NEM Foundation Close to Bankruptcy, Might Start Layoffs Next Month

  • NEM foundation, a nonprofit that supports NEM blockchain's development, is close to bankruptcy. 
  • The organization is seeking funding from NEM's community and may begin laying off certain employees next month,

The NEM foundation, a non-profit organization established to support the ongoing development of the NEM (XEM) blockchain platform, is reportedly planning to layoff many of its staff members.

Due to the prolonged crypto bear market, the NEM foundation has been forced to reduce its operational costs and also begin restructuring its organization. Alex Tinsman, the newly appointed president of the NEM foundation, told Coindesk (on January 30th) that the Singapore-based organization will be submitting a funding request to the NEM community fund.

The NEM foundation is seeking 160 million XEM tokens (to help it cover operational costs), an amount currently valued at about $6.85 million according to CryptoCompare data. These funds are urgently required as the NEM foundation is reportedly close to filing for bankruptcy.

In an interview this month, Tinsman revealed: 

Basically we realized we had a month to operate, due to the is management of the previous governance council.

Layoffs Could Begin Next Month

NEM foundation’s 202 supporting members, who are required to comply with know-your-customer (KYC) requirements and also pay a yearly $50 membership fee, will be voting on whether to approve the funding request in February. Based on the amount of funding the NEM foundation receives, the organization will announce the number of employees it will be laying off, Tinsman stated.

Launched in March 2015, the NEM cryptocurrency network is based on a centralized blockchain model and it’s governance, or platform management, is often compared to Dash (DASH). Notably, XEM tokens were initially distributed to a group of individuals who helped develop the NEM platform.

NEM To Launch "Full-Featured" Blockchain Engine 

According to NEM’s founders, the few people that held XEM started distributing the tokens to NEM’s growing community. Former NEM foundation president, Lon Wong had expressed confidence about NEM’s potential in an interview in February 2018 - when the market capitalization of XEM tokens and other cryptoassets were considerably higher.

At that time, Won had explained that the NEM platform and its native cryptocurrency was primarily developed to facilitate cheap transactions and help businesses conveniently pay routine services fees. NEM’s development team is planning to launch Catapult, the platform’s “full-featured” blockchain engine. The updated version of NEM’s protocol is being developed specifically for enterprise-level use in public and private networks.

Reducing Marketing Activities

Some of the use cases for NEM that are currently being explored are blockchain-based voting. According to Tinsman, the NEM foundation spent approximately 80 million XEM (appr. $34 million at current rates) between December 2017 and January 2019 on marketing services.

However, Tinsman said that the foundation has “reduced [its] marketing activities” as “it doesn’t make sense to market a product [Catapult]” that has not yet been introduced.

Notably, a blockchain developer who had been working under NEM’s previous management team, revealed that the foundation’s former president, Wong, had been promoting what the developer thinks are questionable ICO projects, including Ecobit and ProximaX. The developer, who chose to remain anonymous, said: “the community felt this was a breach of faith” (on Wong’s part).

Need For Better Budget Management

He added:

There’s not a whole lot of people working on this platform. Even though it’s easy, the community isn’t really there unless you go to Japan. We need more developer traction on this platform.

In order to better manage NEM’s operations, Tinsman, a former communications executive at the foundation, is planning to cut costs and will be closely supervising the development budget. She explained:

The community will also be voting on these [funding requests] and which ones we should be moving forward with.

Istanbul Upgrade: 28 Ethereum Improvement Proposals Under Consideration

Ethereum’s developers have submitted 28 ethereum improvement proposals (EIPs), which include recommended codebase modifications that may be integrated into the upcoming Ethereum (ETH) network hard fork, called Istanbul.

The EIPs  are expected to change the smart contract platform’s mining algorithm, code execution and pricing mechanism, and data storage process.

Deciding Which EIPs to Include With Next Hard Fork

During the bi-weekly meeting between Ethereum Core developers (on May 24, 2019), the blockchain network’s development team discussed various approaches and EIPs which may help the platform scale effectively.

Commenting on the process for considering EIPs to be added to Istanbul, Hudson Jameson, the Community Relations Manager at the Ethereum Foundation, remarked:

We’ll talk more on the All Core Devs Gitter channel to wrangle in some of these EIPs that are still stuck in proposed and as quickly as possible decide on which ones are being implemented for Istanbul.

EIP 1108 Tentatively Approved During Bi-Weekly Meeting

Jameson also confirmed that the deadline for submitting EIPs to be considered for Istanbul passed on May 24. He added that Ethereum’s developers are now reviewing the proposals in order to determine whether they should be implemented in the next Ethereum hard fork .

EIP 1108, which recommends small adjustments to Ethereum network gas fees, was tentatively approved this past Friday (during the bi-weekly meeting). As explained on its Github page, EIP 1108 addresses the following:

The elliptic curve arithmetic pre-compiles are currently overpriced. Repricing the pre-compiles would greatly assist a number of privacy solutions and scaling solutions on Ethereum.

Currently, the implementation details related to EIP 1108 (and other EIPs) are being reviewed and Ethereum Core developers will be presenting benchmarking figures for repricing pre-compiles (for EIP 1108) during the next bi-weekly meeting.

According to Ethereum developer Rick Dudley, EIP 1559, which proposes a new type of transaction fee structure for Ethereum, is “a pretty complicated change.” Dudley believes that the final implementation specifications for EIP 1559 will most likely not be finalized by the time Istanbul goes live.

He also confirmed that the Istanbul hard fork, or backwards incompatible upgrade, will be activated at some point in October 2019. However, Istanbul’s Github states that the exact date and time for the planned Ethereum network update is to be determined (TBD).

ETH Mining Protocol Change Under Review

EIP 1057, which recommends a change to Ethereum’s proof-of-work (PoW) mining protocol, is also being considered to be included as part of Istanbul’s codebase modifications. Notably, the market for ether mining rewards has been estimated to be at $655 million (per annum) and powerful ASICs have been consistently outperforming lower-priced and less powerful graphics cards.

One of the design goals, for Ethereum, is to reduce miner centralization by modifying the current PoW mining protocol or replacing it with the ProgPoW algorithm.

Explaining why the implementation of ProgPoW was postponed, Jameson said

We ran into issues starting the ProgPoW audit. We had a hardware partner who specialized in ASICs who was going to work with Least Authority to perform the hardware parts of the audit. They are no longer participating in the audit so we are looking for other auditors for the hardware portion.

Developer Compiles Spreadsheet of All EIPs Under Review

In statements shared with CoinDesk, Ethereum developer James Hancock noted that the smart contract platform’s development team will be working on merging accepted EIPs for Istanbul. The merged proposals will then be added to Ethereum software clients, Hancock explained.

He also mentioned:

The suggestion is to have reference implementations in two ‘major’ clients. The definition of major is pretty loose.

The blockchain developer has compiled a list of all EIPs being considered for Istanbul and they’ve been marked to indicate whether they’re “ready” to be integrated into the Ethereum mainnet