BSCN Alpha Drop: Once per week, BSCN brings you a deep-dive on a single project that we think is especially interesting, or under-discussed/under-appreciated in the wider cryptocurrency space. Sometimes these projects will be early-stage and pre-token - other times they will be well-established but worthy of examination nonetheless. We take various aspects of the project and subjectively rate them 1-5, to make life even easier.
[Nothing in this newsletter is intended to constitute financial advice. The content herein is intended for educational and entertainment purposes only. Investing in cryptocurrency always carries risk; you should always do your own research and never invest more than you are willing and able to lose]
TL;DR - $NYM
Focus/Landscape [3/5]
Team [4/5]
Funding [5/5]
Token Use-Case [4/5]
Tokenomics [3/5]
What is Nym?
Put simply, Nym is a 'layer-0' piece of internet infrastructure, designed to be compatible with any and all other networks. It addresses the problem that internet users often leak sensitive data which can be used by third parties - Even if the information itself is encrypted, the metadata (info about IP addresses, the device being used, and various other elements) is still leaked and can be put to use by governments, businesses, malicious actors and more. This puts internet users at risk of surveillance and forfeiture of privacy.
Nym provides said networks with data-privacy by routing transactions through its own 'mixnet'. Nym's mixnet, which relies on zero-knowledge technology, is a decentralized system of computers which adds layers of encryption to any data that is sent through it.
It mixes user data with that of other users, making them indistinguishable and providing users with genuine privacy and security.
Focus/Landscape (3/5)
Nym is a privacy-focused project - a good and a bad thing.
On the one hand, Nym looks to solve one of the biggest problems in blockchain and the wider internet - the overwhelming degree of transparency. While ideologically a good thing, this transparency can serve as a barrier to entry for individuals and institutions that cannot allow sensitive information to become public.
The increasing awareness of government and commercial surveillance that most consumers are subjected to makes privacy-preserving projects compelling, with well-known privacy token, Monero $XMR, boasting a market cap of over $3 billion.
However, on the other hand, regulators have shown increasing concern around blockchain privacy projects.
In August 2022, US authorities placed sanctions against crypto-mixer, Tornado Cash - a protocol designed to hide the connection between sender and receiver of cryptocurrency assets. Authorities were fearful about the use of such mixing protocols in money-laundering activities and, just a year later, $TORN's founders were arrested.
That said, the privacy industry persists with tools like VPNs remaining in existence and, as far as we understand, fully compliant.
Ultimately, Nym's long-term feasibility and ability to avoid negative regulatory actions will depend on its team's ability to remain vigilant and compliant - something its impressive team seems capable of doing. However, there exists risk in privacy-focused projects that does not exist in some other key blockchain verticals.
Team (4/5)
Nym's team is easily one of its most impressive aspects.
Nym's team is led by Harry Halpin - a world-renowned computer scientist and PhD that worked with Tim Berners-Lee at MIT (the creator of the World Wide Web Consortium). He has personally suffered at the hands of surveillance while acting as a climate-activist, meaning he is close to the cause behind the Nym project.
Nym's CTO, Dave Hrycyszyn, is also a renowned blockchain developer and even worked for Facebook's Libra project, before it was ultimately shuttered. He has sold companies in the past and is the co-founder of cryptocurrency project, Vega Protocol $VEGA.
The rest of Nym's team is flush with academics and developers with impressive experience in both Web2 and Web3 companies.
However, we have given the team a '4/5' score owing to minor concerns that its developer-focused team lacks the marketing experience to guarantee the project will be able to amass a large and loyal following/community over the long-term. This is perhaps reflected in the project's current lack of awareness.
Funding (5/5)
Regardless of anything else, Nym's funding status was always going to score a '5/5' rating...
Nym's funding dates back to 2019 when the project raised $2.5 million. This was topped up with a further $6 million in July 2021 which saw investment from Polychain, Maven 11, and 1kx.
Just 4 months later and Nym announced it had closed a further $13 million - This time with a cap table that included Fenbushi, Huobi, Hashkey, and several others.
However, and perhaps most excitingly, October 2023 saw Nym open applications for a staggering $300 million ecosystem fund, with commitments from Polychain, Huobi, and other well-known investors. Ecosystem funds of this scale are rare, full-stop. However, for a project as young as Nym to boast an ecosystem fund of this size is unprecedented and its long-term impact on the Nym ecosystem could be outlandish.
Nym has also received various grants and, potentially, additional funding rounds. However, on the above accounts alone, the project has been armed with more than $320 million with which to build its product and amass success.
Token Use Case (4/5)
Nym's native token, $NYM, serves as the currency for the project's network and it is key to the running of its core component - the Nym Mixnet.
$NYM exists in two forms - It is both an ERC-20 token, but also a token native on Nym's own Nyx blockchain.
$NYM has several use-cases...
(1) Payment for Mixnet services: $NYM is required to utilize the privacy-preserving services of Nym's mixnet. $NYM is used to pay nodes within the mixnet to use their resources in processing the buyer's traffic. In this respect, it is similar to a gas or payment token.
(2) Node Incentivization: Receiving $NYM tokens is the primary reason for nodes to participate in Nym's network. In this respect, it is required to ensure the smooth running of Nym's mixnet itself.
(3) Staking: Would-be nodes require $NYM tokens to become a node at all. A portion of $NYM tokens constitute the nodes' stakes, therefore incentivizing good behavior and dispersal of network power.
The best cryptocurrency assets, when associated with a product or network, are required for the actual running of said product or network. In this respect, an asset like $ETH has obvious value, whereas some, for instance, GameFi assets do not possess this trait and therefore struggle to maintain value over time.
As Nym's primary product is its mixnet service, $NYM is crucial to the Nym ecosystem. The mixnet cannot function without nodes and nodes have no incentive to participate or behave well without the existence of the $NYM token.
Tokenomics (3/5)
At time of writing, $NYM has a market cap of around $120 million, with a fully diluted valuation of around $190 million.
In this respect, $NYM may already be considered an established token. However, it is yet to reach the lofty heights of other well-funded projects with strong teams, meaning, at least to some, the $NYM token has room to appreciate.
For context, a fully diluted valuation of $190 million means that the $NYM token is worth less than 2/3 the size of its own ecosystem fund...
The first thing about $NYM's tokenomics that would concern any investor is the huge allocation given to project 'insiders'.
That is, the 56.5% of $NYM tokens allocated to both the project's team and private investors. This is a staggeringly large allocation for any cryptocurrency project and it may be behind $NYM's ostensible price suppression to-date.
That said, the silver lining (and reason for $NYM's tokenomics scoring '3/5' rather than '1/5') is the fact that the token has now been in existence for almost 2 years.
According to the image graph from ICO Drops, depicting $NYM's release schedule, almost all tokens (including those of team and backers) are set to complete vesting in the first 24-months after launch.
As CoinMarketCap indicates $NYM's launch in April 2022, this period of hyper-aggressive vesting should be ending in just a few months' time, with the only inflationary pressure remaining being from 'mix-mining'.
In this respect, $NYM's historical price suppression could be coming to an end... at just the time that Bitcoin experiences its halving event.
That said, there is no guarantee that both team and investors do not still hold their $NYM tokens and are prepared to dump as soon as $NYM's price begins to move upwards. Nonetheless, $NYM's tokenomic condition should improve beyond what has been seen over the last 2 years.
Conclusion
Given the impressive nature of Nym's team, the quality of its backers, and the scale of its funding, it seems surprising that Nym is not more discussed in the cryptocurrency ecosystem today. Especially in light of the impressive nature of its technology and mission.
That said, the fact that Nym opened up its $300 million ecosystem fund at the end of 2023 could indicate that the project is only now about to pick up momentum and notoriety.
There may also be justifiable concern that Nym's team, though hyper-impressive, is not sufficiently effective on the marketing front as to quickly build a large and loyal community. However, $NYM's poor tokenomic allocations may have also proved a barrier to the token's adoption.
Nonetheless, with $NYM's aggressive vesting schedule coming to a close this year, around the time that Bitcoin experiences its next halving, combined with the opening of its $300 million fund and the $NYM token could be set for great things in the mid-to-long term.
