NEM Foundation: “To face the facts of where we stand is horrific”
Another one has announced the possibility of it biting the dust.
The NEM Foundation ran the numbers when the 2019 council took over from the 2018 crew, and found only a month of funding left at its current burn rate, it said.
More specifically, according to the new NEM Foundation funding proposal that's currently up for community vote, when the new council took over it found US$1 million in the bank, and 26 million XEM, but also $700,000 in bills and many unpaid invoices. Another 6 million XEM was quickly spent to clear those up.
Newly elected president Alex Tinsman was blunt, describing the funding crunch as being "due to the mismanagement of the previous governance council".
"We are only one month old as the new council, and to face the facts of where we stand is horrific," the new NEM Foundation said in a statement. "We cannot apologise for the past decisions before we came into leadership, but we want to let you know that there is hope for the future."
The plan is to clear debts, immediately try to cut expenditure by 60% pending community approval of the new budget, and then to try to find more funding fast.
What "mismanagement" looks like
"80 million XEM was spent between Dec 2017 and Jan 2019, primarily on marketing," the Foundation explained in a follow-up. The marketing spend was primarily focused on Catapult, NEM's still under-construction all-in-one blockchain engine.
Unfortunately Catapult isn't out yet, which probably made all that marketing spending rather unproductive, especially in an industry already known for making grandiose promises of products that have yet to be created.
The announcement describes the spending as something like over-exertion following the crypto sugar high of late 2017.
"When the new council arrived on January 1, 2019, we opened the books and saw the results of 2018... We saw efforts being duplicated, and inconsistent metrics of success. We saw very little accountability for funds and questionable ROI, leading to a burn rate of 9 million XEM per month. In terms of running an effective organization, the existing structure failed. Maybe that didn't seem like a big problem when the XEM price was high, but it's a very big problem as we seek to sustain a viable organization in the Crypto Winter," the NEM Foundation said.
This puts NEM in a similar boat to many others, such as Ethereum's ConsenSys, except with considerably less runway.
It probably doesn't help that NEM markets have much lower liquidity than Ethereum and so would be less able to absorb the constant downward force of the NEM Foundation's spending.
A high note
After delivering this very bad news, the NEM Foundation's announcement abruptly ends on a high note, suggesting that it will be going for community donations among other fundraising avenues.
"The upcoming launch of Catapult will revolutionise blockchain's future, and we are grateful for your support in the next steps of this journey," it says. "Our Finance and Product Development teams will have plans on exactly how to maximise the benefits of the next bull market."
It says the community response has generally been positive.
"A new Council was elected on the promise of change and so the community is welcoming the restructure," it says.
The Foundation also notes that it's not the be all and end all of NEM as a platform. It's a driving force behind the platform, and is giving direction and funding to support those working on NEM, but even if the Foundation does end up dissolving the NEM blockchain won't be going anywhere.
Unfortunately, it might not be going anywhere in both senses of the phrase.
"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," an unnamed NEM developer said to CoinDesk. "We need more developer traction on this platform."
Disclosure: At the time of writing the author holds ETH.
- Ethereum’s price rallies after adoption by a major Gulf State
- Bitcoin price is starting to look choppy and the US Fed may make it worse
- Ethereum’s price action heats up with overnight gains of 8% – here’s why ETH may surge further
- Bitcoin gains 6% in less than 12 hours: Could this be the start of another bull run?
- DeFi on Avalanche: How to get started yield farming