The NEM foundation, a not-for-profit organisation established to support the ongoing development of the NEM blockchain platform, is almost broke with only “one month” of funding left after “mismanagement” of its cashflow. As a result it is being forced to restructure.
The NEM foundation is seeking 160 million XEM tokens to cover operational costs, an amount currently valued at about $6.8 million. These funds are urgently required. In its message to the community, the NEM foundation said it only has one month left of funding, and “this means we won’t be able to support our current headcount, partnerships, and projects. We need to put everything on hold.”
Alex Tinsman, the newly appointed president of the NEM foundation and former marketing professional, told CoinDesk that the Singapore-based organisation will be submitting a funding request to the NEM community fund. In an interview she said “Basically we realised we had a month to operate, due to the mismanagement of the previous governance council.”
NEM foundation’s 202 supporting members, who collectively pay only $10,000 in yearly membership fees, yet are responsible for NEM’s governance, will vote on the multimillion dollar funding proposal in February. The amount that can be raised will inform the number of employees that will be laid off and the future direction of the business.
Launched in March 2015, the NEM cryptocurrency network is based on a centralised blockchain model, and it’s governance arrangement is similar in setup to Dash. XEM tokens were initially distributed to a group of individuals who helped develop the NEM platform.
In an interview in February 2018, the former NEM foundation president, Lon Wong, explained that the NEM platform and its native cryptocurrency was primarily developed to facilitate cheap transactions and help businesses conveniently pay routine service 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.
According to Tinsman, the NEM foundation spent approximately 80 million XEM between December 2017 and January 2019 on marketing services. However, she said in interview that: “We’ve reduced marketing activities because it doesn’t make sense to market a product [Catapult] that isn’t out yet.”
At an average marketing burn rate of 5.7 million XEM per month, and based on the monthly dollar close price of XEM, this figure amounts to approximately $23 million spent on marketing over 14 months.
Not only this, a blockchain developer who had been working under NEM’s previous management team, revealed that the foundation’s former president, Wong, had been promoting “sketchy” 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).
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.”