Nym (NYM) Q3'24 Initiation of Coverage: Public Beta Launch of NymVPN Marks a Milestone Quarter for the Privacy DePIN Protocol

Nym (NYM) is an open-source, incentivized, and decentralized physical infrastructure (DePIN) protocol that protects privacy at the network level of any application, wallet, or digital service. As a mixnet, Nym protects against traffic pattern analysis and metadata surveillance.

Key Insights

Nym (NYM) is an open-source, modular, and decentralized physical infrastructure (DePIN) protocol that enhances privacy at the network level for any application, wallet, or digital service. As a mixnet, Nym protects against traffic pattern analysis and metadata surveillance.

Nym exists as a tool to facilitate private end-to-end internet communication between any application. As such, it is not exclusive to blockchain-related activities. However, the Nym mixnet is closely linked to the NYM token, which runs on the Nyx Cosmos-based appchain to enable permissionless ‘bonding’ of new mix nodes to the Nym network and to pay for mixnet services.

The NYM utility token serves the following functions for the Nym mixnet and the underlying Appchain:

In Q3’24, NYM’s price further declined 42.9% QoQ to $0.08 after a previous 46% QoQ decline in Q2’24, both in line with the broader market contraction in the quarter. The market cap also dropped 37% QoQ, closing at $63.2 million.

NYM was originally distributed as both a native Cosmos ICS-20 token and an ERC-20 token, bridged to Ethereum via Gravity Bridge for Coinlist users. By the end of Q3, the ERC-20 NYM supply stood at 116 million, or 14.4% of the total 803 million circulating supply, up from 13.3% in the previous quarter. This suggests decreased adoption into the native mixnet ecosystem.

In Q3, Nym Technologies released an NYM Swapper app that allows the exchange of NYM tokens between the native Cosmos-based app chain and Ethereum’s ERC-20 tokens via MetaMask and Keplr wallets. This tool simplifies the bridging process and allows users to easily stake tokens on Nym nodes for rewards and manage delegations across the two blockchain ecosystems.

The protocol incentivizes operators (who run Nym Nodes or Nyx validator nodes) and delegators with Nym rewards to bootstrap the network and incentivize security. Total rewards denominated in NYM decreased by 1.3% QoQ, while rewards denominated in USD decreased by 46.4% QoQ due to the NYM token’s price depreciation. Reward distribution decreased from a 12-month high of 2.36 million NYM in September 2023 to 2.06 million NYM in September 2024. This decrease would be expected as the network moves towards commercial adoption and becomes self-sufficient in incentivizing Operators and Delegators without the need for rewards.

Operators were awarded approximately 13% of overall fees in Q3 2024, while delegators received the remaining 87%. This marks a shift from Q2 2024, where delegators received 91% of rewards and operators received 9%. In Q3, delegators earned $515,500, while operators received over $73,700. This change in rewards distribution is due to new parameter adjustments introduced in September 2024, which affected node operator costs and profit margins. The goal was to prevent a potential "race to the bottom" in operator profit margins and to control any unchecked increase in operator costs. This parameter change sets the following ranges:

Following a community vote in Q2’24, the above parameter changes were implemented through the Caramello release in September 2024. According to an official post by the project team, since the implementation of the above changes:

In the coming months, Nym plans to introduce further changes to NYM tokenomics and staking reward parameters, incorporating feedback from the node operator community. A detailed roadmap for these updates will be presented during the Nym node town hall in October 2024.

In Q3’24, the total number of packets received increased by 118%, reaching over 1 million. Since all packets are uniform in size, network traffic is measured by the total packet count. However, due to dynamic cover traffic, individual user activity remains untraceable from overall packet data.

In Q2, a series of stress tests were conducted to push heavy traffic through the network and identify error messages and their sources. The first test took place on March 20, 2024, and the third concluded on April 9, 2024. Despite involving over 340 nodes, there were no significant increases in packet volume or other metrics during the tests. Most growth occurred later in Q2 and in Q3, following the beta release of NymVPN which drove substantial packet traffic to the network. The absence of packet loss or node dropouts indicates the network remained stable and experienced no