Symbol

What is Symbol (XYM)?

Symbol is a blockchain project often considered the spiritual successor to the NEM blockchain.

A fork of NEM created by a pseudonymous team of cryptocurrency experts, Symbol has a strong following in Japan and South Korea. Its community is active on Twitter and other social media platforms, such as LINE and KakaoTalk.

Symbol builds on the years of work put into NEM and offers various upgrades such as its proof-of-stake-plus (PoS+) consensus, dynamic fees, Merkle proofs, and extended functionality.

When was Symbol Launched?

Symbol launched in 2021 when members of the NEM community forked it away from NEM and proposed that NEM become a sub-chain of Symbol.

NEM holders were airdropped 1 XYM coin for every XEM coin they held, with a total of 7.3 billion XYM allocated for this distribution.

How Does Symbol Work?

Symbol is a blockchain project focusing on enterprise adoption, and to that end, it provides a hybrid structure that began with private chains but has since evolved.

Businesses could use Symbol by way of a private blockchain network with the native ability to shift assets onto a public blockchain if and when needed. This allowed businesses to leave security to their own internal nodes while reaping maximum speed and low transaction fees.

Now, Symbol uses small, purpose-built subChains anchored to the main Symbol chain that act as a settlement layer. This connection is made via a roll-up protocol based on zero-knowledge proofs.

Each subChain is represented by its own utility token called a mosaic. These mosaics are given to block-producing nodes as rewards. They can then be staked, allowing the node to also become a liquidity provider or be traded for goods and services.

Together with this system comes Symbol’s library of optimized APIs that allow for streamlined software development. These tools are compatible with most programming languages used by enterprises and can be integrated easily.

What Makes Symbol Unique?

Symbol is a relatively new blockchain protocol unique in that it is a decentralized project attempting to service centralized users.

Also notable is Symbol’s approach toward solving the problems of data permanence and content-specific networks. There is a shared global state on public blockchains where every user is a root user.

Instead, Symbol empowers node operators to service content based on market demand and machine sympathy. This ensures that the network’s throughput becomes additive rather than dependent on one single part of the system.

The concept of syndicates is also unique to Symbol. These syndicates are an effort to encourage collaboration rather than collusion and include the following:

• Infrastructure syndicates. Composed of nodes and their operators, they rely on developers to design, develop and deploy new functionality on-chain. They also rely on dApps to attract new users and generate network fees.
• Protocol syndicates. Composed of developers and system architects, they are reliant on nodes to maintain consensus and on dApps that monetize the public chain.
• User syndicates. DApps depend on developers for new functionality that allows them to introduce new products and nodes to provide infrastructure.

How is the Symbol Network Secured?

Symbol is secured by a consensus mechanism called proof-of-stake-plus (PoS+). Like with proof-of-stake blockchains, nodes have to stake the network’s native cryptocurrency, XYM.

These nodes create new blocks, validate them, and record transactions. Rather than validation or mining, however, this process is called “harvesting” on Symbol.

Node operators with higher amounts of XYM at stake have more harvesting power and, therefore, more chance of earning the rewards that come with creating a new block.

The difference between PoS+ and PoS lies in the way that Symbol scores node operators. This score is based on factors like the size of their stake, the amount of XYM delegated to them by other users, and the node’s network activity.

Delegation allows ordinary users to put their XYM towards securing the network and earning a share of the rewards granted to node operators. Known as “delegated harvesters,” these delegators can earn rewards even if they don’t run a node.

Operators of nodes also set their own transaction fees, which adds an element of competition when choosing a node to delegate to.

What is the Use of XYM?

XYM is the native token of the Symbol ecosystem and is often referred to as the “mainChain” utility token. It is required for transactions to be finalized at the settlement layer of the protocol.

All subChain nodes need to maintain a balance of XYM in addition to their mosaic tokens. These nodes can also delegate their XYM to a syndicate, an orchestrated cluster of nodes allocated to a set of subChains based on network demand.

How Much Symbol is In Circulation?

Symbol set aside 7.3 billion XYM for distribution to XEM holders at launch and has a total supply of 9 billion coins. The remaining 1.7 billion XYM will be issued as block rewards over approximately one hundred years.

How Do You Buy XYM?

You can buy XYM from various cryptocurrency exchanges, including Bithumb, KuCoin, Gate.io, Bittrex, and Poloniex. In fact, Symbol’s popularity in Korea and Japan is reflected in how most exchanges serving those countries offer XYM.

XYM is often traded against the Korean Won and Japanese Yen, but you can also buy it with cryptocurrencies like BTC and stablecoins like USDT.

How Do You Store XYM?

You can store XYM in a cryptocurrency wallet like the Symbol Desktop Wallet. The Symbol website’s documentation section features a step-by-step guide on how to use the wallet to create a Symbol account. This account serves as an address where your XYM coins will be located on-chain.

It’s also possible to keep your XYM on an exchange account. However, there are several disadvantages to this. First and foremost, it’s only possible to know that your XYM tokens are real when you withdraw them into your own custody.

Much like every traditional stock broker, every exchange will promise you that your assets are real. Unfortunately, that may not always be the case, as seen with the now-defunct exchange FTX. Many exchanges have begun to issue proof-of-reserves, but plenty of supposedly audited and risk-managed institutions have failed (and seem to be failing) real-world stress tests in 2022 alone.

Traditional financial media will try and sway you with arguments that holding assets with a custodian is a good idea because it’s easier to sell or simply because of “liquidity.” However, the main risk of keeping your coins in your wallet is that you might misplace your private keys.

Symbol Energy Consumption

Symbol is a network that uses a variation of proof-of-stake consensus. As a result, it can be considered energy efficient since security comes from XYM tokens being staked rather than raw computing power.

While Symbol’s structure allows for the addition of subChains, this doesn’t necessitate huge increases in energy consumption either. These subChains are purpose-built, and enterprise subChains may consist of a minimal number of nodes.

Is XYM a Good Investment?

Symbol has the potential to be a good investment because it takes a realistic approach to blockchain technology and focuses on enterprise customers. While it isn’t alone in this regard, it does offer a unique technological product and platform for businesses to consider.

Furthermore, Symbol’s footprint and network effect in South Korea and Japan can’t be underestimated. As two of the world’s most technologically advanced economies, both countries are powerhouses on the global stage, and Symbol appears to have a strong foothold in those markets.