The Nym mainnet reward scheme is being activated

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We are reaching the final phase of launching the Nym mainnet, namely activating the mixnet reward scheme.

The Nym decentralised and incentivised privacy system is the first of its kind. This means we are turning on rewards and onboarding participants in stages.

In this blog post we will go through the reward algorithm turning on, the distribution plan for testnet rewards and CoinList sale Option 2 tokens, all of which is taking place in stages over the next couple of weeks.

1 Reward algorithm turns on

The Nym mixnet reward algorithm is being turned on. This will allow you to delegate stake or bond your node as soon as you have received your tokens (the minimum bond to run a node will initially be 100 NYM. There is no minimum for delegation).

But do not worry if you don’t have your tokens quite yet — for those who are impatiently waiting to begin staking in the network, you are not missing out on much. Rewards scale as the network and token supply scales, due to the way that the reward sharing algorithm works….

The initial parameters of the reward scheme look like this:

Total reward set: 720

Active set: 600

Standby set: 120

Node selection rate: nodes are resampled and reassigned to the mixnet every epoch (1hour) so if you are running a functioning node, you get a new chance every hour.

Reward rate from mixmining pool: max 2% of the reward pool are emitted every interval (720hrs, meaning approximately monthly) for a full set of nodes. The reward pool is initially set to 250 million in value, with security precautions in place as funds move into the pool. Later, when fees are activated, these are added to the available rewards.

NOTE: The reward rate scales up or down proportionally according to however many nodes there are. So if there are only 360 nodes out of 720 nodes currently running, we don’t emit 2% but only 1% of the total reward pool. This means rewards scale along with the number of nodes and amount of stake in the network.

To receive the maximum rewards, nodes need high levels of bonded and/or delegated stake:

Say the total rewards available in an epoch (roughly an hour) are 6120 NYM to distribute among up to k=720 mix nodes that are selected for rewards, of which 600 are active and 120 in standby. Taking into account that active mix nodes are rewarded at a higher rate, the maximum rewards are around 10 NYMs for active nodes and 1 NYM for standby nodes. To receive maximum rewards however, mix nodes need to have perfect uptime and be staked up to saturation point, which in the case of k=720 is around one million NYMs bonded and delegated to the node. When nodes have lower staking than saturation or less than perfect uptime, the rewards are scaled down accordingly.

In short, rewards will be very small until the bulk of the NYM token supply is staked on nodes, bringing them to high levels of reputation so that they can realise their full reward potential. This process begins with Option 2 being released, and then will extend so more and more rewards get distributed.

Rewards are distributed to mix nodes and delegators every epoch. You don’t need to take any further action, these are simply being compounded and accounted for in the system.

Currently these rewards will not turn up in your wallet automatically unless and until you withdraw them from the system, which requires a small tx fee. In the current version of the wallet (1.0.3) in order to withdraw rewards you need to unbond or undelegate. In the next version of the wallet you will be able to see the changes to your rewards as they happen and redeem with one click.

2 Testnet participants begin receiving their native NYM tokens

Our testnet participants have helped test the Nym network over the past year and helped make this global system a reality. Testnet participants are approximately 8,000 people (this is the KYC Milhon testnet participants plus NYMPH testnet participants, the latter are yet to be verified — stay tuned for instructions).

In total, 1% of the total supply of NYM, that is 10M NYM tokens, was set aside for the community. For now from that pool each participant receives 1250 NYM tokens to begin staking in the mainnet. They are being onboarded first, before Option 2 buyers (as well as any backers and supporters) as many of them have proven themselves as fully operational node runners in the earlier stages of the network.

The 1250 NYMs will be on a vesting schedule and will be released in 3 batches of 250/ 500/500 NYMs over the course of six months with quarterly releases. You will be able to see the vesting schedule with release dates in the Balance section of the wallet.

The first batch of 250 unlocked NYMs will be distributed starting from May 4, 2022, to those who have submitted their Nym wallet addresses and were not identified as multi accounts. Distribution of this batch will happen in stages over the course of a week in a random order. After that everyone will get their 2nd and 3rd batch of 500 tokens at the same time every 3 months as per the vesting schedule in the wallet.

3 Option 2 begin receiving their native NYM tokens

CoinList has extended the Nym wallet address collection for Option 2 token buyers until May 6th, 2022. The token transfer to Option 2 buyers will start on/around May 9th, again in batches and over a week in a random order.

These tokens are native NYM tokens (Cosmos) and so can be used immediately to stake in the Nym network both as locked and unlocked. You will be able to see the vesting schedule with release dates of Option 2 tokens in the Balance section of the wallet.

Once the first batch of all option 2 tokens are distributed, there will be enough NYM tokens circulating in the system for staking and thus rewards to start becoming substantial. The mainnet reward scheme will then be fully live!

There may be small adjustments throughout each of these stages as the parameters in our live system are tested. Keep an eye out for announcements in the announcement channel.

And as always, thank you for working with us to make this first-of-its-kind global incentivised privacy system a reality!