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CoinEx Research: NYM, A Privacy-preserving Network Under Web3

2022-04-15 08:28:04

Backed by the popularization and advancement of the Internet infrastructure, anyone can now access and create online content with ease and convenience. However, behind the freedom lies a potential risk - the infringement on personal privacy. The more content a person posts/views on the Internet, the more likely his/her private data will be collected by others. On the conventional Web 2.0 Internet, data generated by users were collected by the websites they used and sent to centralized Internet-based companies. From a technical perspective, these companies can process user data with absolute freedom. Furthermore, it is difficult to prevent the leakage of user data even if legal restrictions are already in place.

Most users find it difficult to keep their data private. Although we regard personal privacy as an important asset, the existing Internet infrastructure has failed to ensure the security of such assets. When we talk about the disruptive applications of Web3 and the innovation it might bring, a key focus is the Web3 users’ control over their private information.

NYM, the project that we will focus on today, is a protocol committed to the preservation of privacy. It aims to build the underlying privacy-preserving infrastructure of the blockchain world. As an extremely promising project in the category of privacy protection, NYM uses blockchain technology and economic incentives enabled by its token to decentralize the network, thereby keeping your data fully private.


I. NYM = Mixnet + Access Mechanism + Blockchain, helping users hide in the network

Different from other public chains or network protocols, NYM focuses more on the bottom layer. It has built a complex Mixnet, allowing user information to be mixed and hidden.

NYM’s solution to online privacy protection is called Mixnet, which is a decentralized, multi-layered computer network. Instead of sending messages directly over the internet, users convert message packets into encrypted “Sphinx” packets on their own devices. The “Sphinx” format unifies the presentation of all data packets in terms of their size, making them untraceable. The ordering of these packets is then mixed through Mixnode to disrupt the sequence by which information and data enter and leave the network, which means that monitors will not be able to determine the time of data input and output according to the sequence. In addition, when you are using the Mixnet, cover information will be generated, so that the monitor will have no idea about the time when the information is hidden.

Meanwhile, the Mixnet also requires authorization or authentication services provided by different players to help users stay “invisible”. In NYM, players perform different roles to jointly protect your privacy and keep the Mixnet up and running. Four types of NYM players need to collaborate, i.e., Service Provider, Validator, Gateway, and Mix Node.

1. Service Provider: Helping users connect to the NYM network through API-enabled access

NYM’s Mixnet does not directly face end users. For example, if A plans to send a message to B through the Mixnet for privacy protection, then the software that sends the message from A to B is called the Service Provider. Developers of such software can access the Mixnet by integrating NYM’s client API. From the perspective of users, this process does not affect the normal use of the software, and no additional operations are required. Meanwhile, the Mixnet is included in transferring the bottom-layer data, which enables privacy protection.

2. Validator: Authorizing user access & recording public information in the network

To enter NYM’s Mixnet, you must meet one precondition - Validators will run an investigation that covers such aspects as the cost. For instance, they will examine whether your entry fee (NYM tokens) is sufficient or whether you’ve got other proofs (proof of adulthood, zero-knowledge proof, etc.). Validators are responsible for issuing credentials for eligible users to prove that “you do have enough entry fees” to use the network (bandwidth credentials), as well as the “right to access” (service credentials).

3. Gateway: Your entrance to the network

You may access the NYM network once Validators provide you with credentials. The information you have sent will first go to the gateway, which will check whether the credentials are in place. Upon passing the verification, you can then choose a single gateway or multiple gateways to transmit the target information for privacy protection. Simply put, a gateway is like an intersection on the street, and passing through the gateway will lead you directly to the Mixnet.

4. Mix Node: Mixing the sequence and timing of traffic transmission in the network

At each layer of the Mixnet, computers called “Mix Nodes” will mix your online traffic with other users’ traffic, making it impossible to track the packets and analyze the communication pattern. Therefore, Mix Nodes are the key to privacy protection in NYM.

II. NYX blockchain: Recording the circulation of NYM tokens and information that keep the Mixnet running

NYM is backed by a Cosmos-based blockchain called NYX that supports Cosmos smart contracts. The blockchain, maintained by Validators, broadcasts and publishes secure information, including:

  1. The public key and parameters of Mix Nodes accessing the network;
  2. The number and status of NYM tokens pledged by participants in the current network;
  3. The amount and status of user deposit in the NYM token pool;
  4. Other data that keep the network secure. 

The NYX blockchain maintains these data to confirm the number and status of NYM tokens, thereby checking the transaction history of tokens and whether they have been double-spent. Additionally, doing so also helps the blockchain confirm how packets are mixed in the network and the quality of the mixing process, which serve as the criteria for the distribution of token rewards.

To put it bluntly, the NYX blockchain is like a state machine that records data transformations required by the entire NYM network, making sure that all efforts of privacy protection are traceable. Moreover, as NYX is based on Cosmos, the blockchain comes with fast, easy integration, as well as its own Coconut protocol. In the future, NYX can also provide a basic platform for applications that require enhanced privacy protection, such as DeFi protocols that demand the integration of privacy protection. The NYX mainnet, launched this year, has already issued its native token. According to its blockchain explorer, 2,809 Mix Nodes, 20 Gateways and 2 Validators around the world have joined the network.

To sum up, the advantage of NYM is that the network provides a feasible privacy-preserving solution that features a clear division of labor and solid technologies. Such a solution is superior to traditional VPN and Tor. This is the case because the latter two merely offer encrypted packets, and monitors can still analyze the size, as well as the inbound/outbound sequence, of packets for anonymity-eroding operations. NYM’s Mix Nodes, on the other hand, disrupt the ordering of packets completely, which keeps the relevant data fully private.

Such a privacy-preserving solution not only protects privacy at the network layer but also extends privacy protection to the application level. Meanwhile, the solution encourages everyone to run the network in a decentralized manner through token incentives. When it comes to the regulatory issues of privacy protection, NYM has introduced real-world identity authentications that allow you to participate in the network by submitting legal identity certificates. In the meantime, there are also NYM players who are responsible for the verification of identity and requests. NYM, founded to end the era of Internet surveillance, is building the next generation of privacy infrastructure.

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