I hereby submit this SIP to leverage the upcoming Sovryn Origins platform as a launchpad to do the Token Sale of Mintlayer MLT governance token. The intention of putting forth this SIP for a Bitocracy vote is to permit Mintlayer’s use of the Origins platform to perform the sale.
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 (not rBTC) for any token, with atomic swaps and even using the Lightning Network.
By building Mintlayer side by side with the Sovryn community, we are not just hoping to capture a like-minded ecosystem of future users who share our vision and values, but most importantly we want to tap into this community for feedback during the coming months, which will be 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(Bolt) and RGB. They 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 creates security concerns: Bitcoin miners have governance power over Rootstock without any stake (cost and effort required) in the 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 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, while Mintlayer is focused on the 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).
Check also these introductory videos about Mintlayer (about 1:30m each): Mintlayer - YouTube
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, since 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. Unlike Ethereum, Mintlayer doesn’t require Turing completeness, but just a few OP_CODES for a higher versatility of Bitcoin scripting language, while retaining its reliability and efficiency. By not including Turing complete functionality, Mintlayer reduces risk of unpredicted outcomes that can occur with increased smart contract complexity.
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 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 more privacy.
Integrated Wallet: a Mintlayer wallet is a Bitcoin wallet too (real BTC, not the 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 validators in turn choose which gas tokens they will support and push into the mempool, creating a free market for gas tokens, and allowing builders to promote their ecosystem by subsidising gas.
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, 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.
Staking at least 40,000 MLT tokens, participants have the chance to be selected as blocksigners by the protocol algorithm and earn network fees of the blocks created.
For more info about Mintlayer Mintlayer tokenomics: Mintlayer - MLT
MLT tokens will initially be released as Rootstock and ERC-20 tokens until mainnet, when they will be ported 1:1 to the Mintlayer blockchain. We propose a capped initial token sale of 5,000,000 MLT (Roostock version) on Sovryn.
- Tokens for sale: 5,000,000 MLT (1.000.000$)
- MLT price: around $0.20 (price will be defined in sats at a specific day)
- Percent of supply: 11.6% of Initial Circulating Supply
- Vesting: 30% on TGE (3.8% of ICS) plus 10% unlocked monthly over 7 Months
- Accepting: rBTC
- Bitocracy: 300,000 MLT to Bitocracy Stakers, with a 12 month vesting period
A week after the token sale, any Bitocracy user possessing at least 1,000 MLT for the entire vesting period (12 months) will be eligible for an airdrop of 1,000 MLT. Funds for this initiative are limited to a maximum of 300,000 MLT, so a maximum of 300 Bitocracy users will receive the airdrop.
- Liquidity mining: 300,000 MLT to the rBTC/rMLT pool, with a 4 month 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 that there are 100,000 MLT tokens in the pool and a Liquidity provider called Paperinik participates with 30,000 MLT. Then, the 30% of the MLT allocated for this initiative - which amounts to 90,000 MLT - will be airdropped to Paperinik.