NYM Research Report: Next Generation Global Privacy Infrastructure
The use of the most suitable blockchain privacy technology currently has greatly enhanced the privacy strength of its underlying protocol from a development perspective, which is undoubtedly more advanced and suitable for blockchain research and user needs.Source: D-Tiger Research Institute
Introduction
The three letters of Nym are derived from the English words AnoNymous and PseudoNym, both of which convey the meaning of "anonymity" in the English context. This aligns with the vision of the Nym project team: to end the surveillance of personal information in the internet era and truly protect users' privacy.
1. Basic Overview
1.1. Project Introduction
The Nym Project is a privacy track project developed by the privacy technology startup Nym Technologies. It creates a privacy-centric Web 3.0 application for users by enabling a privacy blockchain based on the Mixnet privacy protocol. Nym is a new generation of global privacy infrastructure aimed at scaling the network, developing a foundational platform with high privacy protection features, and promoting the development of application products that emphasize privacy protection, thereby improving network efficiency.
1.2. Basic Information
2. Project Details
2.1. Team
As of 2022-02-17, the project team has announced a total of 25 members, including individuals from various countries such as Germany, Romania, and the UK:
In addition, Nym's advisor George Danezis previously worked at PANORAMIX and provided advice to Nym before joining Libra.
He rejoined the Nym project after a brief departure to help design Facebook's digital currency Libra (renamed Diem). Chainspace co-founder Mustafa Al-Bassam is also now an advisor to Nym.
Summary: Most of the Nym team members have over ten years of work experience in the field or direction, and have held key positions in large joint companies in the past. The team is experienced, with clear member distribution and moderate development progress, giving the team a strong overall capability.
2.2. Funding and Partnerships
Investors
Partners
Founded in 2018, as of 2022-02-17, the project has undergone four rounds of financing and investment, with a certain amount of funding each year to support the project's development. With the increasing scale of financing, the number of financing institutions and partners has also been growing year by year. Currently, the project has a strong financial backing and is not lacking in funds for development.
With the improvement of development progress and promotional efforts, the Nym project has established partnerships with many public chains and has gained favor from various institutions, including well-known venture capital firms like Binance Labs and A16z. Nym is quite adept at promoting project popularity and collaborating with other projects.
2.3. Ecological Community
As of 2022-02-22 15:00, Nym's official account has published 1,575 tweets, averaging more than one tweet per day. The project's community updates information in a timely manner, making it worth continuous attention. Additionally, the Telegram community has set up categorized groups for different language countries, facilitating user communication and discussion.
However, a drawback is that the Discord community has not yet been opened, which raises the entry barrier for users wanting to understand the overall planning of the Nym project due to the lack of unique information classification. However, according to the management, the official Discord community will be launched soon.
The project team's community operation capabilities are moderate. Following the public offering of the $NYM token, although the project is currently transitioning from an early stage to a high-speed development phase, it has still attracted many interested users, and the project's popularity continues to rise, with moderate to high future development potential.
3. Framework
Overall Design Philosophy: Support applications and services for enhanced privacy.
Focus: Protect users' virtual data and privacy proofs.
Operating Model: A token-based incentive model is used to cover costs incurred during operation and reward those providing excellent node services to the Nym protocol.
Ultimate Goal: To meet the privacy needs of the majority of users.
3.1. Core Technologies
Nym employs various privacy technologies, integrating them into a cooperative network node system, with the main technologies including:
1. Coconut (Privacy-Enhanced Signature Scheme), which allows for the reversal of resource channel control, shifting from identity-based authentication to usage-based privacy protection planning.
2. Sphinx, a protected transmission method, which packages encrypted layer information to make it difficult to distinguish from other binary data.
3. Mixnet, which can encrypt and mix Sphinx packets so that it is impossible to distinguish which packet corresponds to the final destination. Mixnet is a corrected version of the Loopix design.
3.2. Main Network Participants
? End User
The user base of the Nym project includes all users of available services who choose to communicate privately, whether through anonymous broadcast chats, accessing information, or chatting with friends. The larger and more diverse the user base, the better the anonymity, and the higher the network cost-effectiveness.
? Mix Nodes
Mix nodes provide community privacy to end users through anonymous data packaging. Mix nodes are organized on the network and referred to as "mixnet." Before reaching the end user, this data is transformed into various types of nodes, and the final received data is encrypted and reordered, preventing other users from exploiting vulnerabilities or tracking the transmission process.
? Gateways
Gateways keep the Nym Mixnet non-free. Participants may choose to use the same gateway to run their data, diversify into various gateways, or select different gateways daily. Additionally, when participants go offline, the gateway automatically helps them receive information and aids in achieving reliable transmission characteristics.
? Validators
Validators work together to play a core role in the Nym network. They maintain the cross-chain network of Nym, distributing and notifying all information within the network scope, including active nodes and keys, profile factors, pointers, participant stakes, and other information necessary for all participants to ensure the secure operation of the network.
? Service Providers
The Nym network is not a standard standalone network but an infrastructure supporting a wide range of third-party applications and services. Service providers can send and receive information through private communication with users via the Nym network.
Nym Network Overview
Information Flow Process:
Store $NYM tokens in the Nym pool to obtain credentials.
Use Bandwidth credentials to connect to the gateway area.
Establish a temporary Nym network with the gateway.
Run lines through the mixnet.
Use service credentials to prove "usage rights" services.
Ensure that the received credentials are utilized.
Distribute rewards from the Nym pool.
User and Service Provider Privacy Operation Process
3.3. Advantages and Risks
Advantages
✅ 1. Nym protects privacy at the network layer: By relying on diversified layers of transmission within the network (mixnet), at each layer of the mixnet, mix nodes scramble your network data, keeping the entire transmission process private and hiding your real metadata.
✅ 2. Nym's mixnet is incentivized and decentralized: Users pay a portion of $NYM fees to send their data through the mixnet. By staking the initially backed $NYM, anyone can run a mix node, and node operators can earn $NYM token rewards based on service quality. This provides mixed data and privacy for end users, known as "mix proof."
✅ 3. Nym can be compatible with any application: From Bitcoin to Zcash, currently, besides Nym, which can provide layer-0 privacy from every transaction on layer-1 blockchains, Nym can offer network-level privacy for blockchains and other applications. From Bitcoin to instant messaging, developers can build their applications on the Nym top layer for network-level support while providing protection at the metadata level for users.
Risks ⚠️ Nym's design and network are not infallible and come with corresponding risks, such as:
Global Network Monitoring: Adversaries can monitor the entire participant network composition and all communications on the network. Additionally, active network adversaries can inject, modify, and drop packets during transmission, exploiting the underlying internet infrastructure.
Corrupted Participants: Potential threats can compromise a subset of Nym participants and coordinate hostile resources to guide attacks. Participants here include validators, mix nodes, gateways, service providers, and end users.
4. Development
4.1. History
Nym was established in the fall of 2018 through the Binance incubator program.
In May 2019, Nym completed a $2.5 million seed round investment.
In August 2019, the core team members participated in the Web3.0 Summit, ETHBerlin (a decentralized community-initiated industry event).
In December 2019, Nym held its first testnet workshop at CCC, covering operation, interruption, and building the NYM alpha testnet.
In May 2020, the core team held a fully anonymous advanced seminar on using encryption to protect privacy.
On July 16, 2020, Nym secured $6 million in Series A funding led by Polychain Capital, with participation from Eden Block, Greenfield One, and others.
On November 27, 2020, the Nym core team released version Nym v.0.9.2.
On April 22, 2021, Nym officially launched version v.010.0 - Finney testnet.
In May 2021, Nym won the Annual Blockchain Solution Award at AIBC in Dubai.
In July 2021, the Nym v.011.0 testnet was released, transitioning the Finney testnet to the Milhon testnet.
On November 12, 2021, Nym announced the launch of a desktop wallet and the open-sourcing of the Mixnet browser.
On November 18, 2021, Nym raised $13 million in Series B funding at a valuation of $270 million, led by a16z, with participation from Digital Currency Group, Tayssir Capital, Huobi Ventures, and others.
On December 21, 2021, the permanent testnet - Sandbox was officially launched, aimed at replicating the mainnet's operations.
On February 1, 2022, Nym released information about its native token NYM and announced the upcoming launch of the Nym mainnet.
On February 10, 2022, 75 million native Nym tokens $NYM were made available for ICO public sale on Coinlist at $0.5/$0.25.
4.2. Current Status
Nym is currently operating a test network with over 5,000 nodes globally, testing the system's security and token economics, and ensuring that nodes work together to provide privacy protection.
According to data from Nym's official Network Explorer, as of 2022-02-17, there are a total of 2,775 mix nodes, with over 600 active nodes, along with 120 backup network nodes, 12 offline nodes, and 2 validators.
The global node distribution map also shows that the nodes are primarily concentrated in regions such as the United States, Russia, Germany, and the Netherlands. The layout is global, and the number of nodes continues to increase.
Germany has the highest number of nodes, with over 1,809 nodes, accounting for 28.8% of the total. The USA follows with 1,074 nodes, making up 17.1% of the total. The Netherlands ranks third with 860 nodes, accounting for 13.8%, followed by Finland, Russia, the UK, Japan, France, Singapore, Canada, and others.
Overall
- The mixnet and validators are currently operational.
- The Mixnet API has stabilized, allowing for application development to begin.
- Validators are now functioning in their most basic form. Later, validators will also generate Coconut credentials.
- There is currently a native Mixnet client written in Rust. It runs independently on desktops or servers. You can use it to connect desktop or server applications to the Nym network using any WebSockets language.
- A WebAssembly client also exists. The WebAssembly client can be used in browsers or mobile applications and communicates with gateways via WebSockets. The WebAssembly client is currently incomplete (it does not yet send cover traffic), but it is in development and will be ready for use in development. Cover traffic occurs transparently after setup, so Nym application developers do not need to worry about it.
- SOCKS5 clients and service providers (referred to as Nym-Network-Requester) can easily retrofit cryptocurrency wallets and other existing SOCKS-compatible applications to use Nym's privacy infrastructure.
4.3 Future
The Nym core team announced that the mainnet deployment of Nym will be completed in the first quarter of 2022, officially starting the mainnet countdown. The Nym mainnet will begin operation: users will be able to use $NYM tokens to pay for mixnet fees, stake $NYM to run nodes, and stake $NYM on mix nodes.
Nym's future roadmap: 
5. Economic Model
The utility token $NYM of the Nym privacy network not only provides users access to the Nym mixnet but also serves as node points and rewards for operating infrastructure. Users will use $NYM to access the mixnet and send their data through it to enhance privacy. $NYM is not a universal payment mechanism (like Bitcoin and other cryptocurrencies) and is only permitted for use within the Nym network.
5.1. Token Release
The total supply of $NYM tokens is 1 billion, with an initial circulating supply of 63,500,000 tokens.
Token prices and quantities for different rounds of investors:
Investors received a total of 365,128,571 $NYM tokens, accounting for approximately 36.5% of the total supply, distributed as follows:
- 40,000,000 $NYM tokens were sold at $0.014 during the initial seed round.
- 71,428,571 $NYM tokens were sold at $0.038 in the pre-seed round.
- 150,000,000 $NYM tokens were sold at $0.043 in the first seed round.
- 100,000,000 $NYM tokens were sold at $0.11 in the second seed round.
- 3,700,000 $NYM tokens were sold at $0.27 in the validator round (after the mainnet launch, to build validator nodes to ensure the mainnet's secure operation).
Release Rules and Mechanisms:
Reserve & Community Ecology: Starting from 2022-03-31, tokens will be released quarterly for a period of 2 years.
Investment Institutions, Project Team: Starting from 2022-05-03, tokens will be released quarterly for a period of 2 years.
Mixed Mining (Mix Nodes): Tokens will be released monthly, starting from 2022-03-31, but will only become liquid after 2022-05-03.
Testnet Rewards: The first batch will be released on 2022-05-03, with subsequent releases occurring quarterly as needed.
5.2. Token Functions
❓ For End Users:
Any user who wants to protect their privacy at the network layer through the Mixnet will need $NYM tokens to pay for service costs. Initially, the network will be free during the optimization period of a few months, and users can use cryptocurrencies like Bitcoin to pay fees, which can be converted to $NYM.
❓ For Node Operators:
Anyone who wants to run a mix node and earn rewards will need $NYM tokens to participate in the mix node and engage in Mixnet. Only then can they execute mix node data, code, and other tasks to earn corresponding rewards.
❓ For Community Members:
Any member who wants to ensure that the mix network operates with high-quality services can delegate $NYM tokens to nodes they believe will provide high-quality services to enhance the reputation of mix nodes. Of course, if members delegate to low-quality service mix nodes, they will naturally not receive rewards when the nodes fail. Anyone holding $NYM tokens can delegate their tokens and then receive rewards distributed by mix nodes to maintain and improve network quality.
❓ For Applications:
Applications that need to use the privacy technology bandwidth provided by the Mix network will acquire $NYM tokens to pay for network usage fees. Although the first few months will be free, it is the obligation of developers to begin building infrastructure to assist and support them. The Nym network should support various sustainable strategies and business models, including those that are free and non-profit for end users.
5.3. Token Public Sale Activity
As of 2022-02-17, Nym's native token $NYM has completed its public sale on the CoinList platform. The details of the activity are as follows:
6. Competition
6.1. Track Overview
The Nym project belongs to the Web3.0 privacy track sector.
As blockchain development enters a new era, users are not only concerned about project economic capabilities and security but also include privacy protection in their considerations.
Building applications in the Web3.0 era relies on the improvement of underlying infrastructure, such as privacy protection, data sovereignty, and distributed storage. However, privacy protection is the cornerstone of Web3.0 and has long been a missing foundation of the internet.
Unlike the centralized management era of Web2.0, where users sacrificed privacy for services and data ownership was usurped by platforms, Web3.0 aims to create an internet owned by builders and users, achieving value transfer through cross-chain technology and enabling communities to own platforms, with encryption technology applied to data protection.
6.2. Competing Projects
- Tor (The Onion Router)
The traditional project Tor is currently the most famous anonymous overlay, providing a "circuit" with three hops, offering better privacy than single-node VPNs. However, Tor's anonymity can be compromised by entities monitoring the "entry" and "exit" nodes of the entire network, making its privacy design security inadequate. - VPN (Virtual Private Network)
VPNs connect users' devices to remote servers in chosen countries/regions through secure tunnels. This masks users' IP addresses, making it appear as though they are accessing the internet from the remote server's location rather than their actual location.
6.3. Competitive Analysis
Summary:
Firstly, Nym has been researching the privacy track since 2018, while the initial version of Tor was released on 2002-09-20, with the latest version update being 0.4.6.10. The timeline of track layout indicates the project's foresight regarding the future direction of cross-chain technology, and a longer working time leads to more mature working methods and rich experience.
Secondly, the scope of Tor's privacy infrastructure extends beyond the blockchain universe; the field of "anonymizers" that is more easily encountered in daily life is also more comprehensive. However, a broader scope does not necessarily mean more mature technology. As the internet era evolves, many earlier leading development technologies have gradually lagged behind and need to seek innovation or new levels of reform.
Nym is built on absorbing the advantages of previous privacy project technologies while continuously innovating, utilizing the most suitable blockchain privacy technologies to significantly enhance the privacy strength of its underlying protocol, making it more advanced and suitable for blockchain research and user needs.
7. Conclusion
In summary, the development threshold for Web3.0 privacy projects is relatively high, with fewer development teams. However, the times require progress, and privacy technology is no exception. The Nym project not only has a stable underlying privacy technology support but also strong financial backing.
As a result, many users believe that Nym has considerable potential in the privacy field after its launch. Its mix network technology can encrypt user data and hide metadata, making communication discreet to protect privacy. In terms of technology and potential, it is expected to surpass Tor and become a more advanced modern upgrade version. At the same time, the Nym project further encourages the diversity and decentralization of privacy choices and tools for users, software users, and operators. Therefore, the future potential of Nym should not be underestimated.
