Nym is developing a powerful, network layer privacy system for any internet traffic: a decentralized & incentivised mixnet. The mixnet itself is not a blockchain but it’s powered by one called Nyx, which is also the home of the NYM token.
The NYM token is a utility token. This means it enables the usage of a specific utility: digital privacy. The value of NYM tokens are increasingly tied to the demand and usage of this real world utility. In this article we’ll be going over the basic token characteristics, what value it represents and how to make the token work for you. The second part of this article aims to facilitate the overall understanding of Nym token economics.
Four aspects of the NYM token: Utilities, token economic basics, value flow and philosophy
1) Utilities of NYM
NYM is a utility token, therefore the most important aspect to keep in mind is that it enables users to do a couple of different things with it.
I) Access to the mixnet. This is the most important utility that comes with a caveat for everyone who is reading this blogpost around the time it’s published: the mixnet is currently free to use. The first commercial application, the NymVPN will go live in 2024. Launching the VPN will drive a constant FIAT inflow of value into the Nym ecosystem, that ensures a sustainable demand for NYM tokens. Shipyard finalists will be invited to join the core community in testing the closed beta version already in 2023, so make sure to prepare and ace your level 2 exam and join a level 3 specialization track.
II) Staking & Delegated staking. Apart from accessing the mixnet, anyone can use their NYM tokens to delegate them to mix nodes. Currently stakers can earn an average between 16% - 20% APY on NYM delegated to mix nodes. Through delegating NYMs to a mix node anyone can help to secure the mixnet and also earn a share of the mix node rewards. Staking is a really important part to ensure a constant, high quality service and to prevent malicious actors from running fraudulent nodes. All mix node operators are competing for delegations, which is similar to their reputation: the more delegations a node attracts, the higher its chance to be included in the active set of nodes (which is randomized hourly). There is a maximum point calculated based on the amount of NYM in circulation, above which their rewards will decrease, this is called the “stake saturation point” and currently it’s almost 960.000 NYM for each mix node, that they need to attract to maximize their rewards along their chance of being included in the active set.
III) Bonding. The third utility of the NYM token is enabling anyone to start-up a mix node by themselves. This is what enables the mixnet to be decentralized, it does not require too much technical knowledge nor hardware, only a VPS server, some lines of code and placing 100 NYM a a minimum bond when setting up a fresh node. Read here more about setting up your own node.
2) NYM token economics basics
Let's summarize the basic technical aspects of the NYM token economics.
NYM has in total a fixed supply of 1 billion tokens. Not all of these are in circulation yet, as there are different vesting instruments releasing tokens since the genesis of the Nyx chain in early 2022. Nyx is a Layer-1 blockchain based on the Cosmos SDK.
The team releases quarterly tokenomics updates as more tokens enter into circulation. This is necessary as the increase in liquidity results in a change in the mixnet tokenomic parameters. To give an example: the more native NYM tokens there are in circulation, the higher the stake saturation points for mix nodes.
NYM also has a version of its native token running on the Ethereum chain (ERC-20 NYM), where permissionless bridging is made possible through the Gravity bridge. For more details on this read this article here.
If you want to learn more about how to bridge your ERC-20 to Cosmos read this article.
If you are interested in the quarterly tokenomics parameter upgrade read this blogpost.
3) NYM Token flow.
The below is a simplified chart to illustrate the directions of how NYM tokens flow between the main actors of the Nym ecosystem.
- NYM and the value of digital integrity
One of the many reasons to be really excited about what Nym is building: is the hard fact it actually creates real-life (IRL) value. According to a fresh report from the Mozilla foundation: The state of online privacy has reached ‘Very Creepy’ level. Nym is building a layer-0 solution for all and any internet users to regain their digital integrity. This is even more valuable for marginalized communities, minorities and citizens living under oppressive regimes and in conflict zones. These are the groups of people that the technologies developed by Nym support and impact the most. Measuring the value of digital integrity or freedom would be an impossible feat as these are quite abstract and subjective terms, but one thing that we are all familiar with and is also easy to measure is: bandwidth usage of the mixnet. And the NYM tokens are measuring exactly this, without discriminating against anyone based on their gender, values or social status: simply enabling actual privacy for anyone.
So what’s an easy way to picture the mixnet? Nyx chain and the NYM token working together? Imagine that you are on a train station of a future internet. The mixnet is the train, which creates real-life value for humanity: digital freedom and integrity through privacy. As more people get on this train, the better actual privacy it will provide through a growing anonymity set. Every train needs a pair of tracks to run on - and this is what the Nyx blockchain does. It’s the underlying coordination layer of the mixnet. And the NYM token is the third piece of this puzzle: both the tickets for the train and also the electricity that’s powering everything.
The NYM token is the unit of account for mixnet bandwidth usage (train tickets) and the medium of exchange (electricity for the trains) in the Nym ecosystem.
Now let’s recap the most important things one more time⚡️🍍
Nym is a utility token, providing access & securing the world's largest decentralized mixnet. It’s both the ticket to use the mixnet and the energy that keeps it running, incentivising mixnode operators and blockchain validators to provide the highest quality of services and also rewarding all stakers who support these nodes by delegating NYM to them. With the NymVPN coming up, this will close the loop on the Nym token economics: the demand for the NYM token will be directly tied to usage of the VPN and mixnet.