Decentralization is the bedrock of blockchain technology as pioneered by Bitcoin. The technology trended on the idea that users do not need trusted centralized entities like banks to transact with each other.
The concept relies on a consensus mechanism involving a group of nodes that determine valid transactions and enter them into new blocks. This core concept helps maintain the blockchain's integrity and allows users to transact "trustlessly."
The vision where consensus counts, without relying on a centralized entity, boosted Bitcoin's popularity and increased awareness of the crypto industry. However, the Bitcoin blockchain is not perfect.
Bitcoin lacks smart contract capabilities, which is the ability to execute transactions automatically without the need for human prompts. This leads to one main problem: developers cannot deploy decentralized finance (DeFi) and decentralized applications (dApps) on the network.
As the industry continues to mature and technology advances, many researchers and developers have continued making efforts to fix this challenge. In this article, we'll look at Mintlayer, a blockchain ecosystem leveraging Bitcoin, designed to bring DeFi to the Bitcoin network.
What is Mintlayer?
Mintlayer is a layer-2 solution enabling DeFi, smart contracts, dApps, NFTs, atomic swaps, and more on the Bitcoin network. It is a sidechain anchored to Bitcoin. The network is developing the first-ever sustainable architecture for DeFi while incorporating Bitcoin's security model.
Mintlayer will serve as a host for developers who want to create dApps with practical applications. This will influence the future of finance, leveraging Bitcoin's decentralized nature.
History of Mintlayer
The Bitcoin network has undergone several upgrades to modernize and strengthen the initial structure. These developments support the fundamental principles of Bitcoin, in contrast to the centralized entities that exploit it for profits.
The Segwit and Lightning Network's activation by the Bitcoin community helped to boost the network's capacity. The lightning network, a second-layer solution constructed on top of the Bitcoin blockchain, attempts to increase the scalability and speed of Bitcoin transactions.
The latest Bitcoin Taproot upgrade also enabled the network to batch multiple signatures and transactions together. This helps to make the verification process faster, more private, and safer.
However, Bitcoin still needs DeFi capabilities to maintain its lead among modern blockchains, like Ethereum.
On the other hand, prominent smart contract networks often give up decentralization due to several issues the ecosystems face, including clogged blockchains, high fees, and high barriers to running network nodes. When average users cannot partake in running nodes and essential decisions are left to a few servers, decentralization suffers. This condition also presents security threats for daily users and affects the chain's usability.
True decentralization must rise above the prevalent challenges faced by major players in the industry. This is where Mintlayer comes in.
Mintlayer was established in 2019 to serve as another strategy within the expanding, multi-layered Bitcoin ecosystem targeted at giving it additional expressivity. It will also leverage Bitcoin's network to offer a truly decentralized option to developers and users.
Furthermore, the Mintlayer protocol will enable developers and projects to fully utilize the Bitcoin Blockchain's capabilities. It will create a thriving smart contract ecosystem hosting applications dedicated to real use cases.
Mintlayer Features
The Mintlayer network has some notable features to explore. They include:
Mojito Wallet
Mintlayer recently launched a non-custodial crypto wallet: Mojito wallet. It is a lightwallet that allows users to store Bitcoin, Mintlayer tokens (MLT), and other tokens securely. The Mojito Wallet is available both on mobile and desktop. In addition, users can access funds stored in the wallet through a hard wallet.
The wallet supports the Lightning network, allowing users access to fast and cheap transactions. Users can also create multiple wallets to store, transfer and receive Bitcoin all in one place.
MLT Token
The Mintlayer token (MLT) is the native token of the Mintlayer network. Holders will be able to use it for various platform activities, including transaction fees and staking. They can also speculate with the token.
Additionally, the token will be employed in governance. The development team has established that it will be used in deciding the future fate and direction of the network.
The MLT token is scheduled to launch on 21st March 2023. It has a hard cap of 600 million, with 400 million pre-mined tokens available at launch. The remaining 200 million tokens will be used to reward block creators until all tokens come into circulation within ten years.
Staking
Staking involves locking up assets to support operations on a blockchain network. MLT holders will be able to lock up their tokens to become network validators. Validators get rewarded with transaction fees from the blocks they validate
Mintlayer Ecosystem
The Mintlayer ecosystem consists of members who aim to increase Bitcoin's usefulness and make it interoperable with DeFi use cases. Members, including forward-thinking blockchain-oriented investors and other stakeholders, contribute to the ecosystem fund to drive innovation in the emerging Bitcoin-based DeFi ecosystem.
The Mintlayer ecosystem fund also runs three types of initiatives: incubator programs, accelerator programs, and grants initiatives.
The incubator programs are open to developers with ideas and require assistance to put together a team, develop a road map, create a legal structure, design a marketing strategy and raise funds.
The accelerator programs are for experienced teams with a clear idea, roadmap, marketing strategy, and legal structure and are ready to start executing their plans immediately. Such teams will be assisted in fundraising and market launch according to their schedule.
Finally, the grants program is open to those who have ideas that can bring value to Mintlayer, but the idea is not related to token issuance or revenue generation. It can be about developer tools, educational resources, analytic tools, etc.
Why Should You Care About Mintlayer?
Mintlayer will offer several benefits to developers and users looking to explore Bitcoin further. Here are some reasons why you should care.
Enable DeFi Features for Bitcoin and Lightning Network
Mintlayer's main goal is to bring DeFi to Bitcoin and the Lightning network. It will enable smart contracts, DEX, NFTs, and more on the Bitcoin network. Users will be able to swap Mintlayer assets directly with assets on Bitcoin. Mintlayer will also facilitate on-chain confidentiality for transactions. Users will access DeFi products while enjoying Bitcoin's true decentralization.
Allow Developers to Explore Bitcoin
Mintlayer offers a robust platform for projects and developers. It provides tools for developers to build decentralized applications on Mintlayer and access the full capabilities of the Bitcoin network. Mintlayer lays the infrastructure to push the bounds of what is possible on Bitcoin.
Users can also access mentorship and funding to create projects that will advance Bitcoin and the Lightning Network. While Bitcoin has seen several developments, Mintlayer is paving the way for the next. It also aims to discover the full potential of Bitcoin.
High Throughput and Low Fees
The network is committed to solving blockchain scalability problems. This involves increasing the number of transactions the protocol can handle per second. Mintlayer uses signature aggregation to batch transactions on the network. This shrinks transaction sizes, reduces network congestion, and impacts transaction costs.
No Gas-Fee Monopoly
Mintlayer runs a unique financial market. Unlike other networks like Ethereum, which require specific coins to pay gas fees, Mintlayer has no gas-fee monopoly. Any coin available on Mintlayer and selected by the block signers can be used to pay gas fees. For instance, you can send USDT to someone and pay the transaction fees using the same USDT, instead of its native MLT token.
Feature-Packed Wallet
The Mintlayer wallet is packed with several DeFi-supporting features. Users can use the wallet to store assets, lend, borrow, stake, and trade in DEXs. Additionally, the wallet supports the Lightning network, allowing users to trade instantly and cheaply. It is available on phone android and iOS.
Conclusion
Although the Bitcoin network has evolved over time, Mintlayer is another protocol that aims to improve Bitcoin's functionality. The network employs a unique approach to bring about the future of DeFi on Bitcoin and the Lightning wallet. Mintlayer is the first sidechain to try integrating smart contracts with the Bitcoin network, putting it ahead of other protocols.
This will add to the number of layer-1 blockchains and layer-2 solutions anchored on Bitcoin. Developers and users will have more options and more opportunities to choose from while pursuing true decentralization.
