We would like to invite our amazing community to join Nym testnet Finney. Anyone who participates will be eligible for a share of the bug bounty fund that will be released after the mainnet.

In this post we will go through the new features of Nym v0.10.0, plus rules and instructions on how to join the testnet.

What’s new in v0.10.0?

1) The main feature that makes this version different from the previous releases, is that the previously centralized directory authority is removed. The directory is now stored on a blockchain, which is based on the Cosmos SDK (and CosmWasm).

The testnet tokens issued in testnet Finney are HALs. It’s important to note that HAL tokens are not the final NYM tokens. HALs are purely created to mimic the features, mechanisms and uses that the final NYMs will have and to test those out in the wild. HALs are absolutely valueless, can’t be bought, sold or transferred for NYMs.

2) The other feature is that the system will now run on a set of decentralized validators. Replacing our previously centralized database, validators maintain the Nym chain which serves as a public directory that determines which nodes are included within the network at a given time.

For now, Nym validators are a permissioned set of experienced validators. In the next testnet, this set will expand and more can join in a permission-less fashion.

3) In addition to a new chain and validators, we are now introducing mixnode and gateway bonding. Bonding is the process of starting a node, and putting up some stakes or a “bond” of tokens to get it into the blockchain-based directory. Once fully implemented, this feature will secure the network against Sybil attacks by making it costly for the malicious actors to spam the network with numerous nodes. Later, in a future release we will introduce the concept of delegated staking, where token holders who are not operating their own nodes can delegate stake to mixnode and gateway operators that they believe are trustworthy, and earn a share of their rewards.

HAL tokens needed for bonding and starting a node will be provided during the onboarding process (more on that below).

How to join Finney?

Testnet Finney, means that we arrive at the much awaited moment where we will remove the hard cap of 1500 mixnodes, and so more nodes can join the network.

But let’s not forget why we had a cap on the number of nodes to start with!

Back in the day, when there was no cap on the Nym testnet, the network got attacked by a funny pal who started creating more than 10 thousand nodes, either for personal gain or to undermine the network. Although at the time it was not a surprise to us that this could happen, we did not do anything to prevent it in advance either. To the Nym team, it was interesting to see if the network could stand all that many nodes and not fall apart. It did, and it was a good test of the stability of the network.

So now, in order to prevent Sybil attacks, we will be imposing “one node per server” and “one node per person” rules, plus limiting the circulation of HALs per node, until Sybil defences are fully implemented and a more developed staking system is in place. For that reason there will be an onboarding process that requires Telegram usernames (more on that below).

The onboarding will start with the existing NYMPH-holding nodes. That means if you had participated in the previous testnet and had received NYMPHs, you will be able to join Finney first. Have in mind you will need to have your mixnode private and ‘identity’ keys (not the ‘Sphinx key’) and a Telegram username to cryptographically claim your mixnode. Once you claim your node you will be able to join Finney and keep your node’s history all the way to the mainnet and beyond! To check if you are part of this group check if your mixnode’s Identity Key is on this list. To find your Identity Key, run your mixnode, the key will be printed out at the node startup.

We will allow one week for the existing community members (those on the aforementioned list) to switch to Finney, after that the on-boarding for everyone else will start.

Onboarding will start at 11am CET on Thursday April 15th for the former group, and at 11am CET on Thursday April 22nd for the latter. Finney will run until Thursday May 22nd.

To join Finney as an existing community member, follow the instruction on Nym documentation under “Upgrading from an earlier version”.

To join as a new community member or to start a new mixnode follow instructions under “Initialize a mixnode”. You can do this from April 22nd.

What to expect next?

As mentioned earlier there are lots of new features in this version that need to be battle tested. In order to ensure rigorous testing of all the different aspects of the system (ie bonding and un-bonding, rewards based on capacity, etc) before we move to the next phase and eventually the mainnet, we may (or may not) destroy the chain ran by the validators and start it over during this testnet.

That is why the HAL chain, stakes, rewards or any other assets issued on it will have absolutely no value and are purely for testing the system. For any reason if we have to restart the chain, we will keep the nodes’ history, that is public/private keys, the duration each node was online, and their contribution in privacy-enhanced packet transfers. Rest assured you will be able to claim your node in the future through the glory of the public/private key cryptography.

In addition to being incentivized for transmitting privacy-enhanced packets for longer and maintaining a good quality node, there will be tasks and games that will be introduced as we go along that can increase your chances of getting moar and moar rewards!

Please note that we will be very strict with those trying to run numerous nodes and if we catch them none of their nodes will be kept or rewarded. We will introduce algorithmic measures to prevent these attacks, to automate this in the future.

Lastly, the previous testnet will be turned off after all NYMPH-holding operators have a fair chance to join the new testnet. A transition plan for NYMPH will be released, where nodes can keep their reputation — so keep those Liquid addresses! Participants in the new testnet will start receiving HALs, and continue increasing their long-term reputation now on the new chain maintained by the validators.

We can’t wait for all of you to join the network, and the fun that we will be having together testing it!

In this post we will describe what makes up a node performance and subsequently its reputation, as well as the vision going forward.

To recap, until now the incentives for running a mix node, or mix mining rewards, were being distributed to node operators equally and purely based on having a node be online, regardless of how many packets they mixed. From this release however, rewards are distributed proportional to the reputation score that a mix node gains during an epoch (currently weekly for those using a Liquid address or monthly for everyone else). Factors such as uptime, number of mixed packets, and also dropped packets all contribute to the reputation of a node.

What is reputation, why do we need it?

Well, in Nym’s decentralized network the point of the reputation score is to have a mechanism that allows;

1. better performing nodes to be distinguished and picked up by the network for the next round
2. when delegation (staking) kicks into gear, participants can vouch for a node’s reputation by delegating tokens to them and obtaining a portion of their rewards. Nym is not a “proof of stake” network, we use the term ‘stake’ as a proxy for reputation tokens that can be transferred to other nodes.

Let’s dig deeper into details and explain the above points;

The Nym network is designed as a client-server architecture. Where clients or users send and receive anonymous data packets and mix nodes are responsible for mixing user packets and provide privacy for them. Node operators in this architecture are incentivized to run on a set of well-maintained decentralized servers to reliably provide high quality of service (QoS) to hundreds of thousands of users at any time in return for rewards.

At the time of writing this post there are 1362 mix nodes in Nym network. While this is a great achievement and kudos to our community for making Nym the fastest growing privacy network and the largest mixnet out there, we should not forget that the quantity of nodes, although essential to a decentralized network, is not the only criteria that makes a good anonymity network. We need not just quantity, but high quality nodes.

For the Nym mixnet to provide privacy for the users, the size of the network (number of nodes) should be proportional to the amount of traffic that goes into it. For comparison sake, let’s say the Nym mixnet is a public transport system, where instead of packets there are passengers and instead of nodes there are buses. With too many buses in circulation and too few passengers, there will be too much waste in the network. On the other hand with too many passengers and too few buses there will be delays and dissatisfactions.

Now in this network if you also want to be private, then all the passengers should disguise the same way, just like Nym Sphinx packets, and there will always be a sweet spot between the number of identical looking passengers in the network and the buses they fill such that they can not easily be traced and de-anonymised. With too many buses, each passenger will take a separate bus (and so won’t “mix” with other passengers), and can be de-anonymized even if all the passengers wear the same disguise.

The reputation score and rewards are the mechanism to regulate the number of nodes so the sweet spot in the network is achieved. When traffic is low the extra nodes with lower reputation are put on standby and when traffic is high rewards are there to encourage more nodes to join the network. This mechanism design allows the Nym network to dynamically meet the demand for privacy.

In future releases, reputation will be calculated by a more complex verifiable proof of mixing algorithm where rewards are paid out in a new kind of proof of work where the work done by a node is a useful computation to provision privacy (“mixing”) to the users. Right now, the network simply sends through measurement packets regularly and measures if they are mixed or dropped — Nym is a proof of work network, where the work is mixing, not mining.

So while Nym is a proof of work system and not a proof of stake system, there are some features from systems newer than Bitcoin that we plan to experiment with. In the future, token holders can “vote” for other mix nodes with their tokens to signal that the token holder believes the node will have a good reputation , where the amount of “staked” tokens serves as a way to quantify the reputation. This allows participants whose node goes offline or are not able to run a node by themselves to endorse others and so participate in Nym.

Have in mind that Nym has no trusted parties, anyone can become a validator, gateway or mix node as long as they provide capacity to the network with adequate QoS. Since there has been an overwhelming number of mix nodes, we plan to experiment on seeing if participants should “stake” tokens to become part of the Nym network, but are rewarded proportionally to their work and not their stake. Stake is only used to ensure that they are incentivized to provide a high QoS; nodes that provide a poor service are not rewarded. Over time, mix nodes will be rewarded proportional to the amount of bandwidth capacity that they provision to users.

A tokenized reputation with an initial “stake” also prevents sybil attacks where adversaries cheaply introduce a large number of corrupt nodes to abuse the network. At the end of each round malicious nodes’ stakes are slashed and they are removed from the network.

It’s important Nym remains open and fair just like Bitcoin, so we are working on a mechanism to allow nodes that have no reputation to join, after a period of testing, and gain reputation, as we want the network to be fair and fairly reward nodes that do mixing. Lastly we are also working on similar mechanisms for validators and gateways, although the majority of computational power in a mixnet should be focussed on mixing!

One thing that node operators should keep in mind is that the reward mechanism in the mainnet will be designed such that it rewards a node with higher capacity and better QoS more than multiple nodes with mediocre or low QoS. Reputation score and therefore the rewards for the former will be much higher and it will have better chances of being kept in the network for the next rounds.

The above was a very high level explanation of Nym incentives and reputation mechanism. Technical details on how mix nodes performance and reputation is measured via proof of mixing will be accessible in Nym whitepaper. For now measurement packets sent by the network that are successfully passed by a node to the next one will increase the node’s reputation score by 3 and if they are dropped reduces it by 2. That is so nodes which currently do not support IPv6 traffic would not lose reputation, but gain it at a slower rate than nodes which are capable of forwarding both IPv4 and IPv6. In the next major release we expect all nodes to support both formats. For now a node needs 100 reputation score gained via measurement packets before it can start mixing and should always always have the latest version of Nym installed.

As we approach maninnet and as mix nodes in the network adapt to better and better QoS, the measurements will get more complicated taking into account more factors.

Two weeks since the start of the testnet, the network is now more than 20x larger. With over 500 mix nodes in operation, Nym is the largest public-facing mixnet ever deployed that provides network layer and metadata protection against NSA-level adversaries that can watch the entire network.

Much thanks to our great community of privacy lovers and advocates. This has been a great achievement!

The new release added lots of new features to the protocol. For a quick overview of Nym’s latest privacy features, check out these videos on sending private Bitcoin transactions over Nym mixnet or watching YouTube privately using Nym’s SOCKS5 proxy.

If you want to try it out yourself, follow our instructions for connecting a wallet (like Electrum or Blockstream Green with Confidential Transactions) to Nym’s SOCKS5 client, or if you use the Keybase desktop chat app, you can experiment connecting it to the Nym mixnet using the SOCKS5 proxy on port 1080 for network and metadata protection of your communications. We have temporarily disabled the web browsing feature to ensure initial quality of service for crypto transactions, but given the growing size of the network we are starting to experiment with opening it up again. We will also announce more exciting integrations from real-world applications soon.

With all the new features the testnet has been a great mechanism to stress-test the network for stability and robustness.

In addition to testing the network itself, Nym’s decentralized infrastructure depends on mix node operators to provide power for useful work of securely mixing network traffic for users. For the operators to play this role with high quality of service, they need incentives. So we set up this version with NYMPH testnet tokens to start testing our incentive mechanisms in a near real-world environment.

All our node runners have now earned NYMPH testnet tokens. The top 100 mix nodes have also been sent Bitcoin to cover their costs for providing computing for the Nym mixnet and mixing packets.

We will continue to run the incentivized testnet until mainnet launch to test new features and releases as they become available. Our new network monitor, which checks that mix nodes are honestly reporting their uptime, is now completed and about to be deployed in time for the Hackers Conference Paraleli Polis. With that crucial piece done, validators are now being actively worked on and we will be able to test out validators fairly soon.

So if you want to be part of this journey, earn NYMPH tokens or be included in the future bounties, set up a node by following the instructions and fill this form with your L-BTC (Liquid Bitcoin) address. The latter process will be automated in our next release.

If you had any questions setting up your node, join our community run Telegram help channel or say hi in our Keybase chat channels.

We will be holding weekly sessions to help onboard more people to test the mixnet. To get to know about those sessions, bounties, or news about the coming NYM token, join our Telegram channel.

What’s next:

• Testnet phase 1: Directory server with fully automated health checker to check the mix nodes status
• Getting Bitcoin and NYMPH addresses at node set up
• Automatic rewards and payments
• Integration against more privacy-enhanced applications.
• Releasing our validators and including them in the incentivised testnet