Step 4: Using the mixnet
In order to gain access to the Nym network — either through NymVPN’s Anonymous Mode or the Fast Mode with WireGuard — all a user needs to do is:
- Toggle on the desired mode in app
- Possess a valid ticket (delivered to your app automatically with valid purchase)
When establishing a connection, the app will present the zk-nym credential to the entry gateway which, in addition to the Nym API, verifies the ticket’s validity, bandwidth fair usage,* and that it hasn’t been double-spent. Once the ticket is validated, a user’s encrypted traffic will then be routed through either of the selected routing procedures.
Step 5: Operator rewards
The Nym mixnet is operated by independent people all over the world who run nodes to route user traffic and provide them with unparalleled online privacy.
But unlike other decentralized networks like Tor which rely on volunteers, Nym node operators are rewarded for their service in NYM tokens for the traffic they handle in every epoch. Token incentives ensure that nodes perform well for users: running the latest binary, providing stable connections, etc.
Rewards in NYM also increase the decentralization of the network, since rewards are distributed from an on-chain “mixmining pool” of NYM tokens.
Summary of NYM flow
As we’ve seen, the NYM token servers multiple functions in its flow through the Nym network.
- For users, this is the first step in unlinking their payments from their usage of the NymVPN service, something which very few other online privacy services can offer.
- For operators and builders, this gives service providers a direct stake in the success and usage of the NymVPN and network. The tokens are used to reward nodes and the company for operating the network and maintaining the software.
- And for the NYM token ecosystem, the real-world growth in usage of the NymVPN generates a virtuous growth cycle for the NYM token.
The NYM token: A virtuous cycle
NymVPN is the first commercial app to run on the Nym mixnet. It closes the token economic loop, effectively bringing the mixnet to market. Nym's Noise Generating Mixnet is a general purpose private traffic routing network and can be used for any chain, L2, or app. As more apps are built on top of or integrated with the mixnet, the more value is generated for the ecosystem at large. This is the primary role of the NYM token: to enable a decentralized marketplace for privacy.
Why a token?
First things first, you might be asking yourself: why not just use fiat currencies, or even BTC, if the point is to pass on payments from users to operators and teams? Because the NYM token does far more than pass on rewards. It supports a broader token economic ecosystem which is necessary to ensure good quality of service, decentralization, and delinked payments.
The NYM token, in short, facilitates unlinkability across the entire the privacy network:
- Privacy preserving payments: Payments for other VPNs risk linking a user’s financial information to their traffic. With NymVPN, all payments are delinked from a user’s use of the network. This is done through payment conversions to NYM tokens which are used to purchase anonymous credentials (zk-nyms).
- Surveillance free business-model: Many VPNs make revenue by selling user data, inserting ads, or allowing third parties to install cookies on user software. NymVPN runs on a zero-knowledge network where Nym knows nothing about what users do or who they are, and node operators are incentivized to abide by no-logs Terms & Conditions.
- Permissonless and decentralized: NYM tokens enable anyone to “bond” and run a node and earn NYM rewards without needing the permission of Nym Technologies. This enables global network decentralization.
- Unlinkability: Decentralization enables Nym to offer strong anonymity to end users by making sure no one controls the full path of communication. Users will remain unlinkable to what they do online and with whom they communicate.
This article focuses on the first two, namely (1) how a user pays for NymVPN in a privacy-preserving manner, and (2) how operators are financially rewarded to provide end-users with strong privacy rather than being financially tempted to spy on their users.
NYM token flow overview
The NYM token flow is designed to be a virtuous cycle. So let’s walk through all the stages along the way from users to operators and back again.
Step 1: User purchases NymVPN subscription
Everything starts here with users who need real online privacy. Purchasing a NymVPN subscription is the only thing a user needs to actively do. The rest is taken care of on the back-end between the NymVPN app and the Nym network.
You can purchase a NymVPN subscription in a variety of currencies:
- Fiat currencies (whether from debit or credit cards)
- Crypto (e.g., in Bitcoin, Monero, Lightning, and of course NYM itself * )
- Online payment services (e.g., Stripe)
*Payments directly in NYM will receive a small discount, since this saves Nym on processing fees from online payment vendors.
Step 2: Payment converted to NYM tokens
All forms of payments for subscriptions to NymVPN, whether in fiat or crypto, are first converted into NYM tokens. But how and why is this necessary?
Payments submitted to Nym are processed and confirmed with the issuer via the Nym API. This triggers the API to conduct a buy order of NYM tokens on behalf of the user. Once the payment is confirmed between the processor and Nym, the payment will be set up for conversion into NYM tokens and deposited on the Nyx (Cosmos) chain in a general subscription account.
Keep in mind: If you pay for a NymVPN subscription in, say, a fiat currency with a debit card, you will never need to be in possession of NYM tokens: all of this is taken care of for you by the payment system.
NymVPN subscription purchases will result in NYM buy orders, thus closing the loop on the Nym token economics. There is thus a symbiotic relationship between the actual usage of NymVPN and the NYM token which yields both anonymity to users and rewards for service to operators. This is the first step in the virtuous cycle of NYM as a utility token.
Listen to Nym's Head of Research explain and show the NYM perpetual buyback mechanism.
Step 3: Delinking payments from usage (zk-nyms)
Use of the Nym network requires possessing authorized access credentials called zk-nyms (or zero-knowledge Nym credentials). Zk-nyms function as anonymized ticketbooks, as if you purchased a package of multiple passes to ride the metro while vacationing. Each ticketbook is composed of individual tickets that represent bandwidth. These ensure that payment details are delinked from credential issuance: no one, not even Nym, will be able to link a user’s payment details with their access credentials and, in turn, their usage of NymVPN.
Here is how they are generated: When a user’s payment is confirmed, a key pair is generated for them on Nym’s native Nyx (Cosmos) blockchain. One key is held on the user’s device (NymVPN app) and the other on-chain. This allows the Nym API to communicate between the app and the Nyx chain to validate that a user’s subscription has been paid for and is active, which triggers validators to issue zk-nym credentials associated with that key pair.
In order for a user to connect with the Nym network, the NymVPN app will simply submit valid tickets to authorize the entry of their traffic into the network. When a ticket is presented to an entry gateway, the zk-nyms on the NymVPN app simply show that there are the adequate number of valid tickets for the requested traffic. Nothing about a user’s personal payment information (name, credit or debit card information, and further details like bank or address) can be revealed: only the validity of the access credential.
