WHAT EXACTLY IS THE NYM TOKEN?
The NYM Token, which is essential to decentralizing Nym on the Nyx Cosmos blockchain, is at the center of the Nym network. Through rewarding users for enabling communication with increased privacy, this token powers the system. By tokenizing this process, Nym creates the groundwork for an alternative economic model that rejects the current internet’s standards of surveillance. Users are given trustworthy access to unrestricted and private internet communication through the use of Nym tokens, which also facilitate network operations. Participants who run mix nodes and contribute to the Nym ecosystem are rewarded with tokens in the meanwhile.
This token-based mechanism rewards network contributors and fosters a strong and long-lasting Nym ecosystem. Both the Ethereum blockchain and the native Cosmos ecosystem of Nym support the NYM coin. The native NYMs unlock the actual potential and utility of the token, which is a fundamental difference between the NYM token on Nyx (Cosmos) and Ethereum (ERC-20). However, because ERC-20 NYM is listed on more exchanges, it is simpler to access. You can start delegating stake on mix nodes of your choice once you bridge your NYM tokens from Ethereum to the Nyx Cosmos chain and keep them in the Nym Wallet to start earning rewards. If you want to launch your own mix node, you can also bond with native NYMs.
You can learn more about bridging, staking and earning NYM tokens here.
If you own native NYM tokens, you can stake them on effective mix nodes to receive a portion of their benefits. Your contribution to a mix node’s reputation when you delegate your NYM tokens raises the likelihood that it will be chosen to be part of the mixnet’s active set for the subsequent epoch. On the mixnet, a process known as mixmining, only nodes in the active set can mix traffic. As a result, mix nodes with greater reputations are considered to be more “trusted” by the network and therefore mix more traffic than nodes with lower reputations.
Learn more about how to stake and choose a mix node to delegate your NYM here.
Usecases Of Nym Token
- Privacy: Use NYM tokens to access the mixnet for privacy.
- Delegated Staking: Delegate NYM to mix nodes that provide good quality of service, and earn a share of the rewards.
- Run a Nym Node: Bond NYM tokens as an initial reputation score in order for your mix node to be part of running the Nym mixnet and earn rewards.
- Fees: NYM tokens are used to pay for transaction fees on the blockchain to keep the network-wide map of mix nodes and their reputation in NYM up to date.
What blockchains is the NYM token on?
On the blockchain of the Nyx Cosmos SDK are native NYM tokens. These can be utilized in the mixnet for assigning stakes and bonding nodes. For greater accessibility, native NYM tokens can be bridged to the Ethereum (ERC20) and BNB chains.
Is NYM a privacy coin?
NYM is not a privacy coin, though. It is a utility token that powers a worldwide, decentralized mixnet that grants network-layer privacy to all other coins, wallets, chains, and applications in general. A mixnet is an anonymous overlay network that is constructed on top of already-existing Internet protocols like TCP/IP and UDP, much like Tor or I2P. No current “layer 1 blockchain” offers “layer 0 privacy” for the peer-to-peer broadcasts utilized in every transaction, whether it be Bitcoin, ZCash, or Flow. Any blockchain and other general applications can benefit from network-level anonymity provided by Nym. Developers can build their applications on top of Nym to give their consumers network-level anonymity for everything from Bitcoin to instant messaging.
Why does the Nym mixnet need a token?
Nym Mixnet is A decentralized privacy network. By enabling any to connect mix nodes to the network and join a global privacy infrastructure, the NYM coin provides an open, decentralized, permissionless network directory. The coin also acts as a reputation, incentive, and reward system, ensuring that mix nodes deliver high-quality service and that the network can scale in response to demand. The Nym network’s nodes are compensated when users pay fees to use it. The Nym network will expand as usage increases and more money becomes available for rewarding nodes. A “mixmining” reserve (25% of the total NYM supply) offers initial rewards for bootstrapping the mixnet, much to Bitcoin mining rewards. Anyone who owns NYM tokens is eligible to bond a mix node or delegate stake to another user’s node in exchange for a portion of the mix node’s profits. A mix node’s reputation is determined by its total bond plus delegation, and nodes with higher reputations are chosen more frequently to participate in the mixnet, resulting in higher rewards. Mix nodes, which handle packet mixing and give end users privacy, are compensated with NYM tokens based on quality of service. This is referred to as “proof of mixing,” and it works similarly to how Bitcoin pays miners for creating new blocks. The Nym token economy is built to encourage effective privacy protection: the better the service, the more incentives a node earns, the more delegation they attract, and the more reputable they become. This increases the likelihood that they will be chosen to join the mixnet and rewarded in the future, resulting in better infrastructure-wide service.
How To Run A Mix Node With Nym Token
Token owners must use the command line or the Nym wallet to bond NYM tokens as the initial reputation of their mix node in order to launch a mix node in the Nym mixnet and begin receiving rewards. A mix node’s overall reputation is the sum of the amounts it has committed and delegated in NYM. How much NYM you attach to your node demonstrates how much you have faith in your ability to perform the mixing operation. Additionally, the amount of stake that other users assign to your node reveals how much the community trusts you to handle the task of blending traffic and ensuring privacy. It is more probable for a node with a greater reputation (measured in total NYM of a mix node) to be chosen from the reward set of mix nodes to execute mixing, and it also results in higher rewards when chosen. Nodes with poor performance, on the other hand, that go offline or fail to process packets are penalized with smaller rewards, which ultimately causes them to lose reputation and participation possibilities. In order to maintain a suitably wide network, there is also a “soft-cap” that ensures reputation is distributed over enough nodes to keep mixmining work decentralized.
Can I participate if I own NYM tokens but am unable to operate a Nym node?
One of the democratic features of the Nym architecture is the ability of token holders to influence which mix nodes manage the network: anyone with NYM tokens has the ability to delegate NYM to mix nodes. Delegators contribute significantly to the reputation-assignment process for mix nodes. Additionally, they are encouraged to delegate to high-performing nodes who will perform well during mixing and so realize the full potential for rewards because they can receive a share of the rewards. The mix nodes’ reputations are tracked by the Nyx blockchain. To choose which nodes to delegate to, any stakeholder can browse the Nym nodes connected to the blockchain. Download the wallet to delegate to a Nym node and start earning rewards.
How much NYM tokens do delegators get as rewards?
A delegator’s choice of mix nodes and certain characteristics (such as operational cost, profit margin, performance, quantity of pledge, and total reputation score) will determine how much in NYM rewards they will earn. A node’s pre-declared costs and profit margin are subtracted from any rewards earned and refunded to the node operator. The remaining rewards are distributed to delegators proportionally. The likelihood of a mix node being chosen to do mixmining tasks and receive rewards depends on its reputation, and incentives are also influenced by performance measures. At any time, delegations can be moved to a different mix node. The example mixnet explorer in the Nym Sandbox testnet displays node parameters in addition to other things. You should be aware that since the Sandbox is a testnet for the Nym mainnet, all NYMT there are worthless.
What is the mixmining pool and what happens when it runs out?
The mixmining pool is a reserve that was established at the network’s inception with 250 million NYM tokens (or 25% of the total supply of NYM), and these tokens are distributed on a monthly basis. Every month, 2% of the pool’s money becomes available for distribution to nodes as rewards. All rewards are distributed if every node has perfect performance and maximum reputation; on the other side, some awards are returned to the pool when nodes have poor performance or low reputation. As the reserve slowly depletes over time (but never completely empties), the monthly quantity of issued mixmining rewards decreases and is eventually replaced by user fees. The mixmining reserve rewards are necessary for bootstrapping the service since nodes must pay for operating expenses even if initial user traffic is insufficient to generate sufficient fees to support the network. In order to enable testing and usage, the mixnet will in reality be available for free for the initial months. Fees will take the role of the mixmining pool as the primary source of rewards as fees are enabled and more applications and users sign up for the service. In this way, mixing incentives in NYM serves a comparable purpose.
How Reward Algorithm Works On Nym Network
In each “epoch” of the mixnet, which is initially set to one hour, a certain number of nodes (see mixnet explorer) are selected as the “active set” to route packets in the mixnet, and a different number of nodes (initially three or four hundred) are selected as the reserve “standby set” (meant to contain quality nodes that are readily available to allow the network to scale in the next epoch if necessary). The probability of selection is based on reputation; the better the reputation, the more likely it is to be chosen. Be aware that no centralized entity, including Nym Technologies, must approve or make decisions on the algorithm or awards. Both standby and active nodes are rewarded by the reward mechanism. These comprise the ’reward set’ for the epoch. The remaining registered mix nodes that were not chosen for the reward set do not earn rewards in that epoch, but they may be chosen (and paid) in subsequent epochs. Since active nodes have more labor and responsibility relaying packets in the mixnet, they are compensated at a higher rate than standby nodes. The ‘active set’ nodes are compensated according to their standing, the amount of labor they contribute (which depends on the size of the mixnet), and how well they perform (in terms of relaying packets correctly). Based on the same factors, standby nodes are rewarded for remaining in reserve, however at a reduced rate because they don’t actually mix user packets. When bonding, Mix nodes state their operational expenses as well as their targeted profit margin. Before profits are paid, costs are reimbursed, and the profit margin shows what portion of the profits go to the node operator. People who have assigned a stake to the mix node will receive the remaining rewards (proportionate to their assigned stake). To draw delegators, a node must maintain a competitive cost structure and profit margin. After being split between the mix node operator and those who have delegated to the node, taking into account each participant’s stake as well as the node’s declared operational cost and profit margin, the rewards are given to individual mix nodes in the active and standby sets based on their reputation, bond, and performance. Initial mixmining prizes are given out from the mixmining pool. Rewards will increasingly come from fees paid by customers as network usage increases.
Here are some things you can do right now to engage in the Nym ecosystem and promote its expansion:
- Create a NymWallet: Start staking and exploring the mixnet using a NymWallet to learn more about the Nym ecosystem.
- Stake NYM Tokens: You give the Nym mixnet security and verification by staking NYM tokens.
- Operate mix nodes: Run mix nodes, which are essential for boosting privacy and anonymity, to contribute to the Nym network.
- Download NymConnect: Download NymConnect to make your applications more private.
- Develop applications: Technically savvy people can help the Nym ecosystem expand by creating tools, integrations, or apps that make use of Nym’s privacy-enhancing features. This can involve developing decentralized programs, wallets that prioritize privacy, or other tools that support safe and private online communication.
Conclusion
NYM Connect underscores the significance of the NYM token in reshaping internet communication and privacy. It demonstrates how this token-based approach rewards users and fosters a strong Nym ecosystem while emphasizing the choice between Ethereum and native NYMs for accessing and utilizing the token’s full potential.
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