Introducing the NYM token

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The NYM token now exists on mainnet and is officially approved for a public launch! The token is an essential component to the Nym decentralised privacy mixnet, enabling users to pay for their use, and mix node operators across the world to be compensated for running the global privacy network.

We are pleased to announce that the total supply of one billion NYM tokens have been generated on the decentralised mainnet Nyx chain. The Swiss utility token prospectus (first of its kind in Switzerland!) has been approved ahead of the CoinList token sale and is listed on BX Swiss. The initial distribution and lock-up schedule is out, and there is a date for a public offering of 75 million NYM on CoinList.

In this short blogpost, we introduce the token and explain each of these steps and their importance for making the Nym decentralised privacy network a reality.

Why does a mixnet need a token?

The aim of Nym is to ensure privacy by addressing two major problems of the internet today:

• the technical problem whereby the core internet protocols were simply not built with privacy in mind;
• and the economic problem, where today’s digital platforms and infrastructures have surveillance at the centre of their business models.

The first problem is solved with the mixnet — a decentralised privacy network that delivers privacy to end-users by mixing their packets. The second problem is solved with the NYM token, which facilitates decentralisation while incentivising mix nodes to provide a high quality of service, ensuring that the mixnet can scale according to demand.

When users pay for using the network for privacy, or apps pay on behalf of their users, some fees go to reward the nodes that operate the network. These fees are taken in or converted to NYM in order to prevent the network from being subject to the volatility of any other underlying asset. Thus, the more usage, the more NYM tokens are available for rewarding nodes and scaling the mixnet to match demand!

Thus the NYM tokenomics is intended to economically incentivise people to provide privacy, rather than surveillance. Not only that, the tokenomics has been designed and engineered to incentivise good privacy protections: the better the service in terms of mixing packets, the better the reputation of a mix node in NYM will be in the overall infrastructure. In essence, NYM serves a ‘reputation’ token for mix networks.

We understand that there are valid concerns about creating yet another token. However, the challenge of providing tokenized reputation in a decentralized mix network pre-dates even Bitcoin, and we believe NYM solves the problem of provisioning privacy-enhanced internet access at scale. Without some form of reputation, years of pre-Tor research demonstrates it is difficult to scale privacy-enhanced access to the internet. Representing reputation inside of a mixnet using valueless tokens also causes problems with usability, as the three years of Nym testnets have shown. Using another underlying asset such as Bitcoin to represent the special purpose of reputation in the mixnet was heavily considered, but it would lead to problems with volatility that could hurt usability and not be in line with the purpose of Bitcoin, which is a long-term store of value based on transparent digital scarcity. However, we believe that resistance to mass surveillance also has value for society.

Who and what is the token for?

The NYM token is for anyone who wants to make use of or help provide network layer privacy. More specifically, the NYM token is for

• End users who want to protect their privacy at the network layer by sending their communications through the Nym mixnet. They will want NYM tokens in order to pay for the service, although the first few months of the mixnet will be free of charge while the network is being optimized for speed and efficiency. Payment of fees in fiat or cryptocurrencies like Bitcoin can be converted to NYM. Note that NYM is not a general purpose payment mechanism or cryptocurrency.
• Node operators who want to run mix nodes and earn rewards. They will want NYM tokens in order to pledge a mix node and join the mixnet. They then have the chance to be considered for the reward set of mix nodes doing the work of mixing packets and earning rewards.
• Community members who want to ensure the mix network is operating with a high quality of service. Not every person may want to run a mix node themselves. Instead, community members can delegate NYM tokens to increase the reputation of mix nodes that they believe will provide a good quality of service. Of course, the opposite is also true and if a person delegates NYM to a poorly-performing mix node, then they will fail to increase their NYM as the mix node fails to perform. Anybody who holds NYM tokens can delegate and receive a share of a mix node’s rewards for contributing to ensuring the quality of the network.
• Applications that want to use the privacy-enhanced bandwidth provided by the mix network for their users. They will want NYM tokens in order to pay for usage of the network. The first few months will be free of charge however to help support developers as they begin to build on the infrastructure. The Nym network should support a wide variety of sustainability strategies and business models, including those that appear free to end-users and that are not-for-profit.

Is the NYM token a ‘privacy coin’?

No, NYM is not a privacy coin. NYM is a token that runs a global decentralised mixnet, which offers network layer privacy for any application, including any cryptocurrency wallet on any chain. This includes applications that do not use blockchains at all, such as instant messaging applications.

NYM does not seek to compete with Bitcoin as a store of value or with Confidential Transactions, Monero, or zero-knowledge proofs in terms of providing privacy on-chain. From Bitcoin to ZCash, no current “layer 1 blockchain” provides “layer 0 privacy” for the peer-to-peer broadcasts used in every transaction. Nym can provide network-level privacy for any blockchain and beyond to any generic application, just like Tor or a VPN. And developers can build their wallets and applications on top of Nym to offer network-level privacy for their users.

Why does the NYM token have a prospectus?

We believe that buyers of the NYM token should be informed. We are excited to be the first Swiss blockchain-based initiative to have a Swiss token prospectus approved by BX Swiss as a utility token! BX Swiss is approved as a prospectus review body by the Swiss Financial Market Supervisory Authority (FINMA). By having a prospectus checked for completion by a neutral third-party, we demonstrate our commitment to transparency and accountability

The prospectus of the NYM public offering can be found here.

How are NYM tokens distributed?

The initial distribution of tokens and their unlocking schedule has been organised to match the ‘skin-in-the-game’ of the pre-launch participants, with the aim of matching as closely as possible the actual resources and time that have been put into building the Nym mixnet so far. This includes the Nym Technologies employees that created the design and built the code, our backers who have supported Nym Technologies (for example, our employees would not have been paid a salary without their support), and the thousands of testnet participants who have helped test the mixnet as we have been building it over the past two years. Participants in the testnet also receive NYM so that they can continue to run their mix nodes at the mainnet.In order to ensure that these token-holders do not centralize control over the network, their tokens will be locked and only slowly released over two years. This ‘vesting schedule’ can be found here.

I love privacy, how can I get the NYM token?

No one should purchase NYM for financial gain or speculation. NYM should only be used within the Nym mixnet. Again, NYM is not a general purpose payment mechanism nor cryptocurrency like Bitcoin. For investment purposes, do not use NYM but instead look into Bitcoin or other investment vehicles.

NYM tokens are required to use the mixnet or run a mix node. Initially, the token will be available to the broader privacy-interested public in a sale recently announced on CoinList. The sale will open on the 9th of February 2022, and full details can be found on CoinList.

We are always looking for new community members to run nodes and create privacy-enhanced applications on top of Nym.

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