Understanding the Operation Mechanism and Characteristics of Privacy Infrastructure Nym in One Article

Source: Coinlist Blog

Original Title: A Deep Dive Into Nym: The Next Generation Of Privacy Infrastructure

Compiled by: Richard Lee, Chain Catcher

CoinList will conduct the Nym token sale at 2 AM UTC on February 10. It is reported that Nym is the next generation of privacy infrastructure, providing privacy protection for users at the network layer. Nym was incubated by Binance in 2018, and the latest round of financing was completed in November last year, raising $13 million at a valuation of $270 million, with a16z as the lead investor, along with participation from DCG, Tayssir Capital, Huobi Ventures, HashKey, Fenbushi Capital, and others.

Recently, Coinlist had a conversation with several members of the Nym team about the content of the project and how NYM (the native token of the Nym mixnet) provides privacy for users of the Nym network. Below is the full compilation by Chain Catcher:

1. First, what is Nym? And how does it utilize blockchain?

Nym is a privacy infrastructure. Its main technology is a mixnet that provides privacy protection at the network level. Any metadata from communication in internet traffic is removed by the Nym mixnet.

Metadata is data about data, such as who you are talking to, when, where, and from what IP address, etc. Metadata is essentially the language of machines, as most surveillance today is conducted using machine learning algorithms. Therefore, in monitoring your internet activities and predicting your behavior, metadata is as important as the data itself.

The Cosmos-based blockchain "Nyx" is used to track the reputation of each "mix node" associated with NYM tokens. This blockchain network also runs smart contracts for the Nym mixnet (to reward nodes) and contracts for NYM token transactions (for all NYM users and those who stake NYM tokens to run "mix nodes").

2. What are the use cases for the native token NYM of the Nym network?

The NYM token has three main use cases.

First, users need to use NYM tokens to pay fees when sending their data through the mixnet.

Second, users can also stake NYM tokens to run "mix nodes." The job of a mix node is to obfuscate data packets (note: thus, the mixnet is essentially a network of nodes providing obfuscation services), and based on their reputation and service quality, "mix node" operators can earn NYM token rewards. If a mix node successfully obfuscates user traffic, their reputation will increase, and correspondingly, the amount of NYM they can earn will also increase.

Finally, users can delegate to a mix node to operate without having to do it themselves.

Thus, the intrinsic value of the token lies in its utility in granting access to network privacy and providing incentives for it. The crypto-economics aim to incentivize high-quality privacy protection: the higher the service quality, the more rewards nodes receive, and the better their reputation in the overall infrastructure.

3. What is a mixnet? How does the Nym network utilize mix nodes to provide privacy for network users?

A mixnet is a decentralized computer network arranged in a multi-layered format. Users do not send messages over the internet, but instead convert their message packets into encrypted "Sphinx packets" on their own devices. The format of "Sphinx packets" presents all packets as uniform sizes, making them difficult to track.

Then, at each layer of the mixnet, computers known as "mix nodes" mix the internet traffic of users with that of other users. This makes it impossible for even the most sophisticated adversaries to monitor the entire network, as they can no longer track packets or analyze communication patterns.

4. Can you explain what "mix proof" is? And how does this concept reward users of the Nym network?

The Nym mixnet is a proof-of-work (PoW) system that "mixes" packets instead of mining Bitcoin.

Mixing is a form of work, and while the Nym mixnet requires mix nodes to stake NYM tokens, the quality of service and privacy protection provided by the mixnet still depends on the actual work done by the mix nodes.

We can measure this work by sending "measurement" traffic through mix nodes, as mix nodes cannot distinguish between measurement traffic and user traffic, nor can they cover user-generated traffic or even the traffic of the Nym mixnet itself. This allows the network as a whole to determine which mix nodes are offline or operating below standard. The network thus does not reward malfunctioning mix nodes with NYM, while users of well-functioning mix nodes should ultimately gain a higher reputation in NYM.

5. How does Nym compare to VPNs (Virtual Private Networks) and Tor?

The most widely used network-level privacy solution is VPNs. While VPNs provide the ability to hide users' exact IP addresses, they are a centralized solution. This means that VPN providers can observe all network traffic between their users and the public internet, accurately knowing what services their users access at any given time. Additionally, VPNs cannot withstand powerful adversaries that can observe VPNs or poorly managed VPN providers that log your IP address…

Tor attempts to solve this surveillance issue by routing traffic through three relay "circuits," providing better privacy than single-node VPNs. Tor encrypts traffic multiple times, so only the final Tor node can see the "destination." However, the anonymity of Tor can be compromised by intelligence entities that can monitor the "entry" and "exit" nodes of the entire Tor network. This is because Tor currently does not add timing obfuscation or cover traffic to obscure traffic patterns in the circuit, which can be used to correlate different flows and deanonymize users. However, Tor's design is expected to continue being the best design for web browsing and other flow-based traffic.

Nym can provide stronger network-level privacy for cryptocurrency transactions, instant messaging, and any other message-based traffic. Unlike Tor, Nym's mixnet design offers network anonymity and resistance to surveillance by adding cover traffic and timing obfuscation, even in the face of adversaries capable of monitoring the entire network.

The Nym mixnet is decentralized, rather than operated by a trusted provider like a VPN, as it uses blockchain technology and economic incentives to decentralize the network. Nym node operators are incentivized to run nodes and provide high-quality service and uptime through "mix proof." Software updates are typically based on community adoption, followed by final decisions made by node operators and token holders.

6. What does it mean for Nym to provide "network-level privacy protection" for all blockchains and applications? Can you give some examples?

Applications, wallets, and blockchains can use the Nym mixnet to protect packets from network observers' attacks—whether they are broadcast through peer-to-peer networks in encrypted transactions or messages sent between clients or any other type of application.

Developers can run their applications or transactions through the mixnet to protect their users from network-wide surveillance. In fact, the design of the mixnet means that the more applications and uses it has, the better everyone's privacy will be. This includes messaging applications like Signal or any blockchain network and wallet. From Bitcoin to ZCash, there is currently no "layer 1 blockchain" that provides "layer 0 privacy protection" for peer-to-peer broadcasts used in every transaction.

If you are interested in learning about the practical applications of Nym, the Nym mixnet can now be used with any application that supports the SOCKS5 interface for local proxying of Internet traffic, just like Tor. This means Nym can now be used in many Bitcoin wallets, including those that support on-chain privacy with Liquid Confidential Transactions like Blockstream Green. Today, the encrypted messaging application Keybase also supports Nym, and adventurous users can even run Nym on Firefox. You can find videos on how to use Nym with applications on the Nym YouTube channel, and we have detailed documentation on our website.

7. What crypto trends are you most interested in at the beginning of 2022?

We are certainly excited about the renewed focus on "privacy"! Privacy, including the early work of mixnets, is very important for creating the early vision of the same cypherpunks that created Bitcoin, and it is great to see privacy becoming a topic of interest again. We hope that privacy can once again become a cornerstone of the industry, just as we saw with zero-knowledge systems in the late 1990s.

Without making privacy the default setting of the internet, many decentralized ideals, including autonomy and freedom, are impossible to achieve. Given the overall digitization of our lives during COVID-19 and the growing idea of the "metaverse," more and more people are concerned about putting our lives and interactions into the digital world, which is a surveillance machine for governments and Silicon Valley.

Surveillance can lead to analysis and targeting, resulting in various concrete harms, and we need tools like Nym to fight back. However, Nym is not the only tool needed for human freedom; we look forward to other efforts from Minimint for Bitcoin to "DarkFi," as well as seeing existing efforts like Tor and the Liquid Alliance continue to gain more traction in 2022.

8. What is the best way for the community to get involved with Nym?

Currently, users can download and install the Nym wallet, obtain NYM tokens, use the wallet to stake NYM to run a mix node, or delegate to a mix node and earn mix mining rewards. Users can also use Nym's SOCKS5 proxy to send their data to the mixnet for network-layer protection, just like Tor.

The Nym website has a complete "Get Involved" section that will be updated over time. Additionally, the Nym Telegram is a great place to learn about the developments of the Nym network.