Quarterly token economics update
See within for updates on the NYM vesting schedule, token supply, and parameters
See within for updates on the NYM vesting schedule, token supply, and parameters
The lifeblood of the Nym mixnet is its underlying token economics. This carefully crafted system incentivises node operators for providing a good quality of service, as well as enabling a decentralised, permissionless node directory.
Languages: Bahasa Indonesia // 日本 // Русский // Español // 中文 // Português
Rather than solely being a reward system, though, the NYM token also signals the reputation of nodes — as decided by the community — a metric that helps the mixnet decide which nodes are more likely to run the service at any given time.
All together, these moving parts make for a completely decentralised and secure privacy system. Anchored to these economics are key dates every quarter from the launch of the Nym mainnet and initial coin offerings through to May 2024. These are something called the ‘vesting schedule’ or vest dates — in simple terms, this is where more tokens are released into the markets.
Let’s quickly take a look at when the remaining vest dates are and what this means.
For NYM holders already familiar with the token economics, scroll below for the latest supply figures plus parameter changes (spoiler alert: there are no changes at time of publication).
How does the Nym vesting schedule work?
For newcomers to the Nym universe, the granular details of how the token operates might feel a little confusing.
But the main thing to remember is unlike many tokens in the Web3 world, the NYM token is deflationary. This is similar to Bitcoin and means there is a finite number of NYM tokens that exist and will ever exist: 1 billion.
However, not all of these tokens are yet in circulation.
Instead, there are two important mechanisms that affect the number of tokens in circulation.
They are each tied to a ‘smart contract’ hosted on the Nyx blockchain. They are:
- Token rewards for Nym nodes. These are distributed monthly from the ‘mixmining pool’. This is facilitated by the mixnet smart contract*.*
- Token vest. This is where tokens that have been allocated to Coinlist buyers, backers, and the Nym core team are released on a quarterly basis. This is facilitated by the vesting smart contract.
See also: A breakdown of the smart contracts that run the Nym token economics
The overall vesting schedule began in 2022, the year the Nym mainnet went live and the NYM token was publicly listed. There are quarterly vests over the course of two years ending in 2024.
The most recent vest dates were 2 November to Coinlist buyers, then 4 November to validators, and then on 5 November to backers and advisors, who hold the most NYM tokens out of any group.
See below for the vest schedule through to May, 2024:
It is important to remember that because NYM tokens are deflationary, large vest dates may have a temporary impact on the value of the NYM token.
This is to be expected, according to the laws of supply and demand. Token price movements around vest dates tend to rebalance and recover afterwards.
What does the token supply look like?
Openness and transparency are essential to the Nym mission, so the core team publishes regular updates on the number of tokens currently circulating.
Anyone can check the current token supply at any time using this API.
At the time of writing, the total circulating supply is 607.4m NYM.
Additionally, 22.4% of tokens remain in the mix-mining pool, essentially a bootstrapping mechanism to reward node operators for good mixes.
As paid usage begins with the upcoming NymVPN, the fiat or crypto that VPN subscribers pay for access will be converted to NYM tokens and distributed as rewards to the various entities that make the service possible. This leads to a circular flow of NYM tokens with sustainable demand.
Furthermore, the zk-nym zero-knowledge protocols enable subscribers to unlink their payment from their credentials and usage of the service, thus protecting their privacy.
See also: Nym roadmap update — 2023–24
Staking parameter update
Tied to the vesting schedule and the token economics is something called a staking parameter update. This entails adjusting the target staking supply to account for the increase in overall staking supply. An increase here, in turn, affects node stake saturation point and therefore the APY of nodes and delegators.
Before diving into that, here are the current parameters:
- Circulating supply: 607 million NYM (API)
- Locked staking supply: 168 million NYM
- Max staking supply: 657 million NYM
- Target staking supply: 230 million NYM
- Mix node stake saturation point: 960,000 NYM
Let’s walk through these one by one and explain why they matter.
The NYM tokens that are released during the vests entail a significant increase in the circulating supply of tokens. In addition to this, token holders can also stake some of their locked tokens (concretely, 10% of their original locked amount can be staked).
The circulating supply plus locked staking supply determines the max staking supply, meaning the total amount of NYM tokens that could in theory be staked on Nym nodes.
Now, it is highly unlikely that all tokens will be staked on Nym nodes.
For example, right now 150 million NYM, representing 23% of the max staking supply, are staked.
For this reason, a target staking supply is set at a reasonable number between the max staking supply (657m) and actual current level of staked tokens (150m).
The target staking supply parameter is set to maximise APY, or rate of return, for currently staked tokens, while nevertheless incentivising further staking.
This determines the stake saturation point of Nym nodes. The stake saturation point is found by dividing the target staking supply by the number of rewarded mix nodes: 230m / 240 = 960k saturation point.
The saturation levels of a node signify its reputation, and this affects whether the node is selected to the active set (or ‘epoch’) in the mixnet, and earning rewards. If all nodes reach saturation too easily because the target is set very low, then the incentive algorithm no longer works, and staking loses its significance in the selection process.
In short: setting a target lower than the current level of staked tokens would disincentivise people from operating nodes and delegating stake. But setting the target a lot higher could raise the saturation point to unreachable levels. This would harm the APY of mix nodes, and also disincentivise operating and staking.
So, in order to offer a good APY to operators and stakers, the target staking supply for rewards is higher than the current level of staked tokens, but lower than the current maximum of 657m, and set at 230m.
And those all together are the ‘parameters’.
Parameter update — no update!
Changes to the parameters are only necessary when the level of staking in the mixnet is approaching the target.
This number might increase with rewards being released every month from the mixmining pool. And it is even more likely to increase with the quarterly vest, as this releases a large amount of tokens that can be staked.
Having said all that, the target staking point of 230 million NYM is still a way off, therefore none of the parameters need to change.
The parameters will be revisited with the next vest to assess whether the total staked in the network is nearing the target.
Whew: deep breath. Make sense?
Check out the paper Reward sharing for mixnets for a deeper dive into how this all works.
And don’t forget to keep an eye on Nym Shipyard masterclasses from community members, Nym core team, and special guests for more info about nodes, staking, and the token economics. Watch now:
- Nym Shipyard masterclass: Nym token economics 101
- Nym Shipyard network and token economics AMA
- Nym Shipyard: want to stake? Here’s how to choose a mix node to delegate NYM
Join the Nym Community
Discord // Telegram // Element // Twitter
Privacy loves company
English // 中文 // Русский // Türkçe // Tiếng Việt // 日本 // Française // Español // Português // 한국인
