NEM foundation has a new council leading the foundation and there are big shakeups going on and with those big shakeups is coming to some very big FUDs. NEM had elections to lead the NEM foundation which were very contentious and dramatic. We had things like the acquisitions of vote buying, discussions about who can even vote around proof of importance. The NEM foundation was first of its kind trying to run a decentralized promotional organization that operated in multi-regions around the world. The foundation was essentially put in charge of making decisions for the NEM public blockchain and also a course in spreading global adoption. However, all these different regions were empowered to make a lot of their own decisions but when the new council started digging into the books from 2018, the results didn’t look very good at all.
We had things like duplicated efforts, so the teams in different nations were all doing the same kind of things i.e. duplicating their efforts instead of coordinating. There were bad matrix on success, so throwing money at campaigns and of course very little accountability for some of the questionable programs that money was thrown at. So a lot of money was just spent on things that really did not have a lot of great benefit to the ecosystem. The NEM foundation was burning 9 million NEM a month and that wasn’t a very big deal back when the price was NEM was high but now that NEM is just about 4 to 5 cents of value, its a very different situation in terms of funding all of these things. So they are looking at audits between 2017 and 2018 which are being sent out to the core developers and legal teams for review. It looks like the majority of funds were spent in 2018. They are trying to figure out where it went wrong and how they spent so much money and didn’t really get so much return out of spending that money.
Moving forward, there is not going to be any more regional teams. They are going to be replaced with product-focused teams. So essentially more of a centralized business model but considering the mismanagement of the funds on the decentralized model, perhaps this is the right business decision by the guys at NEM.
There are also going to be some big layoffs happening. The final number on how many staffs are going to be laid off has not been confirmed.
A new part of the structure is that all teams will report to their head and all expenditures will have to pass through the head of finance. So this is a positive step in the professionalization of the NEM foundation overall.
There is also going to be a big reduction in promotional spending. NEM foundation’s new focus in going to be on tech, products, features, developer tools and getting programmers on board.
There is going to be a 60% reduction in the monthly burn rate they are going through in terms of how much money they are spending every month as a big part of the budget cut.
Basically what they want to see are the ability to support their current headcount, the partnerships and the projects but a lot of those are going to be cut because of the funding that they currently have the amount of support, staff, partners, and projects that they are trying to fund. So there is going to be big cuts happening in all of these.
Essentially they are putting a lot of things on hold. The NEM foundation is attempting to put in a request for 160 million XEM worth about $7.5 million. They are not out begging the community for money, but this is a pre-existing fund designed to fund the NEM foundation but they do have to request to get more money coming in.
There will be new plans to monetize the foundation’s activities so that there is less reliance on having to withdraw money from that fund all the time. This includes things like enterprise money and affiliate marketing, all, of course, to try and reduce the reliance on getting those grants from the community.
It is worth noting here that this effects the NEM foundation, we are not discussing the platform. Obviously, they are linked. The platform is definitely linked to the success of the foundation but the NEM foundation is not NEM. NEM is an open-source project that has a thriving community but it will be even better with a thriving foundation at the head of that. So it is very important for the success of the NEM platform overall to have a very strong foundation but this does not mean that the NEM platform itself is under threat.
There would also be a renewed focus on Catapult which is the scaling solution for NEM that is supposed to be taking NEM up to 4000 transactions per second. With so many promises and delays around Catapult, this really needs to happen. It is currently running on Mijin which is NEM’s private blockchain implementation but we need it on the public chain. The NEM foundation’s financial situation does not prevent Catapult from moving forward. The core developers are not paid through the NEM foundation, nor do they report to the NEM foundation. So there is a separation of powers there. So the development on Catapult is not in threat.
The foundation is also going to be focusing on business applications trying to bring in more features to unlock use cases and they are aiming to have new business-ready applications in the next few months. Partners have been asking for them for years though so it’s definitely time to get some of these things moved forward as this is an incredibly competitive space.
What are your thoughts on NEM’s new council? Tell us in the comments section below.
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