Dear Sovryn community,
Please find below our new draft SIP for the collaboration we’d like to propose between the Sovryn community and Mintlayer.
Naturally, it being a draft, nothing you see below is final yet, and we are still open to make changes based on your feedback. However, so long as there are no substantial objections from the community, we intend to submit this for a Bitocracy vote in the coming week(s).
Thank you so much in advance for your honest and constructive criticisms, please do not hesitate to raise your voice, as we are listening. Finally, thank you for being such an awesome community.
-the Mintlayer team
I hereby submit this SIP to hold two Token Sales for the Mintlayer MLT governance token on Sovryn’s Origins platform, and to expand the Sovryn dApp to the Mintlayer blockchain.
The intention of putting forth this SIP for a Bitocracy vote is to obtain permission for Mintlayer’s use of the Origins platform to perform these sales, and to begin the development of the Sovryn dApp on the Mintlayer blockchain. If this SIP will pass, the sales will be performed according to the detailed program below.
For what regards the development of the Sovryn dApp on Mintlayer, given the fact that this goal would require a considerable effort and an allocation of funds and other resources, this SIP represents just a “directive” rather than a binding commitment with an executive plan.
After the Fair Sale is performed, a second SIP will be issued with a detailed proposal that could give execution to these broader plans, illustrating the benefits of the decision of building on Mintlayer, the costs implicated for Sovryn Bitocracy, including an estimation of the amount of time and effort required for the development. The Sovryn community will be provided with a detailed proposal including the allocation of funds required and the amount of workload that will be undertaken by the Mintlayer community to help Sovryn developers in their tasks.
To be clear: Any future development of Sovryn on Mintlayer will depend on the success of the aforementioned, separate and dedicated SIP. However, with the passing of this SIP, the Sovryn community doesn’t just approve the fair sale and public sale, it also communicates its desire for the second SIP, and for all the prerequisite conversations to occur between the Mintlayer and Sovryn core and developer teams.
Mintlayer could be a game-changing innovation for the Bitcoin ecosystem. We would like to invite the Sovryn Bitocracy to imagine a future where you can directly exchange native Bitcoin (as opposed to a wrapped or pegged version) for any token (including NFTs and privacy-oriented tokens with confidential transactions) with atomic swaps and even use the Lightning Network., Mintlayer will make this possible on a sidechain whose consensus mechanism partly derives its security from Bitcoin’s Proof of Work through a system of anchors and checkpoints on Bitcoin blocks.
By building Mintlayer side by side with the Sovryn community, we are not just hoping to gain a like-minded ecosystem of future users who share our vision and values, but most importantly, we want this community to be one of Mintlayer’s largest stakeholders, empowering Sovryns to steer the direction of the project, especially during the coming months, which will be most crucial for Mintlayer’s early development.
Mintlayer is a Bitcoin sidechain dedicated to asset tokenization and decentralized exchanges. Currently, there are a few tokenization systems created on top of Bitcoin like Omni(& OmniBolt) and RGB. They all have the same disadvantage: their transactions compete for the same space as the Bitcoin transactions, polluting the Bitcoin blockchain and leading to higher fees. The first version of Tether was issued on Omni, which moved to Ethereum to avoid the high fees on the Bitcoin blockchain (and then moved again to Tron because of even higher ETH fees).
For this reason, the concept of “sidechains”, with onchain space dedicated to asset tokenization and pegged-tokens, has been put to the test. Rootstock is an example, but its architecture is very close to Ethereum and merged mining leaves the governance power over Rootstock in the hands of Bitcoin miners without any actual stake (cost and effort required) in the Rootstock chain.
Liquid sidechain is an alternative, but its governance is centralized in the hands of the companies that have contracts with Blockstream. In contrast, Mintlayer’s governance is community-driven: the protocol introduces Dynamic Slot Allotment (DSA), a refined Proof-of-Stake-inspired consensus mechanism with Bitcoin anchoring. For both Rootstock and Liquid, bitcoins on the sidechain are used in a peg-in system managed by a federation of few entities.In contrast, Mintlayer avoids intermediaries, instead allowing direct atomic swap between the tokens built on Mintlayer and the bitcoins on the mainchain. In fact, a Mintlayer DEX transaction allows p2p exchanges of tokens issued on Mintlayer with each other (intra-chain atomic swap) and also between Mintlayer and Bitcoin (inter-chain atomic swap).
To be clear: This SIP is not proposing that Sovryn cease to be available or maintained on the RSK blockchain. Our vision is for users to be able to stay Sovryn by toggling between both bitcoin sidechains as they please on the Sovryn dApp, and also bridge tokens from one to the other, ensuring a free market and maximum choice.
Check out these introductory videos about Mintlayer (about 1:30m each): Mintlayer Youtube
Here’s also a longer, 15 minute presentation given at Bitcoin Events’ DeFi Conference (where Yago also spoke) in which Andreas further elaborates on how he envisions the partnership with Sovryn to go down: DeFi Conference 2021: Mintlayer: Bringing DeFi to Bitcoin Through Layer2 Technology
Bitcoin interoperability.: An entire ecosystem of tokens issued on the new layer can be p2p traded for bitcoins through atomic swap or Lightning Network swaps. The atomic swap is secure even in case of chain reorganization, since Mintlayer blocks are anchored to the Bitcoin blockchain (a Bitcoin reorg affects both the chains).
Scalable DEX: there are no on-chain order books in the form of smart contracts.Instead,trade intentions are communicated through a distributed hash table that is separated from the blockchain. This helps keep lower throughput and fees when compared to Ethereum DEXs like Uniswap. Also, arbitrage transactions can be made through Lightning Network channels between CEX and DEXs’ liquidity providers. As a result, the blockchain space won’t be over-exploited. It is worth noting that DeFi dedicated blockchains get clogged mainly because of DEX contracts, arbitrage transactions and pyramidal schemes (see Glassnode analysis).
Access Control List: ACL rules are optionally enforceable for securities issued on Mintlayer (such as stock tokens), allowing compliance with company policies or other regulators and making fully compliant security token DEXs a possibility, by moving the burden of compliance to token issuers. This feature is something missing on Bitcoin, but possible with Ethereum.
However, unlike Ethereum, Mintlayer doesn’t require Turing completeness; just a few OP_CODES for a higher versatility of Bitcoin scripting language, while retaining its reliability and efficiency. By not requiring Turing complete functionality, Mintlayer reduces risk of unpredicted outcomes that can occur with increased smart contract complexity.
It is also true that there are certain, albeit riskier and arguably not as crucial, use cases which necessitate turing completeness - for this reason, alongside the potential for backwards compatibility with the existing DeFi ecosystem, each Mintlayer block will also have a limited amount of space dedicated to programmable pools, a Web Assembly VM abstraction layer allowing users to exit the UTXO system into an accounting model capable of running “Ink!” smart contracts. Porting tools will help developers turn their Solidity code into “Ink!”. Having a space dedicated inside the block ensures that the entire chain can’t get clogged because of applications such as AMM DEXs and arbitrage BOTs, while Mintlayer fullnodes can even choose not to sync transactions in the programmable pools.
Optional confidentiality: due to the trade-off between privacy and scalability, Mintlayer introduces distinct tokenization standards to address all needs. MLS-01 transactions take up less space and enable procedures like batching (similar to CoinJoin, which is also an option for increased privacy) with BLS signature aggregation, to shrink the space consumed even more. MLS-02 on the other hand has confidential transactions, which are greater in size but provide the maximum privacy imaginable (similar to Monero).
Integrated Wallet: a Mintlayer wallet is a Bitcoin wallet too (real BTC, not a pegged version!) and Mintlayer full nodes can be considered as an “add-on” to Bitcoin full nodes.
No native gas token: Any MLS-01 or MLS-02 token can be selected by users to pay for fees for any Mintlayer transaction. Block creators’ nodes can rely on DEX or CEX prices (queried through API) to estimate the worth of fees paid in different tokens, in order to decide which transactions to include in the block. They may also publicly support specific tokens, signaling their intentions to accept them (the same way Bitcoin miners signal upgrade intentions in the coinbase part of the block). This creates a free market for gas tokens, and potentially allows builders to promote their ecosystem by subsidising gas.
MLT token and Mintlayer Consensus system
MLT is the governance token of the Mintlayer sidechain. A token is necessary because it’s technically unfeasible to build a secure and decentralized architecture based on a pegged version of Bitcoin, given the downsides of every peg-in/out system envisioned so far. Not even the Blockstream Liquid sidechain could implement a governance based on pegged bitcoins, and relied instead on federated entities that signed a contract. For decentralized governance of a sidechain, it is necessary to introduce a POS-like system with a governance token. Mintlayer’s DSA Consensus mechanism prevents nothing-at-stake long range attacks, without needing hard-coded checkpoints, thanks to the protocol’s built-in dynamic checkpoint system, which anchors Mintlayer to the Bitcoin mainchain.
Mintlayer uses Bitcoin PoW for different scopes, it’s not only a way to commit its state in Bitcoin: first, every Mintlayer block is linked to a BTC block and a reorganization on the Bitcoin mainchain reverberates also on the sidechain (it means more security for atomic swaps). Second, Bitcoin POW is used as a “clock” for time calculation: it defines Mintlayer rounds (with a committee of blocksigners) and enforce a minimum time delay between Mintlayer blocks, preventing any attacker from trying to generate blocks at higher frequency (to fake a “longest” chain). Third, the Bitcoin block hash is used as a source of entropy for the random determination of the blocksigners in the next round, so that it’s not necessary to rely on other randomization sources such as new algorithms which may reveal vulnerabilities in the future or ASIC hardware distributed by a single entity (such as in the case of Ethereum 2.0 Proof of Stake system!)
Participants who Stake 40,000 MLT tokens or more have the chance to be selected as blocksigners by the protocol algorithm and earn network fees for the blocks created.
For more info about Mintlayer’s distribution metrics: [Public] Mintlayer token distribution
The Mintlayer Testnet is launching on November 10th. It’s already possible to play with the code on the public repositories of github. Around the same day - if this SIP is approved - the token pre-sale will be held on Sovryn Origins platform. By that time, the high-intensity marketing campaign will have been running for a month already, with programmatic ads, involvement of influencers, press releases and mass-activities on socials including initiatives such as the Bitcointalk signature campaigns.
Two weeks before the testnet launch, the Core team of international developers will be gathered in a war room in Dubai not just to work for the upcoming launch, but also to prepare the hard work expected in the later months: first for the mainnet, later for all the upgrades in the pipeline. Currently 9 full time devs have been hired thanks to the funds raised by the seed raise and a few more are about to join the team.
The testnet has been implemented on a Substrate networking architecture on top of which a UTXO system with BLS signatures has been built. The first version of the node available will have limited features such as sending and receiving funds, creating tokens, BIP39 seeds and the Bitcoin scripting system. Later releases will implement programmable pools, atomic swaps, ACL rules and much more, as shown in the Mintlayer roadmap.
The mainnet is expected in Q1 2022 and in April Mintlayer aims to participate in the Bitcoin 2022 Miami conference as a “Moon” sponsor.
Part 1: Fair Sale
We propose a capped fair sale of 6,302,521 MLT on Sovryn. “Fair sale” in this instance means that the same terms are offered as were presented to Mintlayer’s Seed Round VCs, in the private sale that was held in March 2021 (same price and vesting).
By default, participants in this fair sale will be registered to receive mainnet MLT when the mainnet launches in Q1 2022, but MLT tokens will also exist on the Rootstock and Ethereum blockchains, with a bridge facilitating transfers between these chains, and fair sale participants will have the option to receive RSK or ERC20 versions of MLT on TGE, instead of the default mainnet version, if requested before the launch of the mainnet.
However, it is important to note that, unlike mainnet MLT, the ERC20 and RSK versions of MLT can not be staked to participate in the DSA consensus mechanism and receive block rewards; also, it’s not possible to bridge tokens between different chains while they are still in their vesting period. Instead, only mainnet MLT tokens can be staked to potentially receive block rewards even if the vesting period is not complete.
Tokens for sale: 6,302,521 MLT ($600,000)
MLT price: around $0.0952 (price will be defined in sats on a specific day)
Percent of supply: 1.58% of total supply, 1.61% of Initial Circulating Supply
Vesting type: 10% available at TGE + 6% unlocked monthly over 15 months
When: 10th November, 2021.
SOV Staking requirements: Users must have SOV staked, allocation sizes determined by voting power on November 9th, at 23:59:59 UTC. Counting only voting power from voluntarily staked assets; excluding voting power from vesting assets
The maximum amount that can be purchased is 50,315$ worth of MLT. To buy that amount, a SOV staker shall have at least 100,000 VP (voting power). The minimum amount of VP to participate in the sale is 10 VP, which allows you to buy a maximum of 50$ worth of MLT.
The maximum amount of MLT that can be purchased according to the Voting Power is defined in the following table:
|Voting Power||Allocation (value in $)|
This is calculated with this rationale:
- $50 of MLT for a total amount of 10 VP
- $3.5 of MLT per VP for every additional VP up to a total allocation of 100 VP
- $2.5 of MLT per VP for every additional VP up to a total allocation of 1,000 VP
- $1.5 of MLT per VP for every additional VP up to a total allocation of 10,000 VP
- $0.38 of MLT per VP for every additional VP up to a total allocation of 100,000 VP
Example: For 454 voting power at the threshold time, you would have the opportunity to buy up to $1,250 of MLT on seed terms, as demonstrated by the equation below:
$50 + ($3.50 * 90) + ($2.50 * 354) = $1,250
Whereas for 10x more voting power, that is to say 4540 voting power, the maximum allocation allowed would be $7,925;
$50 + ($3.50 * 90) + ($2.50 * 900) + ($1.50 * 3540) = $7,925
The opportunity to buy MLT in the fair sale will be available for 5 days, or until all of the fair sale allocation has been distributed, whichever comes first.
Part 2: Public Sale
In Q1 2022, the Mintlayer mainnet will be launched. This is when VC and fair sale tokens will be distributed (TGE) and vesting will begin. At the same time, there will be a public sale offering fully unlocked tokens on a limited number of exclusive platforms, including Sovryn if this SIP is approved. Accordingly, if this SIP is approved, the Mintlayer dev team will endeavour to help Sovryn core developers to create an initial, beta version of the Sovryn platform on the Mintlayer testnet, so that at least the Origins launchpad platform will be available on Mintlayer mainnet on launch day, enabling Sovryn users to participate in the Mintlayer public sale (and other token offerings on the Mintlayer chain, pertaining to other projects, several of which are already under way) using native bitcoin.
Tokens for sale: 6,000,000 MLT ($1,500,000)
MLT price: around $0.25 (price will be defined in sats on a specific day)
Percent of supply: 1.5% of total supply, 15.36% of Initial Circulating Supply
Accepting: BTC (native, mainchain BTC as opposed to pegged/wrapped BTC)
When: First quarter of 2022.
SOV Staking requirements: None
Bitocracy: 600,000 MLT to SOV Stakers, with a 12 month vesting period.
A week after the public sale, any SOV staker possessing at least 1,000 MLT will be eligible for an airdrop of MLT.
If there are equal or less than 600 eligible wallets, each of them will receive 1,000 MLT.
In case there are more than 600 eligible wallets, given that the maximum amount of 600,000 MLT allocated for the airdrop (not everyone can receive 1,000 MLT), then the amount received with the airdrop is determined by the Bitocracy voting power of the stake. Counting only voting power from voluntarily staked assets; excluding voting power from vesting assets.
Wallets receive a fraction of the total allocation of MLT that is proportional to their VP weight in the total cumulative voting power of all eligible wallets.
VPweightBob = 0.001 of the cumulative VP weight → MLT airdropped to BOB = 0.001 * 600,000 = 600 MLT
Provision: the maximum VP weight is 0,001666667 (stakers with more than that VP will count as only 0,001666667 of the total cumulative weight). This way the maximum amount of MLT received with the airdrop is capped at 1,000 MLT.
VPweightAlice = 0.01 of the cumulative VP weight → MLT airdropped to Alice = 0,001666667 * 600,000 = 1,000 MLT
Liquidity mining: 400,000 MLT to the rBTC/rMLT pool, with 4 months vesting.
A week after the token sale, any Liquidity provider of the rBTC/rMLT pool will receive airdropped MLT tokens according to the quota the Liquidity provider committed in the pool. For example, assume there are 100,000 rMLT tokens in the pool and a Liquidity provider called Satoshi participates with 30,000 rMLT. In that case the 30% of the 400k MLT allocated for this initiative - which amounts to 120,000 MLT - will be airdropped to Satoshi.