Coin Report #30: NIX

Coin Report #30: NIX

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N.B: In the spirit of full transparency, the following Coin Report on NIX is a Sponsored Post.

Welcome to the 30th Coin Report. In today’s report, I will be assessing the fundamental and technical strengths and weaknesses of NIX. This will be comprised 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!

Introduction

NIX is one of those projects that consistently appeared on my timeline on Twitter but that I never found time to research. However, following a community-submitted proposal to book in a Coin Report, I was given the opportunity. Prior to beginning my research, all that I really knew about the project was that it was privacy-focused and had an engaged community; beyond this, I was very much in the dark.

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 NIX prior to reading this report, here are some primary links:


Fundamental

General:

Name: NIX

Ticker: NIX

Algorithm: lyra2rev2

Sector: Privacy

Exchanges: Mercatox, KuCoin, CryptoBridge & IDAX

Launch Overview

NIX was launched in June 2018, with no premine or ICO. It began with a Proof-of-Work consensus mechanism on the lyra2rev2 hashing algorithm, but migrated to Proof-of-Stake in September 2018. NIX also has a network of Ghostnodes that operate alongside the Proof-of-Stake consensus.

Regarding supply emission, 12.01 NIX are minted with each new block, with 2-minute block times.

Price-History Overview

There is around twelve months of available price-history for NIX, but the vast majority of this time has been spent with price in a downtrend, as I shall cover a little later.

For now, it will suffice to say that NIX formed its all-time high at ~10,700 satoshis in September 2018, and has since experienced successive lower-highs, with price currently trading at all-time lows around 1,100 satoshis.

Project Overview

As is often the case with privacy-focused projects, their aims tend to be straightforward; NIX is no different in this regard, with the clear and valuable goal of providing freedom to more people globally by leveraging privacy.

As stated in their whitepaper:

“NIX aims to grant the means and resources to empower people across the world to achieve independence in their social, economic, and global structure. These assets span from financial security and freedom to private data management and even social content autonomy. The key issue within the blockchain and cryptocurrency realm in the present is user integration. Although the technology has been battle hardened to an extent, real world development and use case is little to none. The adversity that NIX aims to solve is bridging that problem and empowering elements to create ecosystems with a specific use case.

In order to achieve this, NIX is adopting multiple privacy mechanisms, scaling solutions, smart contracts integration, sidechain utilities, and ease of use towards the end consumer specifically in speed and environment.

The NIX protocol offers layered optional privacy that is enabling people to create a medium of communication and dApps between blockchain channels, for whichever purposes each channel stores.”

Privacy is perhaps the single most competitive niche in the cryptosphere, or certainly one of the top 3, so I am intrigued to find out how NIX is progressing on this front, given the lack of ICO or premine for funding research and development.

Let’s begin with some Metric Analysis:


Metric Analysis:

Below are listed a number of important metrics, all of which are accurate as of 9th August 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.

Metrics:

General:

Price: $0.137 (1159 satoshis)

Circulating Supply: 43,245,163 NIX

Total Supply: 43,245,163 NIX

Exchange Volume: $100,005

Network Value: $5.935mn (501.12 BTC)

Maximum Supply: 102,210,160 NIX

% of Max. Supply Minted: 42.31%

Network Value at Max. Supply: $14.028mn

Exchange Volume-to-Network Value: 1.68%

Category: Lowcap

Average Price (30-Day): $0.154

Average Exchange Volume (30-Day): $103,447

Average Network Value (30-Day): $6.653mn

Average Exchange Volume (30-Day)-to-Network Value: 1.55%

Volatility* (30-Day): -0.0664

Average Daily On-Chain Transactions (30-Day): 621.6

Average Daily Transactional Value** (30-Day): $954,829 (source)

NVT*** (30-Day): 6.22

% Price Change USD (30-Day): -43.1%

% Price Change USD (1-Year): -13.6%

USD All-Time High: $6.83

% From USD All-Time High: -98%

Premine % of Max. Supply: 0%

Premine Location: N/A

Liquidity (calculated as the sum of BTC in the buy-side with 10% of current price across all exchanges): 0.119 BTC

Liquidity-to-Network Value %: 0.02%

Supply Available on Exchanges: 523,131 NIX

% of Circulating Supply Available on Exchanges: 1.21%

*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.

**Transactional Value in $ is calculated by taking the daily transactional value in NIX and multiplying it by price.

***NVT is calculated by dividing the Network Value by the Average Daily Transactional Value. See here for more on NVT.

Supply Emission & Inflation:

Block Reward Schedule: Current block reward is 12.01 NIX, with 70% rewarded to Ghostnodes, 20% to stakers and 10% to the development fund. 720 new blocks are minted daily.

Average Block Time: 2 minutes

Current Block Height: 274,688

Annual Supply Emission: 3,156,228 NIX (36.58 BTC at current prices)

Annual Inflation Rate: 7.3%

Circulating Supply in 365 Days: 46,401,391 NIX

 

Staking & Masternodes:

Network Staking Weight: 6,214,698 NIX (14.37% of circ. supply)

Staking ROI (Annual): 10.16%*

Masternode Collateral Size: 40,000 NIX

Masternode Price: $5,490

Masternode Count: 347

Masternode Count Growth (30-Day): N/A

Supply Locked in Masternodes: 13,880,000 NIX

Masternode ROI (Annual): 15.92%**

Masternode Reward / Block Reward: 70%

Masternode Network Value: $1.905mn

MNV / Network Value: 32.1%

*To calculate annual staking ROI: (annual supply emission * staking % of block reward) / network staking weight = (3,156,228 * 0.2) / 6,214,698 = 10.16%

**To calculate annual masternode ROI: (annual supply emission * masternode % of block reward) / supply locked in masternodes = (3,156,228 * 0.7) / 13,880,000 = 15.92%

 

Distribution:

Address Count: 5124

Supply Held By Top 10 Addresses: 17.65%

Supply Held By Top 20 Addresses: 20.27%

Supply Held By Top 100 Addresses: 30.05%

Inactive Address Count in Top 20 (30 Days of No Activity): 13

 

Analysis:

The mountain of metrics for this report reminds me of older reports, which primarily covered old-school, no premine or ICO projects that often had Proof-of-Stake consensus and masternodes. As such, there is an awful lot to cover, so I won’t waste your time.

Beginning with the metrics related to on-chain transactions, using the Chainz explorer I found that NIX averaged 621.6 on-chain transactions per day over the past 30 days, amounting to a whopping $954,829 of Average Daily On-Chain Transactional Value. Now, it does state that the data on the explorer is in beta, so I am unsure how reliable that is, especially when you work out NIX’s NVT using it; at $954k of daily transactional value, NIX has a 30-day NVT of 6.22. This would make it exceptionally undervalued and indicates a great deal of non-speculative demand for the coin. This is also disregarding the additional transactional value that will be invisible to us due to the privacy features that are optional on the blockchain.

Moving on, NIX’s Volatility was also interesting, as I calculated it to be -0.0664 for the past month, indicating that it may be in accumulation against the Dollar, given how tight its range has been for that period. Relative to coins from prior reports, this degree of volatility places it somewhere in the middle.

Now, let’s take a look at the metrics related to Liquidity:

Regarding buy-side liquidity, I found something very surprising, especially given the data for on-chain transactions; NIX has only 0.1197 BTC in the buy-side of the orderbook across all listed exchanges within 10% of current prices. That equates to an incredibly disappointing 0.02% of its Network Value. Why is there such a discrepancy between demand for the coin on exchanges at current prices and usage of the coin on-chain? Perhaps it can in part be attributed to NIX only being listed on 4 exchanges, two of which have no volume whatsoever, but it is listed on KuCoin, which is often relatively liquid. Very strange.

As for sell-side liquidity, NIX’s numerous incentives for holders shine through here, as I found only 523,131 NIX available for sale across all exchanges, equating to 1.21% of its circulating supply; the sixth-lowest figure amongst prior reports. Clearly, the incentives are doing their job, as there is little desire to sell. That said, there is also – quite surprisingly – even less desire to buy at current prices.

Moving onto volume, NIX has traded $100,005 over the past 24 hours, equating to 1.68% of its Network Value. Further, its Average Daily Exchange Volume came out at $103,447, equating to 1.55% of its Average Network Value for the same period. These are respectable figures, although much of the volume does come from Mercatox, where there is virtually no buy-side liquidity at all, indicating that much of that market’s volume may be due to wash-trading.

Next, let’s take a look at Supply Emission, before moving onto Staking and Masternodes and finally Distribution:

Given that NIX has two-minute block times and a block reward of 12.01 NIX, we can determine that annual supply emission is 3,156,228 NIX. This equates to 36.58 BTC at current prices, giving NIX an annual inflation rate of 7.3%; not bad at all for us speculators.

More significant than these figures alone, however, is their relationship to volume:

If NIX has annual supply emission of 3.156mn NIX, its Average Daily Supply Emission is 8647.2 NIX, equating to 0.1 BTC, or $1184-worth at current prices. NIX’s 24H traded volume covers this daily emission by 84.4x. Further, its Average Daily Exchange Volume covers this by 87.3x. As such, there is no reason why current prices should be unsustainable, thus declining prices is likely a symptom of price manipulation or weak hands selling, rather than supply emission being dumped. If we discount 80% of the volume that may be due to wash-trading on Mercatox, the remaining volume is still plenty to suggest that declining prices is likely due to one of the two aforementioned reasons. Lastly, even NIX’s poor liquidity of 0.1197 BTC would cover a day’s-worth of supply emission. Overall, there are no real headwinds to price growth, but clearly something isn’t working the way it should be…

Moving onto Staking and Masternodes, the most important thing to note here is that both options offer higher annual returns-on-investment than the annual inflation rate, thus incentivising holders.

However, another important point to highlight is that the Ghostnode network has a total value of $1.9mn, meaning that almost a third of the supply is locked and so artificially reducing circulating supply and theoretically providing tailwinds for price growth; nonetheless, clearly this mechanism is ineffective given the continual price decline.

Finally, lets take a look at Distribution:

Using the Chainz explorer, I found that there are 5,124 holders of NIX, and that the top 10 richest addresses control 17.65% of the supply; the top 20 control 20.27%; and the top 100 controls 30.05%.

However, the richest address is the development fund, which controls 5.3% of the supply alone.

Regarding the activity of the top 20 addresses, I found that 13 were inactive over the past 30 days. Of the remaining 7, one is the dev fund, as mentioned. Of the other 6, the 3rd-richest is flat on the month but has added 300k NIX in the past two weeks, the 4th-richest is staking and has added 722k NIX, the 9th-richest is flat on the month but reduced position size by 200k NIX over the past two weeks; the 17th-richest is staking, and so is the 18th-richest.

And that concludes this section. Onto the NIX Community:


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.

Social Media:

Concerning social media presence, there are four main platforms to examine: Twitter, Facebook, Telegram and Discord.

NIX is present on all four platforms. To begin, let’s look at the various social metrics that I calculated from the NIX Twitter and Facebook accounts:

Twitter Followers: 27,354

Tweets: 580

Average Twitter Engagement: 0.34%

Facebook Likes: 232

Facebook Posts (30-Day): 0

Average Facebook Engagement: N/A

As usual, I will be using RivalIQ‘s social benchmark report for evaluation purposes.

Twitter:

As is expressed in this benchmark report, the average engagement rate on Twitter across all industries is 0.048%; NIX has an engagement rate that is 7.08x greater. Further, the average engagement rate for the Media industry (the most similar industry in the report) is 0.009%; NIX’s is 37.7x greater. This is despite NIX’s large following of over 27,000, which is the fourth-largest of all coins previously reported on. However, whilst impressive relative to global benchmarks, NIX’s Twitter engagement isn’t as impressive against other cryptocurrencies: in fact, it is in the bottom third of coins from prior reports.

Facebook:

Despite NIX having a Facebook page, it is clearly abandoned.

Discord:

There are 3,018 members in the NIX Discord group. 46 new members joined over the past week.

The group itself is well organised, with channels segmented by Development, Community, Support, Social and Information, primarily.

Beginning with Information, here we find a number of relevant links for new users, as well as an info bot and a tipbot. Social comprises three channels, one of which mirrors Twitter, featuring any tweets that mention NIX, whilst another features articles written about the project. Support is prompt and helpful, with user queries resolved relatively quickly.

Regarding Development, two of the three channels are inactive, but Announcements is updated at least biweekly. Among recent announcements, I found that Flare Wallet was released in July, 6 new contributors joined the project in August and a new tipbot was released for the Discord group.

In the Community grouping, there are 6 channels, though only General and Governance are relevant for our purposes. The latter is for community discussion of submitted proposals and is relatively active, particularly when there are proposal deadlines. As for General, there is daily discussion here, although much of it is general rather than specific to NIX (and a lot of it is related to tipping, not that that’s an issue).

The most active channel, however, is the dedicated Ghost Squad channel for the most active members of the community. Here, there is near 24/7 conversation, with the channel operating almost like a group chat with friends. Clearly, there is an engaged and committed community present.

Telegram:

There are 2,063 members in the NIX Telegram group.

The group seems to simply mirror the General channel from Discord.

BitcoinTalk:

The NIX BitcoinTalk thread was created on January 19th, 2019, and has since generated 336 posts spanning 17 pages in 202 days. This equates to 1.66 posts per day, on average. However, in the past 90 days, the thread has had 64 posts via 18 individual posters, giving an average of 0.71 posts per day.

Regarding the announcement itself, I found it to be very well-branded and designed, with a clear focus on privacy, emphasising “Total privacy for all” in the NIX multi-layer platform. It mentions the novel Ghost Protocol, built by NIX, which is comprised of Commitment Key Packs, Zero Knowledge Proofs, Zerocoin, Tor, Dandelion and Bulletproofs.

There are 4 layers to the platform: protocol; utilization; communication; and DApp.

Beyond this, we find out about 2-Way Ghosting, wherein transactions are granted full sender and receiver privacy, with coins disappearing from public view and reappearing on the other end in the Ghost Vault.

Further, NIX has cold staking capabilities, which is also highlighted. Below these descriptive paragraphs are links to the whitepaper, desktop UI wallet for desktop (which looks very user-friendly from the screenshots provided), mobile wallets for iOS and Android and exchanges and social links. I was disappointed that there was no coin specification or block schedule provided, however.

Regarding the activity over past 90 days, there is talk of the Sigma protocol, with NIX being the first PoS coin to integrate it; Sigma allows for scalable privacy by reducing on-chain transaction size by 94% and removing the need for Zerocoin. Links are also provided to development updates with further reading; the platform had the Sigma Testnet launch; were listed on KuCoin; mentioned the proof-of-concept for the Flare Wallet DApp, which is a multi-coin wallet with anonymous decentralised exchange integrated; released a 3.0 wallet update, which includes off-chain governance and Sigma Mainnet; and were listed on Cryptobridge listing. Beyond this, general community consensus was that there are issues related to liquidity that may be solved by more exchange listings and that there must be a more concerted effort on marketing the project.


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:

Project Leadership:

There are 2 advisors and 23 team members listed on the website, with 608 contributors on Github.

The advisors to the project are Charlie Shrem and Dr. Sriram Vishwanath. Regarding the team itself, there are 5 in marketing; 3 in design; 9 in operation; and 6 members working on development.

Overall, the team is clearly experienced and there is plenty of breadth of expertise in relevant areas.

Website:

https://nixplatform.io

The website is modern in its design, with relatively smooth navigation, although it was somewhat difficult to find any exchange listings. It is also well-branded, with the tagline Total Privacy for all emblazoned on the homepage. There is also an introductory video available for those unfamiliar with the project.

The navigation menus are generally relevant and comprehensive. There is also a native Wiki for new users to learn more about NIX and there are documentation links on the homepage for those seeking more technical reading. Further down the page, we find the latest milestones, though this has not been updated since May. The footer contains all social links; these could be more prominent.

Individual pages on the site are highly relevant, informative and accessible, covering all manner of subject matter related to NIX.

Overall, useful for a potential new user but not without some flaws.

Roadmap:

https://nixplatform.io/about/roadmap

The roadmap is primarily text-based and quite brief with no “further info” links available.

It begins in June 2018, with the mainnet launch. Following this, in September 2018, NIX underwent a switch to Proof-of-Stake consensus, as well as launched the Ghost Vault for one-way privacy. In November, 2-Way Ghosting was launched with Commitment Key Packs for end-to-end privacy, as was the desktop UI wallet with integrated Ghost Wallet. In December, NIX launched leased Proof-of-Staking, allowing coins to be leased out for staking.

In January 2019, NIX released both Android and iOS mobile wallets, followed by hardware wallet support for hosting Ghostnodes in February. May saw NIX listed on KuCoin and release off-chain governance and the Sigma protocol, and in June NIX was listed on Cryptobridge.

Following this, we have a couple of brief points on current and future development, with the former comprising hardware wallet support for Leased-Proof-of-Stake, as well as the launch of the Flare Wallet. The latter mentions a Developer SDK release, as well as Sidechain research and development.

As a potential new user or investor, whilst this roadmap is informative, I would like to see greater detail, or at least links to further reading on the components of development. Some sort of measure of progress would be useful too, for accountability purposes.

Whitepaper:

https://nixplatform.io/docs/NIX-Platform-Whitepaper.pdf

The whitepaper is 23 pages in length and features a Table of Contents for ease-of-access. It is quite clearly focused on the technology aspects of the NIX project, based off of this contents page.

The document begins with an Introduction and Concept section; this covers the data revolution and peer-to-peer history, and mentions that the primary aim is to facilitate freedom and ownership through user-friendly privacy. Further, intra-and-interoperability is a goal for the project. This section concludes with an introductory note on NIX’s key components, including the Ghost Vault and 2-Way Ghosting, which allows for intrachain privacy, and the Ghost Protocol, which is a library of the most important privacy components bundled together. Lastly, we are told that atomic swaps are being developed to facilitate cross-chain private transactions.

The following section is titled Privacy Features. Here, we learn about the core components of the Ghost Protocol: Zerocoin; zero knowledge proofs; Tor; and bulletproofs. It begins with an explanation of the Ghost Vault, which facilitates one-way privacy for the sender or receiver, with coins in the vault being hidden from the chain. With the development of 2-Way Ghosting, which is stated to be an historic first, NIX can be transferred between vaults without appearing on-chain at all, with Commitment Key Packs facilitating this. CKPs allow for “an address-less blockchain payment protocol.

The Ghost Protocol is also optional, with users able to choose to use the protocol to make their transactions private or not – the mechanisms of each sub-protocol is detailed in this section.

Regarding Commitment Key Packs; these utilise Pedersen Deposits as one-time keys for Zerocoin deposits, allowing for end-to-end privacy for transactions with no requirement for addresses on-chain. The technical details of this protocol are provided, though are difficult to parse for those unfamiliar with specific concepts and terminology. Tor and Dandelion are bundled into the protocol to obfuscate location and IP.

There is then a section on Ghostnodes, which are masternodes requiring 40k NIX to operate; these receive 70% of the block reward, and process all Ghost Protocol transactions and all smart contract elements. A 0.25% fee is also rewarded to operators per Ghost Protocol transaction.

Following this, we have a breakdown of the other three layers of the platform (having already covered the Protocol layer).

The first of these is the Utilization Layer:

This comprises the Ghost Vault, which makes coins invisible on-chain. In essence, users send coins to the vault, which hides the location of these coins, also called ghosting. This is fully private for the receiver, and sending from the vault is fully private for the sender. The introduction of 2-Way Ghosting allows for both parties to remain anonymous. Beyond this, Ghost Vault staking is actively being developed.

Following this is a section on the Communication Layer, which breaks down the concepts of interoperability and sidechains; the two primary communications goals of the NIX platform. Effectively, NIX will be built upon by other platforms, each utilising the privacy of the NIX mainnet.

The DApps Layer is the final of the four, discussing the development of decentralised apps to run on top of NIX, also utilising its privacy; thus allowing for private atomic swaps. A primary use-case here is private decentralised trading and a DEX manager that aggregates decentralised exchange liquidity.

The document concludes with an overview of the coin specification and block reward schedule.

Overall, concise, technical and yet accessible for  the most part.

Wallets:

There is a mobile wallet for iOS and Android, desktop UI wallets for all operating systems, and, importantly, hardware wallet support on Trezor and Ledger.


Technical

NIX/BTC

NIXBTCDaily

Despite NIX having around a year’s-worth of price-history, the market cycles are very much contracted and short-term, with the over-arching trend being downwards through this time.

Following NIX’s listing on exchanges, it made its all-time high at 10700 satoshis; a high which has remained intact since. Support was found at 3600 satoshis following this, marking out the first short-term cycle. We can see that price attempted a new bull cycle from this base, but peaked out at 9700 satoshis, with price again falling to support at 3600 satoshis. However, support fell, albeit briefly, making a new low at 3100 satoshis, from which another short-term bull cycle was launched, with price finding a successive lower peak at 6700 satoshis. From this point, NIX has continued to fall, breaking below the important support area in the mid-3k satoshis range, turning it into resistance in April 2019.

As of now, price is trading at all-time lows of 1100 satoshis and remains capped by trendline resistance from November 2018. It is also well below the 200-day moving average. I would not be a buyer until we start to see this trend reverse, as price remains in bearish discovery until the support turned resistance at 2100 satoshis is reclaimed as support. Beyond this, however, the most important level is 3100 satoshis; if this is flipped, I would be convinced the long-term downtrend is over for NIX. But that is a long way away…


Conclusion

This report is now approaching 5,000 words, and it is time to draw it to a close.

My final grading for NIX is 7 out of 10.

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.


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