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Welcome to the 26th Coin Report. In today’s report, I will be assessing the fundamental and technical strengths and weaknesses of Nimiq. This will comprise of an analysis of a number of significant metrics, an evaluation of the project’s community and development and an overview of its price-history. The report will conclude with a grading out of 10. I hope you enjoy the read!
Prior to researching this report, I had no real knowledge of Nimiq, despite having seen the name appear on my Twitter feed a number of times over recent months. There was, I was pleasantly surprised to find, a degree of uniqueness about the project, but I shall come to that a little later. For now, it will suffice to say that Nimiq is a project that was worth researching, if only to foster a better understanding of the ever-growing possibilities in this space.
I hope this report will prove objective where it must be and fair on more subjective matters. For those who’d like to learn a little more about Nimiq prior to reading this report, here are some primary links:
Algorithm: Argon2d (Proof-of-Work)
Sector: Browser-based Blockchain
Exchanges: KuCoin, HitBTC, HotBit, Trade Satoshi, LAToken, BTC-Alpha, Nimex, Stealthex, CoinDCX
Nimiq was launched with an ICO in July 2017 that raised $12.8mn (~56,500 ETH, at the time), which subsequently created 10.5mn NET (Nimiq Exchange Tokens). These NET were converted to NIM on a 1:100 basis, thus there were effectively 1.05bn NIM sold during the ICO, at an average price of $0.012 per NIM. More can be found on this ICO in Nimiq’s Transparency Report.
Upon creation, there was a 12% allocation of the maximum supply of NIM, equating to 2.5bn NIM, to the token sale, the team, the Nimiq Foundation and the Nimiq Charity and other similar costs and ventures. Thus, 88% of the maximum supply became available to miners from mainnet launch in April 2018.
Though Nimiq has only been in existence for a little over a year, there are two quite distinct market cycles that have played out in that time, with NIM forming its all-time high against Bitcoin at 75 satoshis in July 2018; its all-time high against the Dollar coincided with this at a little under $0.006. Despite the two clear market cycles (and thus cyclical support being identified), price recently broke below this support and is trading at all-time lows, as we shall discuss at length a little later.
The purpose of Nimiq is simple: to bring the benefits of cryptocurrency to a mainstream audience; doing so by focusing on developing web-based functionality and seamless UI/UX.
As stated in their whitepaper:
“While Nimiq itself as a tech-focused project is dedicated to ushering in a new era of independent and censorship-resistant digital cash, the Nimiq Ecosystem aims to bring universal access and the ease of use of NIM to both the tech-savvy and typical Internet users.”
This is a bold ambition; in fact, I know of very few altcoin projects that do not mention their desire to bring crypto to the masses. Nonetheless, this seems to be a novel approach, at the very least, and I look forward to dissecting the project’s progress since launch.
Let’s begin with some Metric Analysis:
Below are listed a number of important metrics, all of which are accurate as of 9th July 2019. For anyone reading this who has yet to read a Coin Report, it might be worth reading this section of the first report, where any potentially unfamiliar terms are explained. For any terms or metrics specific to this post, I will provide explanations besides the figures.
Price: $0.001 (8 satoshis)
Circulating Supply: 4,166,974,112 NIM
Total Supply: 5,157,474,112 NIM
Exchange Volume: $423,069
Network Value: $4.105mn (333.36 BTC)
Maximum Supply: 21,000,000,000 NIM
% of Max. Supply Minted: 24.56%
Network Value at Max. Supply: $20.689mn
Exchange Volume-to-Network Value: 10.31%
Average Price (30-Day): $0.0014
Average Exchange Volume (30-Day): $744,982
Average Network Value (30-Day): $5.736mn
Average Exchange Volume (30-Day)-to-Network Value: 12.99%
Volatility* (30-Day): -0.03068
Average Daily On-Chain Transactions (30-Day): N/A
Average Daily Transactional Value (30-Day): N/A
NVT (30-Day): N/A
% Price Change USD (30-Day): -29.4%
% Price Change USD (1-Year): N/A
USD All-Time High: $0.006
% From USD All-Time High: -81%
Premine % of Max. Supply: 12% (5% to token sale, 2.5% to foundation, 2% to sponsorships, 1.5% to early contributors and 1% to creators)
Premine Location: N/A
Liquidity (calculated as the sum of BTC in the buy-side with 10% of current price across all exchanges): 0.6028 BTC
Liquidity-to-Network Value %: 0.18%
Supply Available on Exchanges: 128,152,752 NIM
% of Circulating Supply Available on Exchanges: 2.88%
*Volatility is calculated by taking the average price over the given time-period, calculating the difference between it and the highest price and it and the lowest price over that same time-period, and multiplying those figures together. The closer to 0, the less volatility during that period, and vice-versa. Read this for more on volatility.
Supply Emission & Inflation:
Block Reward Schedule: Progressively diminishing block reward. Current reward is 3777 NIM per block. Block reward in 365 days will be 3332 NIM.
Average Block Time: 1 minute
Current Block Height: 645,132
Annual Supply Emission: 1,985,191,200 NIM (158.82 BTC at current prices)
Annual Inflation Rate: 47.64%
Circulating Supply in 365 Days: 6,152,165,312 NIM
The following details were taken from this source.
ICO Token Sale: July 2017
Total Tokens: 2.52bn NIM (originally NET prior to conversion at a 1:100 ratio)
Tokens Available For Sale: 1.05bn NIM
Average ICO Price Per Token: $0.012 (5381 ethtoshi)
Total Raised: $12,800,000 (56,500 ETH, at the time)
Address Count: 26,629
Supply Held By Top 10 Addresses: 36.32%
Supply Held By Top 20 Addresses: 42.38%
Supply Held By Top 100 Addresses: 64.26%
Inactive Address Count in Top 20 (30 Days of No Activity): 11*
*The top 5 addresses are all either exchange-owned or team-owned, equating to 30.1% of the total supply. #1 is the Nimiq Foundation; #2 is the Nimiq Charity; #3 is HitBTC’s cold wallet; #4 is labelled NIM Activation – Cold; and #5 is KuCoin’s cold wallet. Without these addresses, the next top 10 control 9.6% and the top 20 control 14.6%.
Given Nimiq’s primary purpose of being used for web-based payments, it would have been useful to have been able to provide some on-chain transaction-related metrics to determine the demand for such services. Unfortunately, none of the Nimiq block explorers provide much transaction data at surface level, thus I could not make these calculations.
Nonetheless, there are plenty of other insightful metrics for us to look into, and I’ll begin by running through those from the General sub-section before moving on to Supply Emission and concluding with some Distribution analysis.
Firstly, Nimiq was found to have 30-day Volatility of -0.03068, which was the fourth-lowest degree of volatility found in altcoins from previous reports, suggesting that, at least in Dollar-terms, there is some consolidation occurring at present.
Regarding Nimiq’s Liquidity, I calculated it to be 0.6028 BTC on the buy-side, equating to 0.18% of its Network Value. This places it around the middle of the pack amongst coins from previous reports, with two other coins achieving 0.18% Liquidity-to-Network Value: GeoCoin and Fantom.
Looking at Nimiq’s sell-side Liquidity, I found there to be 120.15mn NIM available for purchase on exchanges, equating to 2.88% of its circulating supply. This is the 6th-highest figure from previous reports, suggesting that there is a lack of incentive or desire to hold onto NIM currently.
Moving onto volume, I found that Nimiq had traded $423,069 of Exchange Volume over the past 24 hours, equating to a whopping 10.31% of its Network Value, whilst its Average Exchange Volume for the past 30 days surpassed this at $744,982, equating to 12.99% of its Average Network Value for the same period. At the surface level, one would be forgiven for thinking this is indicative of significant interest in the coin at current prices; however, the vast majority of this volume is coming from Hotbit, which itself is largely comprised of wash-trading. Thus, such figures are largely unreliable. If we discount Hotbit volume, around 8% of the volume remains, which would put Average Exchange Volume at around $59,598; a much more modest 1.03% of Average Network Value. This places Nimiq 5th-from-bottom amongst altcoins in previous reports.
Now, what about its supply emission?
Well, given that Nimiq has a progressively diminishing block reward and one-minute block times, whilst it is unfeasible to calculate exact emission figures, we can determine that there will be a maximum of 1.985bn NIM created over the next 365 days, using the current reward of 3777 NIM per block. This equates to 158.82 BTC at current prices and gives NIM an annual inflation rate of 47.64%, which is rather high. In fact, it is the 8th-highest annual inflation rate of altcoins previously reported on.
More significant, however, is the relationship between supply emission and volume. Now, I won’t be using Hotbit’s volume in the calculations here as it is impossible to determine the degree of wash-trading present (though, if its liquidity is anything to go by, it is clear that the vast majority of volume here is faked).
Using the above calculations, we can determine that the average daily supply emission of Nimiq equates to 5.438mn NIM, or 0.435 BTC at current prices. This is roughly $5,358 of daily supply emission. Thus, Nimiq’s Average Exchange Volume (excluding Hotbit) covers emission by around 11x, which should indicate that current prices are sustainable (though the chart proves otherwise, as we shall discuss later). Nonetheless, based on this metric I expect that the current price decline is largely due to manipulation or longer-term holders selling, rather than purely inflation-driven. However, when we take Nimiq’s Liquidity of 0.6 BTC into consideration, it becomes clear that one full day of emission would barely be covered, and thus it is likely that until sufficient demand can be drummed up (or supply can be limited, perhaps by incentivising holders), price will continue to fall.
Finally, let’s take a look at Nimiq’s Distribution:
Looking at the rich-list, I found that there are currently 26,629 active Nimiq addresses, which is actually the 3rd-highest of any coin previously reported on, beaten only by BitShares and Stratis, both of are several magnitudes larger than Nimiq. This is impressive and does give some indication as to the utility of the token, though we could not get any meaningful transaction data to reinforce this.
Regarding distribution of supply itself, I found that the top 10 addresses own 36.32% of the total supply; the top 20 own 42.38%; and the top 100 own 64.26%. However, as mentioned earlier, the top 5 addresses are actually owned by the Nimiq Foundation, the Nimiq Charity, HitBTC, NIM Activation and KuCoin; thus, it is more accurate to discount these addresses in our calculations. The top 10 addresses following these 5 own a more modest 9.6% of total supply, whilst the top 20 owns 14.6%, which is a fairly well decentralised concentration of supply.
As for the activity of the largest holders over the past 30 days, 11 of the top 20 addresses have been inactive, whilst 8 have cumulatively added 127.6mn NIM to their holdings (two of these addresses are HitBTC and Hotbit hot wallets and account for 21.8mn of the total). The remaining 1 address has distributed 2.1mn NIM. Overall, despite the declining price, it does seem as though the largest holders are not distributing, but rather adding to their positions. Speculatively-speaking, this is what I like to see.
And that concludes this section on Metric Analysis. Onto the Nimiq Community:
There are two primary aspects of community analysis: social media presence and Bitcointalk threads. I’ll begin with the former before moving on to the latter.
Concerning social media presence, there are four main platforms to examine: Twitter, Facebook, Telegram and Discord.
Nimiq is present on all four platforms. To begin, let’s look at the various social metrics that I calculated from the Nimiq Twitter and Facebook accounts:
Twitter Followers: 9,763
Average Twitter Engagement: 0.73%
Facebook Likes: 368
Facebook Posts (30-Day): 27
Average Facebook Engagement: 1.35%
As usual, I will be using RivalIQ‘s social benchmark report for evaluation purposes.
Nimiq has a relatively small Twitter audience of 9,763 (though this is larger than some projects of greater Network Value from previous reports), which places it around the middle of the table. However, it has fairly decent engagement, with its average engagement rate at 0.73%. This is 15.2x greater than the average across all industries and 81.1x greater than the average of the Media industry. However, it is (again) right in the middle amongst altcoins from prior reports. I did like that there is a consistency to Nimiq’s use of Twitter, with regular posts and constant engagement.
Nimiq’s Facebook page has 368 Likes, which is considerably smaller than its audience on Twitter, as is often the case. However, there is no sign of negligence here on their part, as there have been 27 posts in the past 30 days, which is great to see. Further, average engagement is around 1.35%, which, though not particularly impressive given the small size of the audience, is better than many other altcoins on Facebook. It is also 15x greater than the average across all industries and 27x greater than that of the Media industry. Whilst the commitment to regular updates is promising, it cannot go unstated that a project with the primary purpose of bringing cryptocurrency to the mainstream, web-native audience cannot do so when its updates are being seen by so few; an equal effort must be given to growing such channels and incentivising new users.
The Nimiq Discord is comprised of 4125 members, which is modestly sized.
The Announcements channel is barely used, with no updates since April, where they announced that they acquired a 9.9% stake in a German Bank, WEG. Nimiq News is a bot-led channel containing tweet updates. Important Info contains relevant links and resources for newbies, including tutorials and guides. There is nothing to be found in Community News since early June, and before that there were a couple of updates in May linking to blog posts concerning development and third-party reviews.
Trading and Price was the most active channel due to the recent decline in price, with many concerned that deadlines are not being met and that the token has such high inflation, which is not met with rising demand. The community consensus is that the team are working well towards improving user experience but is not quite hitting the mark yet. There was also a little activity in Suggestions and Ideas, where some community members proposed collaborations with growing projects in the space to develop connections and promote positive associations.
Overall, not at all as engaged or active as I’d have liked to have seen, though it is refreshing to see the community taking some initiative and putting forward ideas to improve upon current weaknesses as they themselves have determined.
The Nimiq Telegram has 8139 members and is by far the most active social platform for the project. In fact, it is one of the most active Telegram groups I’ve found whilst writing these reports, particularly for the size of the project.
Over the past week, there has been near 24/7 discussion in the group, with several hundred members online and conversing. A lot of the recent discussion does revolve around price, which is understandable given the decline Nimiq has experienced over the past few weeks; however, this is coupled with genuine interest in the future of the project, as well as community-led proposals and suggestions. One of the more interesting points of discussion is that many expect Nimiq’s adoption rate will increase as Nimiq OASIS facilitates greater and more seamless merchant adoption, with NIM-to-fiat conversions being streamlined. There is palpable concern over the marketing efforts of the team, with the general consensus being that despite the user-friendly nature of the blockchain and the Nimiq Safe, there simply aren’t enough eyes on the project for any reversal to occur in the price of the token, particularly whilst inflation is so steep. I am inclined to agree.
Overall, there is a completely different picture painted here of the community to that across all other social platforms, with high engagement and active interest in pursuing any and all means of improving the project.
The Nimiq BitcoinTalk thread was created on June 6th, 2017, and has since generated 3360 posts spanning 168 pages in 762 days. This equates to 4.4 posts per day, on average. However, in the past 90 days, the thread has had 287 posts, giving an average of 3.18 posts per day.
Regarding the announcement itself, it was last updated in April 2018, and is not particularly well-branded. The project is described as the “browser-based blockchain” and social and other relevant links are clearly displayed. The overview discusses Nimiq’s function as a web-native blockchain, with aims of improving accessibility and usability of blockchain technology. The problems with conventional blockchains for adoption are highlighted as data usage, software installation and transaction times. This is followed by a brief explanation of how Nimiq seeks to improve upon these, utilising a mini blockchain scheme to dramatically
Regarding the past 90 days of content, there is clearly a lot of back-and-forth between community members and those that are against the project, with innumerable conflicting messages about the project’s development and its team. There is some FUD that is cleared up by the team regarding the partial acquisition of the German bank, WEG; the reasoning behind the acquisition being that Nimiq OASIS (Open Asset Swap Interaction Scheme) can leverage the SEPA network in Europe to enable customers to more seamlessly exchange value between crypto and fiat. Moving through the thread, I found more back-and-forth regarding possible conspiracies; however, there does seem to be some degree of concern about the lack of timely progress, despite there being regular work being published to Github. On a more positive note, I found that the Nimiq Safe is Ledger Nano S compatible and that NIM can also be stored on the TrustWallet mobile app; that the project was recently listed on BitLadon and KuCoin; and that Nimiq 2.0 will improve transaction capacity and reduce block times.
And that concludes this section on the Nimiq Community. Let’s take a look at its Development:
For the following Development analysis, I will be evaluating project leadership, the website, the roadmap, the whitepaper, the wallets and finally providing a general overview:
There are 21 team members listed on website and 34 contributors on Github. Of these 21 team members, there are 13 occupying development-focused roles, 3 in marketing and PR-based roles and the remainder comprising of operations, design and legal. Clearly there is a breadth of expertise and experience, with a development-heavy approach, as is evident from the previous section of this report.
The website is responsive and fairly well-branded, with good UI/UX. The design is very sleek and clean, as would be expected of the browser-based blockchain. The tagline reads “The blockchain designed for simplicity”. The whole layout is comprised of several clearly-defined tabs, each containing links to the Nimiq Safe; a number of team and community-built apps; the whitepaper; Github; developer center; Nimiq Miner; social links; a blog; the Nimiq Community website; exchanges; and further information on the project, from token details to team information.
Further, an FAQ is provided with several basic questions answered, along with regularly updated blog, which is great to see.
Overall, exactly what I’d expect of such a project. A new website is now scheduled for release this quarter.
The roadmap can be found on Trello and is community-managed, but is somewhat difficult to find. It also doesn’t seem to be up-to-date, and I believe a website-native roadmap would be more helpful for potential new users or investors. Further, it will allow the community to objectively measure the punctuality and progress of the team, which has come up a few times as a concern for some within the Nimiq community.
Update: The Nimiq team have provided a more up-to-date roadmap that can be found here. This is a text-based roadmap in a blog post, and contains details of the next year or so of expected developments.
Project Status gives the reader a brief description of Nimiq’s launch and current developments, beginning with the release of the mainnet in April 2018 and concluding with the recent acquisition of a stake in WEG Bank, to facilitate Nimiq OASIS. Moving on through the whitepaper, we find some links for developers to learn more about the codebase, as well as Nimiq’s collaborations with Stanford University and Imperial College. Two research papers are linked; one on Nimiq OASIS (described as “the crypto-to-fiat bridge, making fiat currency behave as if it were tokens on the blockchain”) and one on Albatross, which is a new Proof-of-Stake consensus mechanism that is “able to achieve a performance close to the theoretical maximum for a single chain”. This is followed by a very brief visual roadmap, though it ends at March 2019 with the announcement of Albatross.
The next sections of the whitepaper address the motivations behind creating Nimiq, summed up by the statement that the team are seeking to make Nimiq “the most accessible and easy-to-use but also censorship-resistant and decentralized payment solution”. We then get a breakdown of how all this is expected to occur, with the Design Approach section highlighting how Nimiq does not require installations and can be used across all devices due to its browser-first nature. Moving on, there are more technical sections provided on the benefits on a browser-based blockchain, with every user’s browser acting as a node in the Nimiq network without needing to store copious amounts of data.
The following sections concern the blockchain and token, with a table provided displaying the features, use-cases and specifications of Nimiq, alongside Ethereum and Bitcoin. Here, we are told of the changes that will occur upon release of Nimiq 2.0: namely, faster block times and greater transaction throughput. We are also given details of the NIM supply distribution, including the breakdown of token allocation, with 88% of the maximum supply of 21bn NIM allocated to miners, and the remaining 12% allocated to the token sale, the team and general development.
Penultimately, there is a lengthy section on the Nimiq Payment Ecosystem, which covers the user experience, including seamless on-boarding via browser-based connectivity and account creation; visual identity with identicons instead of alphanumerical addresses to ensure accessibility, alongside IBAN-like account numbers; the Nimiq Safe, which manages all balances and is entirely client-side and non-custodial despite being web-based; and login files that alleviate the need to manage private keys.
And finally, we come to some brief sections relating to the milestones achieved since June 2017, when Nimiq was conceptualised, through to May 2019. Here, we get a little taste of a roadmap for the future, with Nimiq 2.0 and Nimiq OASIS being the key releases over the next few months.
NIM can be stored in the Nimiq Safe, which is Ledger Nano S compatible, or on the TrustWallet mobile app.
As can be seen in the Daily chart printed above, Nimiq has experienced two distinct market cycles; one in November 2018 and one in April 2019. The most important aspect of Nimiq’s price-history is that both cycles began around 17 satoshis, with the latter cycle dipping a little deeper to 15 satoshis. Thus, 15-17 satoshis was the historical accumulation zone and critical support, which, in June, was lost.
NIM formed a cyclical high of 55 satoshis in April, from which price has continued to bleed. Price did find support at 17 satoshis, as it historically had, but levels of prior resistance turned support were reclaimed as resistance and the support fell, with price now trading under trendline resistance and having fallen as low as 7 satoshis.
Given NIM’s high inflation, I would not be a buyer of a cyclical position until trendline resistance has been broken. However, given the activity of the largest holders, I would certainly be interested in a speculative position at some point. For the more risk-averse, the most opportune entries will come when Nimiq can reclaim that lost historical support at 15 satoshis.
However, until sufficient demand can step in to stem the current oversupply, Nimiq will remain in price discovery.
This report is now approaching 5,000 words, and it is time to draw it to a close.
My final grading for Nimiq is 6 out of 10.*
*I would grade Nimiq a 7, but the lack of liquidity prohibits a grade above a 6.
Here, you can find my grading framework, for reference.
Lastly, here is a link to a Google Sheets file with any significant data from previous reports compiled for cross-comparative purposes. I will keep this updated as I continue to write these reports.
I hope this report has proved insightful and that you’ve enjoyed the read! Please do feel free to leave any questions in the Comments, and I’ll answer them as best I can.