NYM

DePIN - a new paradigm or simply a fancy name?

John Smith

Apr 10, 2024 • 10 min read

From the very outset of human civilization, there was always a question of collecting, preserving and saving information. Before written form of information was invented, the only form of information transfer was oral. We all remember from our school days various myths, fairy tails, customs, traditions, ~~gossips~~. While this was the only way to pass information from one individual to another, it was clearly a very unreliable method due to the way our memory works and how people can subjectively interpret events.

Even though we all know there were various inscriptions found on the cave walls discovered by archaeologists around the world, the real breakthrough came when writing was invented. There is not single agreement as to when this happened but roughly we are talking about Bronze Age c. late 4th millennium BC^[1] . This enabled humanity to preserve information for future generations to study/observe and correct. Eventually, press machine has been invented and punch cards, which became the predecessors of modern storage devices.

The next major breakthrough was invention of World Wide Web (WWW) in 1991. This was inevitable since humanity needed and wanted to transfer information on long distance in short periods of time. Back at the time it was a massive leap in technology but is it still the case today? Post Snowden revelations^[2] the paradigm has shifted and we are able to witness a gradual transition from Web 2.0 to Web 3.0.

The aim of this article is to explore what is DePIN, what its strengths and weaknesses are and where it can be applied. The structure of this paper is as follows:

Internet is broken!..Wait, what? As we discussed already in the introductory paragraph, Internet and WWW was arguably the most important invention of 20th century, so why are we talking about it being 'broken'? The way it is broken is relation to data economics being developed by pioneers of Internet like Microsoft, Google etc. Let's take Gmail as a specific example. It opened its doors to customers on 1 April 2004 and as of October 2019, it has got 1.5 billion active user accounts^[3]. First, registration was based on invites only, which is a very smart marketing move because it makes people they are special and they can now have access to this elite club of username@gmail.com holders. Everything was free and this is a key point here. Throughout years, Google started offering a lot of services (all for free, of course) on one single gmail account. Convenient? Yes, of course. You do not need to register many accounts for different services, there is one single umbrella for everything.

Now, try to think about it from another angle. All these services run on expensive hardware in professional data centres with redundant power supplies etc. This costs money. In fact, it costs a lot of money if you want to run it for public. One counter argument here is cost of storage per gigabyte which has been decreasing, here is a chart from BackBlaze to indicate it:

source: https://www.backblaze.com/blog/hard-drive-cost-per-gigabyte/

However, this is just one fraction of the overall costs. Overall, running such a massive infrastructure is a going concern and bills will ultimately have to be paid by somebody. Do you feel where the wind is blowing? We are at the heart of data economy where people use services and give out a lot of personal information in order to use those services. This dish is spiced-up with two sauces - convenience and free-of-charge usage, however it does come at a certain cost, not necessarily a monetary one.

These days personal data is very important to Web 2.0 economy. It is a tradable commodity since a lot of people are arguably happy to share it with tech sharks like Microsoft or Google. I am going to argue that they are doing it because of lack of education in relation to what is going on in Web 2.0. People rely on convenience, free-of-charge and nothing-to-hide approach, which will be discussed in another article. In return, users with their personal data. It is not only personal identifiable information (PII) but also various traits like your metadata, whom you are talking to, when, how, etc. This data is then sold to marketing companies in order to target users with ads. The main problem here is the lack of transparency, users are kept in the dark what data is mined, how it is used, how much revenue it generates. On top, it enables personal data to be abused and used for collateral purposes, for example, to spy after certain users in order to obtain unfair economic advantage.

Web 3.0 - a new hope?

Since the inception of bitcoin (bitcoin's birthday is 9 Jan 2009), we have seen a new onset of decentralization ideas, which are generally described as Web 3.0. The whole idea behind it is about decentralization. What is it? This is basically a shift of decision-making from the central authority to stakeholders. The most obvious example here is our favourite Google's product - Gmail. With Gmail, users have to abide certain rules Google impose on them. All the updates, changes to Terms & Conditions, bans etc are imposed by one central authority - Google.

In the recent days we have also witnessed a birth of another term relevant to Web 3.0 - DePIN. It stands for Decentralized Physical Infrastructure. In layman's terms, this arrangement enables users to provide spare/idling infrastructure to other users in return for a profit. In crypto economy, this profit may take a form of stablecoins or crypto tokens, which are liquid and can be exchanged. This approach is indeed not new, we all remember Filecoin, which enabled users around the world to provide storage capacities in exchange for token FIL. Another project from the past is Golem, where people can provide space compute capacity for computation purposes.

NYM - does it fit in the picture?

Since Snowden revelations, we know that information has become a valuable commodity, including patterns of digital behaviour. What is the solution? Let's talk about Internet traffic. It can actually reveal a lot about what we do. Despite the fact that SSL became a de facto standard today to keep the date encrypted in transit, it can still reveal certain patterns of behaviour. At the moment, all current traffic obfuscation projects like Tor, I2P or even VPN do not fully obfuscate traffic to an extent needed to keep passive adversaries away from snooping it. NYM is trying to solve this by obfuscating the traffic to the extent it is not possible to unwrap traffic's flow backwards. The following picture illustrates how it works:

source: https://nymtech.net/developers/infrastructure/nym-vs-others.html

NYM has recently published an article about DePIN^[4], where it has been discussed the idea is not unique to Web3. While this is true to an extent, with examples in the article being Uber and AirBNB, I am going to argue that those examples do not fully represent the spirit of decentralized economy and Web 3.0. Yes, all these services provide spare capacity (cars in case of Uber, flat/house in case of AirBNB) but they do it on its own terms, those terms are often damaging and do not represent the interests of stakeholders. We all know how Uber penetrates the taxi market without following regulations (for example, in the UK Uber drivers do not undergo the same level of preparation as black cab drivers and in other countries there were cases where Uber drivers did not possess a valid driving license). So, on one hand Uber gives users cheaper taxi services but on another hand this desire is driven by profit seeking. On top, those providers became shady data collectors themselves.

Let's discuss how NYM may reshape the whole market. NYM has got two networks - one is Cosmos based blockchain for smart contract to operate and another one to mix the traffic called mixnet. Mixnet is basically peer-to-peer network made of nodes run by volunteers (either purely for profit or for any other reasons). In very simply terms, Internet traffic enters the mixnet from the clearnet via a gateway, randomly bounces through three nodes and then exits the mixnet to the clearnet via an exit gateway.

Now, let's focus on the nodes. NYM runs an yearly activity called shipyard, which is like series of workshops and it attracts people from various backgrounds but who are more or less interested in privacy topic. On top of shipyard, NYM runs Delegation programme (DP)^[5] on the regular basis and this is an important key to the true decentralization in DePIN. In a nutshell, this programme aims to attract people with some technical node running skills to run a NYM mixnode in return for a delegation of NYM tokens from NYM in order to enable a particular node to be selected into an active validators set. There is a massive decentralization value:

There is a compiles list of jurisdictions where there is lack of NYM presence with specific criteria. For example, during the 2023 Autumn DP the focus was on Asian, North African and Latin American regions:

There is a list of VPS providers to avoid. There are well known Mastodon providers like (in no particular order) Hetzner, Contabo, AWS, Google etc. I argue that some of those providers are actually should not be called mastodons but this falls outside of the scope of this article. It is very important to keep network decentralized and make sure that bulk of the traffic and/or mixnodes are controlled by one big single provider. If candidates applied with one of those providers, their application was likely to be rejected. Here is an interesting pie chart:

source: https://dashboard.notrustverify.ch/d/CW3L7dVVk/nym-mixnet?orgId=1

The screenshot above illustrates that most of the nodes are installed on server owned by a few big tech companies, so it is very important to control this process. PrivacyRebels is striving to respect decentralization and its NYM infrastructure is hosted with less known but solid network providers. Here is a screenshot of the previous VPS provider took on 9 Apr 2024 to support this:

And here is the screenshot of the current provider:

In fact, I have not seen anything similar in other DePIN projects, which I consider a big strength and competitive advantage in decentralization race. However, it does come at a cost of resources allocation - it is not enough to apply the above criteria once and forget about it.

NymVPN - a decentralized solution?

Let's move to the top layer of NYM's stack, which is NymVPN, the first commercial product built on top of the mixnet. Currently there is an alpha test, so it is free to use and NYM is actively collecting feedback from people. Some NYM squads are also organizing workshop to test NymVPN in small groups and collect feedback from users. All these activities are held around the world and are decentralized.

Disrupting a VPN market was a completely logical step since having a decentralized mixnet running is a good base for such a product. NymVPN will in turn enable users with high privacy needs (journalists, political activists, etc) to be better equipped. However, in order to succeed with NymVPN, it is important to bring consistency to the table^[6]. There are different node operators around the world, running different infrastructure and using different VPS providers. In order to reach some degree of consistency, a regular testing is a must. NYM has had a few rounds of gateways testing and the reasons why this is a great decentralized example are as follows:

NYM team does not want to centrally collect and store stats about mixnet nodes. All node operators are encouraged to run their own stats stack (for example, Grafana and Prometheus). In fact, this is a complex task to store large amount of stats data in decentralized way.
All communication are taking place on NYM's matrix server. While this server is hosted in centralized way, Matrix protocol is decentralized, so users have got a choice to use it as a hosted service or to self-host own instance of Matrix.

Conclusions - are we doomed?

We have seen how the information evolved, starting from oral story telling to the Internet, which is a bliss but Internet is broken. All the major services are centralized and are actively harvesting users' data in order to maximize profits. Notwithstanding, there is a hope beyond horizon. With Web 3.0 blooming, which leveraging on decentralization and empowering final users to take financial decisions, hope can be recovered in the long run. But certain steps should be taken now.

Our lives have quickly became centralized. We browse Facebook (which control what information and how it is delivered to our devices, we publish our life on Instagram and call our relatives on Whatsapp and we never think that three products belong to the same company. While most of the people rely on nothing-to-hide argument^[7], this should and will be improved by education about the state of Internet today and a big hope it put into NYM project.

NYM's approach to Web 3.0 is decentralized giving a good balance to node operators and users which require access to VPN services. Please make sure you familiarize yourself with NYM at www.nymtech.net and www.nymvpn.com and conduct your own research.

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