+	}
+
+	if (mMode == omTRACKING)
+	{
+		// check if the ledger is good enough to go to omFULL
+		// check if the ledger is bad enough to go to omCONNECTED
+	}
+
+	if (mMode == omFULL)
+	{
+		// check if the ledger is bad enough to go to omTRACKING
+	}
+
+	setStateTimer(10);
+}
diff --git a/src/NetworkOPs.h b/src/NetworkOPs.h
index 525f5b9f1..e0b175d44 100644
--- a/src/NetworkOPs.h
+++ b/src/NetworkOPs.h
@@ -1,6 +1,8 @@
 #ifndef __NETWORK_OPS__
 #define __NETWORK_OPS__
 
+#include <boost/asio.hpp>
+
 #include "Transaction.h"
 #include "AccountState.h"
 
@@ -31,7 +33,7 @@ protected:
 	boost::asio::deadline_timer mNetTimer;
 
 public:
-	NetworkOPs(boost::asio::io_service& io_service) : mMode(omDISCONNECTED), mNetTimer(io_service) { ; }
+	NetworkOPs(boost::asio::io_service& io_service);
 
 	// network information
 	uint64 getNetworkTime();
@@ -55,7 +57,7 @@ public:
 	bool findAccountNode(const uint256& nodeHash, std::vector<unsigned char>& rawAccountNode);
 	bool findTransactionNode(const uint256& nodeHash, std::vector<unsigned char>& rawTransactionNode);
 
-	// tree synchronzation operations
+	// tree synchronization operations
 	bool getTransactionTreeNodes(uint32 ledgerSeq, const uint256& myNodeID,
 		const std::vector<unsigned char>& myNode, std::list<std::vector<unsigned char> >& newNodes);
 	bool getAccountStateNodes(uint32 ledgerSeq, const uint256& myNodeId,
@@ -63,6 +65,11 @@ public:
 
 	// network state machine
 	void checkState();
+
+protected:
+
+	void setStateTimer(int seconds);
+
 };
 
 #endif