Home Editor's Pick Introducing Mintlayer: A Blockchain for Financial Markets Built on Bitcoin

Introducing Mintlayer: A Blockchain for Financial Markets Built on Bitcoin

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Mintlayer was founded in early 2019 to build a Decentralized Financial Ecosystem that is built on Bitcoin forming a truly decentralized, trustless, and transparent future for finance.

As such, Mintlayer is a sidechain, which provides the infrastructure and critical tools for projects to build the future of Bitcoin on Mintlayer.

Over the last two decades, people have tried rebuilding finance using fintech and many interesting financial applications have come to the markets, but they all remained bound to the traditional fiat system.

Meanwhile, Bitcoin’s native monetary system is its chief achievement and is a novelty in the fintech industry.

Not only is it the world’s largest and most popular cryptocurrency, but Bitcoin is also known for its decentralized and secure protocol. Bitcoin is outstanding as it is independent of today’s existing financial and monetary system.

What Is Mintlayer?

Mintlayer aims to create a sustainable architecture for decentralized finance, inheriting its security model from Bitcoin.

It is a Layer 2 solution that allows users to build a decentralized finance ecosystem rooted in the Bitcoin blockchain, opening Bitcoin to DeFi, smart contracts, atomic swaps, NFTs, apps, and more. Mintlayer is also compatible with the Bitcoin Lightning Network.

Yet there is still one missing piece if Bitcoin is to compete against other more modern blockchains like Ethereum.

Bitcoin cannot execute smart contracts, which allow for automated transactions including the creation of decentralized applications (dApps) and decentralized finance (DeFi) products.

Despite the shortcomings, true innovation in money and finance has only started with Bitcoin when many in the crypto community are searching for a solution to bring smart contract capabilities to the blockchain. One of them is Mintlayer.

The Bitcoin Community has made changes to modernize and improve upon the original foundation.

Bitcoin activated Segwit to increase the network’s capacity and Lightning Network as a second-layer solution built on top of the Bitcoin blockchain that aims to improve the scalability and speed of Bitcoin transactions.

Now, Mintlayer is taking Bitcoin innovation to the next level…

Mintlayer  Token (MLT)

Mintlayer Token (MLT) is the native token for the Mintlayer ecosystem that will be used for different activities on the platform, including transaction fees, governance, and staking.

Therefore, by holding MLT, you will be able to stake your tokens and become a network validator. Then, you will get rewarded with transaction fees from the blocks you validate.

Also, you will be able to participate in the decision-making process involving the Mintlayer ecosystem.

MLT holders can stake a minimum amount to participate in the consensus mechanism. By doing so, you can accept network fees in a token of your choice. MLT tokens can also be staked in a pool for token owners. Not only that, but the token is also used to mint new tokens on the platform.

400,000,000 MLT will be generated during TGE, but most tokens have a vesting period before being unlocked. MLT will be initially launched as an ERC-20 token and will be migrated to Mintlayer Mainnet once completed.

Token Distribution:

At Launch: 400,000,000 MLT
Staking Rewards: 200,000,000 MLT
Max Supply: 600,000,000

Technical Architecture Deep Dive

Mintlayer has chosen to lean on various technical architectures, including UTXOs, ACLs, the Lightning Network, P2P batching, and Atomic swaps.

Enhanced decentralization with inclusive P2P network and DEX: is designed for anyone to run a node with low hardware requirements. Each node communicates with peers to perform atomic swap transactions enabling a fully decentralized exchange (DEX).
Unspent Transaction Output (UTXO) based model: allows for enhanced privacy. This allows multiple receiving addresses for each wallet and supports batching and conjoining procedures.
Reducing User Friction: High throughput (TPS), low fees, and fast transactions reduce friction.
Increased Token Interoperability: allows aggregated payments and supports multi-token transfers within a single transaction. Token porting from other networks. Two-way pegging allows for wrapped tokens from other blockchains. Cross-chain Atomic swaps with BTC.
Providing security: Any network participant can enforce checkpoints on the Bitcoin blockchain. Also, Non-Turing Complete smart contracts increase outcome predictability and reduce contract failure risk.

Mintlayer Ecosystem

The Mintlayer Ecosystem is a suite of opportunities for projects with the sole purpose of unlocking the full potential of Bitcoin. As so, projects at all stages can apply for support.

Here are the infrastructure and critical tools for projects to build on Mintlayer.

Ecosystem Fund: selects and funds the best DeFi projects with real-world use cases. This tool also connects project founders to the Mintlayer network of Angels and VCs,
Incubator Program: nurtures early-stage projects to bring them to launch as well as assists with business strategy, software development, tokenomics, funding, legal hurdles, and more.
Accelerator Program: For established projects who wish to port (or migrate) to the Mintlayer protocol, the program provides funding and advisory for projects to fast-track to maturity.
Grants: offers grant opportunities for open-source developers to build on Mintlayer.

What Makes Mintlayer Different?

Currently, when the DeFi ecosystem runs on the Ethereum (ETH) blockchain, nodes can only be managed by specialized servers rather than average users. Thus, most users are left outside of the blockchain’s governing decisions.

These conditions lead to security threats for daily users that mostly rely on light nodes or custodians, as well as lead to more centralized project choices.

Ethereum will be an unsuitable long-term solution for truly decentralized finance due to the lack of future-proof sustainability and long-term plans for scalability, combined with a complex technical architecture.

A Faster Platform

A clogged network cannot guarantee proper functionality of DEXs and gigantic nodes have increasingly slow syncing time. Not only that, but the built-in Turing completeness also causes users and investors to encounter risks while interacting with smart contracts.

This situation is completely detrimental to the goal of DeFi-for-All, and this complexity can’t change without fundamental fixes. A DeFi ecosystem built directly with Bitcoin in mind could eliminate a lot of this complexity.

Mintlayer allows you to achieve more with your Bitcoin by allowing native Bitcoin integration, enabling direct swaps for other tokens or assets, and using your BTC directly for other DeFi activities.

Mintlayer is the only DeFi/Bitcoin platform that’s directly interoperable with native BTC while all other similar platforms use intermediaries like wrapped BTC or federated tokens. Mintlayer’s assets on the ecosystem can be swapped 1:1 with native Bitcoin.

In addition, Mintlayer will develop a decentralized exchange (DEX) allowing BTC holders to trade for tokenized assets directly and without intermediaries using its DEX.

UTXO Batching

A UTXO model allows for peer-to-peer transaction batching.

You can batch multiple token transfers into a single transaction. Signature Aggregation reduces each payment’s size by up to 70% to avoid network clogging. The network is built to run and fully support the Lightning Network and provide users with near-instant low-cost transactions.

Not only that, Mintlayer’s UTXO structure combined with transaction batching will help to make more anonymous payments. It will support complete anonymity with “Confidential Transaction” mode.

Conclusion

To date, Mintlayer is a one-of-a-kind project allowing participants to achieve more with their BTC without relying on centralized exchanges.

By leveraging the security of the world’s largest cryptocurrency and integrating the Lightning Network, Mintlayer can provide a platform for developers to build applications with real-world financial use cases.

Many talented developers in the DeFi space, and many are working to make their mark on the industry. This is a sign of the diverse DeFi ecosystem on Bitcoin is just beginning!

The post Introducing Mintlayer: A Blockchain for Financial Markets Built on Bitcoin appeared first on Blockonomi.

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