What is Symbol?

Symbol is a blockchain created by the NEM Group and launched on 17 March 2021. It uses a special kind of proof of stake (PoS) consensus mechanism called POS+, which increases interoperability and collaboration with other blockchains. XYM is the native token of Symbol. This enterprise-grade blockchain lets users create specialised crypto assets with configurable properties that can act as security tokens.

The XYM token is an integral part of Symbol’s strategy. XYM stakeholders use this utility token to get incentives, pay fees, and send transactions on the network. XYM has rapid transaction speeds and can be transferred worldwide unrestrictedly.

A brief history of Symbol

Symbol’s origins trace back to the creation of the NEM community in January 2014 and the subsequent development of the NEM NIS1 blockchain, which released its mainnet and XEM native token in March 2015. In the preface of the NIS1 blockchain project’s white paper, the NEM Group explained how NIS1 was born, stating, “Eventually, we came to the realization that the original solution would need a rearchitecture to fix some central performance bottlenecks and allow faster innovation in the future.”

The NEM Group, with the support of Tech Bureau, proceeded to build a new PoS public blockchain from scratch. Following four years of development, the Symbol mainnet and the XYM cryptocurrency were launched on 17 March 2021, effectively turning it into a two-blockchain ecosystem, according to NEM Group CEO David Shaw.

Symbol was billed as an enterprise-grade blockchain with high-performance developer tools for interoperability and tokenisation. “We’re looking to encourage interoperability and collaboration with the other blockchains,” NEM Group COO David Mansell said. “We’re not competing against them.”

Alongside the launch of Symbol, the NEM Group first distributed the XYM token to NEM NIS1 users who agreed to migrate their accounts to Symbol. These users obtained an XYM balance equal to that of their XEM balance. Symbol has a current circulating supply of about 5.58 billion XYM, and a total supply of 7,967,988,930 out of a maximum limit of 8,999,999,999 XYM.

On 11 November 2021, the Symbol community approved a hard fork called Cyprus, which aims to transition the blockchain into an omnichain platform with content-specific, scalable shards powered by the zk-STARKs scaling and privacy solution. (The acronym zk-STARKS stands for zero-knowledge scalable transparent argument of knowledge.) The hard fork also burned all existing reserved development funds and post-opt-in funds for Symbol, while minting new funds that are placed in a multi-signature account, operated by Valkyrie Funds and Symbol’s core team.

How Symbol works

Symbol leverages a four-tiered design to create a simplified experience for companies and individuals. Fourth-generation blockchains, such as Symbol, have layers dedicated to decentralised app (dapp) processing and smart contract execution. This dual-layered architecture increases scalability by reducing congestion on the main layer, which serves as a digital ledger.

The Symbol blockchain uses a modified version of the PoS consensus mechanism, called the Proof-of-Stake Plus (PoS+). This mechanism is similar to PoS, as it considers the number of tokens staked on each account. But it differs by rewarding participants based on their activity, therefore promoting the ecosystem’s health.

One of the primary issues that Symbol addresses is a lack of functionality in previous blockchains. This fourth-generation network supports the most recent DeFi features and is expandable to accommodate market developments in the future. Together with smart contract programmability, these features advance Symbol’s functionality ahead of its predecessors.

To eliminate friction points, Symbol users are also allowed to tokenise their assets. Tokenisation is the process of transforming another asset into a blockchain asset. This method can entail dividing a large asset into smaller denominations and has several benefits. Firms may use Symbol to tokenise and generate bespoke digital assets to fulfil their communities' demands. Symbol users can digitise assets such as stocks, signatures, votes, debt, and much more. The procedure eliminates technical barriers to blockchain integration and gives developers tools to speed up the process.

Symbol also features many versatile tools meant to streamline processes, such as multi-layered, multi-signature accounts. Users can build digital assets to represent almost anything, such as non-fungible tokens (NFTs), signatures, or stock shares.

What is Symbol used for?

The XYM token is used to pay for network fees in Symbol’s public blockchain layer. Symbol’s hybrid system allows for the use of private blockchains for critical functions and the public blockchain for finalizing transactions. This means that the platform’s users end up paying for transaction fees only on the public blockchain layer, resulting in savings for these users.

As with any PoS blockchain, XYM can also be used for staking activities. Token holders can earn more XYM by staking their Symbol wallet or delegating their XYM to a harvester, Symbol’s term for an account that creates a new block on the network and receives rewards for transaction fees produced. In addition, the Symbol engine supports the gradual increase of the XYM total supply as time passes.