NYM: The Privacy Layer0 of the Web3.0 World

Written by: Deep Tide TechFlow

Recently, while interacting with many friends from the internet and venture capital circles, I often find myself inadvertently discussing two topics: the Metaverse and WEB3.0.

If the former is the hot topic of the moment, it feels like too many people are "playing with concepts," creating a sense that everyone wants to cash in. The latter, however, has a more mysterious veil that needs to be lifted.

What is Web3.0?

Here, I would like to quote an analysis by A16z partner Chris Dixon.

Web1.0 (approximately from 1990 to 2005) was about decentralized and community-managed open protocols, with most of the value going to the edges of the network—users and builders.

Web2.0 (approximately from 2005 to 2020) was about isolated, centralized services operated by companies. Most of the value went to a few companies like Google, Apple, Amazon, and Facebook.

The open protocols of Web1.0 had flaws in data storage and privacy protection, which the tech giants of Web2.0 exploited to build data-driven and monopolistic business empires.

Web2.0 has the following characteristics:

• Users sacrifice privacy for services.
• Ownership of data and its profits are seized by platforms.
• Platforms naturally tend toward monopolies for profit.

Today, we stand at the pinnacle of Web2.0, at the dawn of the Web3.0 era, which combines the spirit of decentralization and community governance from Web1.0 with the advanced, modern functionalities of Web2.0.

Web3.0 is an internet owned by builders and users, enabling value transfer through blockchain.

Unlike the closed and monopolistic nature of Web2.0, the ideal Web3.0 should be:

• Open, where the platform is owned by a community rather than a single company.
• Privacy-protecting, where personal data is no longer exposed, and encryption technology is widely applied to information transmission.
• Value-sharing, where the value generated by the platform is no longer monopolized by a single entity, allowing individuals who create value to receive corresponding rewards.

Building applications for the Web3.0 era relies on the improvement of underlying infrastructure, such as privacy protection, data sovereignty, and distributed storage… Among these, privacy protection is the cornerstone of Web3.0 and a foundational element that the internet has long lacked.

For anyone wanting to understand Web3.0, I recommend reading some articles by A16z partners or on their media platform regarding Web3.0, while also keeping an eye on their latest investment trends.

In the Web3.0 infrastructure sector, A16z's latest move has been to invest in the blockchain privacy startup Nym Technology.

On November 18, Nym Technology announced it had raised $13 million in funding, led by venture capital firm A16z, with participation from Digital Currency Group, Tayssir Capital, Huobi Ventures, HashKey, Fenbushi Capital, and others.

Regarding this investment, A16z partner Ali Yahya wrote:

We believe that privacy will be a fundamental and important feature of blockchain, even though most blockchains like Ethereum and Bitcoin are currently completely transparent. Projects like Aleo, IronFish, and Aztec address application-level privacy issues, but before Nym, the network-level blockchain privacy problem had remained unsolved.

By enabling privacy on the blockchain, Nym will open up a new design space for builders to create previously impossible privacy Web3 applications. Nym is a next-generation global privacy infrastructure that provides privacy using relay nodes, similar to Tor. Their goal is to scale the network to become a privacy hub for the entire internet and improve network efficiency by rewarding nodes that run the network.

Why Nym?

When you think of privacy protection, surveillance, data breaches… what comes to mind?

Snowden, Assange, Chelsea Manning (one of the largest leak providers for WikiLeaks), imprisonment, exile… blood and tears, idealism and heroism intertwined.

Therefore, my long-held view is that to achieve success in the challenging yet righteous field of privacy protection, one must be an OG: a tech OG, an idealism OG, and not back down.

The team at Nym embodies this blend of technical expertise and idealism.

The founder, 41-year-old mathematician Harry Halpin, worked from 2013 to 2016 at MIT for Tim Berners-Lee, the inventor of the World Wide Web, helping to standardize browser encryption technology.

Former U.S. Army intelligence analyst Chelsea Manning, known as the largest leaker in U.S. history for providing WikiLeaks with a vast amount of classified information about the U.S. government, was sentenced to 35 years in military prison but was released after her sentence was commuted by the Obama administration. She has also dedicated herself to the construction of NYM.

The name Nym comes from the English words AnoNymous and PseudoNym, both of which convey the meaning of "anonymity" in the English context, aligning with Nym's vision: to end the surveillance of personal information in the internet era and truly protect users' privacy.

Nym provides privacy protection at the lowest layer of the internet, serving as the foundation upon which other privacy solutions are built. You can think of it as the Layer0 of privacy protection.

Currently, Nym's main product is a decentralized global mixing network (Nym Mixnet).

The concept of a mixing network was actually proposed by cryptography pioneer David Chaum back in the 1980s.

Essentially, a mixing network is a network of nodes that provides obfuscation services. These nodes consist of covering routers, whose main function is to transform and reorder messages, ensuring that the appearance, timing, and other metadata of the messages cannot be correlated.

Nym Mixnet is a decentralized three-layer computer network. Communication traffic is sent through it, wrapped in multiple layers of encryption using the SPHINX packet format, making every piece of data that passes through the Mixnet appear identical. At each layer of the Mixnet, a user's internet traffic is mixed with that of others, along with the metadata that uniquely identifies their communication. The user's IP address, time, and destination are obfuscated.

In other words, in Nym's mixing network, all packets will be shuffled and arranged randomly.

It's like rolling dice; the dice represent packets, being shaken around in the mixing network, and until they stop, no one will know what number they show.

For example, imagine each piece of information on the Nym network as shoppers moving between stores in a shopping mall. Nym's customers all dress identically, and before reaching their final destination, they randomly visit multiple stores. Therefore, an all-seeing observer cannot distinguish Nym's shoppers, and encryption technology prevents them from reading the content of each message.

So, how does NYM differ from the more mature Ethereum-based mixing protocol Tornado?

Nym is a project that can prevent large-scale surveillance of internet traffic by providing metadata protection. You can think of it this way: Nym operates at Layer0 (network layer), while Tornado operates at Layer2 (application layer). In fact, projects like Tornado Cash can be built on or integrated with the Nym system to protect users' network-level privacy.

In fact, the only global competitor that can be compared to NYM is Tor.

Tor stands for The Onion Router, and those familiar with the dark web should know it.

Tor uses a three-proxy model, where its clients first communicate with directory servers to obtain information about globally active relay nodes, then randomly select three nodes to form a circuit, and every ten minutes, randomly select three new nodes to avoid detection.

However, while Tor encrypts traffic through this model, it adds time obfuscation or uses decoy traffic to confuse the flow. Therefore, when faced with institutional-level computational power, Tor's model becomes inadequate.

In this regard, Nym's mixing network can provide new features that Tor lacks, such as traffic covering and time obfuscation, enhancing user privacy. Additionally, compared to Tor, Nym has a unique token incentive mechanism that encourages users throughout the ecosystem to contribute to privacy protection.

Privacy and Incentives

A core question here is, what role do tokens play in the WEB3.0 world?

A16z partner Chris Dixon believes that tokens grant users property rights, the ability to own a part of the internet, and serve as a value incentive, which is one of the core differences between Nym and Tor.

As a privacy protection system, Tor primarily operates through volunteers, which leads to the project's development heavily relying on the distribution of global volunteers: for example, in Western developed countries like Europe and the U.S., there are more volunteers, and Tor can provide more services, while in places like Southeast Asia and Africa, where there are fewer volunteers, the general public finds it difficult to fully enjoy Tor's functionalities.

However, compared to Tor, Nym's approach seems more human-centric: incentivizing privacy protection behaviors through the NYM token.

NYM is a utility token that powers the network, allowing individuals or institutions to purchase it to pay for "bandwidth vouchers," which are allowances for using the Nym Mixnet at Layer0, and to pay for "service vouchers," which can be used for privacy protection services at Layer1 and Layer2. Its demand will be driven by general and global privacy needs, and it also serves as a protection for the privacy network.

However, Nym does not seem to intend to compete directly with Tor.

Founder Halpin stated: "We do recommend individuals use Tor, but I think we are better suited for Bitcoin and Layer 2 solutions."

In fact, Nym has been rewarding its network node operators with Bitcoin. In the long run, he hopes that Nym's technology can integrate with protocols like Lightning, meaning that in the future, NYM will also become a cornerstone of privacy protection for many crypto applications.

Finally, I would like to conclude with a quote from Polkadot founder Gavin Wood about NYM: "We find ourselves being drawn into a hive-mind world of 1984, where our dreams, loves, and vulnerabilities are merely transaction records for corporate and government interests. It's time for us to start paving alternative paths, and decentralized incentive-based mixing networks are an indispensable key part of that."

In an era where people are accustomed to trading privacy data for services in WEB2.0, someone has to step up and say they are unwilling to, right?

Big brother is watching you, But NYM won't allow it.