FAQ/AMA: What happened to the SIP? Where do we go from here? What even is Mintlayer?

As many of you have become aware from Mintlayer and Sovryn community channels, there is no longer any Mintlayer SIP, Mintlayer’s Fair Sale event will no longer happen on Origins (although it will still happen on another platform next week, which has already been announced on our channels, but not relevant here), and we are ceasing our direct line of engagement efforts with the Sovryn community.

That is not to say that there can not be any future collaboration between Mintlayer and Sovryn, in fact I suspect that many members of the Sovryn community are still interested in such a collaboration and that they will personally push for it.

However, as far as the Mintlayer core team, including myself, are concerned, we will concentrate our efforts on other opportunities until such a time that the Sovryn leadership approaches us expressing their own interest, which they have so far lacked.

But what even is Mintlayer?

Even though we wrote two very lengthy and descriptive SIPs, and have a lot of documentation out there which precisely describes the Mintlayer vision, it has come to our attention that many people still don’t understand what we are trying to build. I will therefore dedicate the rest of the post to clarifying what all of this is supposed to be about.

To begin with let me summarise the problem that Mintlayer is trying to solve in the most succinct way I can. I believe Bitcoin has the potential to do a lot more than just fix money. Not that fixing money isn’t already a gargantuan task, with far-reaching implications - but the unmatched level of decentralised consensus created by Bitcoin’s proof-of-work can solve problems even beyond money, making any completely separate public ledger ultimately obsolete.

Securities are an ancient and useful technology; being able to represent a (possibly illiquid) non-monetary good or service in a portable and transferrable format is extremely important, and finding ways of removing layers of trust in the issuance and exchange of securities is unimaginably valuable to humanity. Sure, for traditional and regulated securities, there is a fundamental and immovable layer of trust and permissionality at the level of ultimate enforcement (the only way to improve that is to privatise government, a-la-Liechtenstein). However, not only can we do a lot of good by making the trade/exchange of assets and derivatives more trustless and permissionless, we can also expect there to be more and more new types of securities that actually have trustless and permissionless enforcement as well, such as governance tokens over Decentralised Autonomous Organisations, which can represent a mathematically provable fractional ownership over a shared, distributed enterprise and Bitcoin treasury.

This is why in the beginning (colored coins / RGB, mastercoin/omni) the idea was to try to find a way to issue tokenized assets straight on Bitcoin, putting all of the data of transactions on-chain. The problem with that is that of course, we like our bitcoin blocks small to ensure node proliferation, and you simply can’t contain all of this information on the Bitcoin blockchain without making drastic changes to it - something that I believe none of us want or advocate for.

The alternative seems to be sidechains - new blockchains that in some way or another leverage the Bitcoin consensus. But there are a lot of challenges and impassable trade-offs when you design a Bitcoin sidechain.

Blockstream Liquid, Rootstock (RSK) and Stacks all have native gas currencies which are essentially enforcing a new type of money at the protocol level. In the case of the former two, the native gas currencies (L-BTC and rBTC) are pegged to the value of Bitcoin, but they often get missold as being true Bitcoin, whereas those pegs are actually upheld by closed federations of a few private entities holding keys to a multi-signature wallet. Hardly in line with the trustless and permissionless philosophy of Bitcoin.

The Blockstream Liquid sidechain and its consensus is built around this peg and doesn’t have any other connection to the Bitcoin mainchain. The Rootstock sidechain additionally has merged mining, which is a mechanism whereby Bitcoin miners can use their hashpower on the mainchain to participate in the governance of the sidechain at no extra cost; this is opt-in (not all Bitcoin miners contribute to the security of Rootstock), and carries very questionable incentives - The only disincentive a miner has to not act maliciously or destroy the sidechain, is sacrificing the revenue from future RSK block rewards, but as it stands (numbers from a few months ago when BTC was at $40k, but the point still holds true) bitcoin miners earn about $34k of value from RSK block rewards for every $216m from BTC block rewards. Stacks’ consensus is a lot more convoluted (involves having to transfer large sums of BTC from one address to another to mine STX, and in the future will involve burning BTC instead), and not even finalised in its design according to the Stacks team.

Furthermore, none of these solutions are truly interoperable with or really expand the capabilities of Bitcoin whatsoever. Direct atomic swaps between BTC and tokens issued on these sidechains are not possible or would not be secure, because chain reorganisations and orphaned blocks would cause inconsistencies leading to users on one side of the trade losing their funds. In the case of RSK, the whole purpose of the sidechain is to run an EVM with some connection to bitcoin, and in doing so they carry all of the security and privacy risks (and incompatibility with Bitcoin) of Ethereum, Solidity, Turing Complete smart contracts, and Account based systems along with them.

So then we have Mintlayer, which has its own trade-offs. For one, yes, there is “a premined shitcoin” as some might call it, MLT, which we’ve sold (and are still selling) to a very varied and distributed mix of DeFi VCs, to pools of investors, communities and DAOs, as well as through our website - and used the proceeds from in order to fund the development. It was our hope to have a large part of these MLT distributed on Sovryn (and the proceeds for this sale to go towards building Sovryn on Mintlayer, rather than to us), but unfortunately this was not interesting enough to the Sovryn leadership for them to work with us within our timeframe.

Mintlayer’s consensus mechanism is called Dynamic Slot Allotment, DSA, it requires MLT to participate in as a blocksigner (but not as a node/validator), and it is in part like Proof-of-Stake, which would be surprising to you if you knew how much its creators despise Proof-of-Stake and premined shitcoins.

The best way to understand DSA is to read the consensus paper, but briefly put, there are a three key differences to Proof-of-Stake:

  • Anchoring to Bitcoin blocks : a round of selecting blocksigners lasts 1008 bitcoin blocks - a week - which means that we have a reliable and trustless external source of time; a check on the height of the blocks enforces a minimum time delay between Mintlayer blocks in case an attacker tries to generate blocks at higher frequency.

  • Using the hashes of Bitcoin blocks as a partial source of entropy for the random determination of the blocksigners in the next Mintlayer round - unlike Ethereum 2.0 for example which uses centralised ASICs to generate entropy

  • Voluntary built-in checkpointing system. Users can create and enforce snapshots of the Mintlayer sidechain on the Bitcoin mainchain - The sidechain is programmed to treat these snapshots as its primary source of truth, and therefore a Mintlayer fullnode must be connected to a Bitcoin fullnode in order to be able to validate Mintlayer blocks, and MLT stakers can therefore not perform long-range-attacks or rewrite the history of the ledger, unlike with traditional proof-of-stake chains.

Like I implied before, Mintlayer also does not have a native gas currency, so whilst users could pay for transaction fees on the sidechain with MLT, they could also hypothetically pay with any other token issued on the sidechain by anybody (could be a bitcoin peg secured by a closed federation, but unlike in RSK or Liquid, nobody’s bitcoin peg is given preference over another’s), and they could make use of the technology without ever owning any MLT.

The “demand side” of this interaction comes from MLT stakers, they’re the ones who decide which tokens will be accepted for transaction fees and at what rate. In this way, Mintlayer sadly inherits the ability for stakers to censor transactions like in traditional proof-of-stake chains. That is the one trade-off we could not avoid.

However, what we are going to achieve with Mintlayer is a new type of wallet where real BTC can be directly, trustlessly and securely traded for any other asset that is tokenised on the sidechain, without requiring any third token, pegged BTC or otherwise. All of this with an architecture that is a lot more similar to Bitcoin itself (UTXO based, using Bitcoin’s own scripting language), can perform secure atomic swaps with BTC because reorgs affect both chains, and which is compatible with the lightning network. In fact, it will be possible for the first time ever to open and fund a LN channel with any asset issued on the sidechain, for example stablecoins, and for those LN channels to perform trustless lightning swaps with BTC lightning network channels. We will also enable for privacy oriented digital assets (like Monero, using the same type of technology) to be issued on Mintlayer, so fully anonymous transactions will be possible for the first time with inherited security from Bitcoin’s proof of work.

I am convinced that what we’re doing here is nothing short of upgrading bitcoin, making it better and more useful for everybody. I know that’s a very bold claim, but I genuinely and strongly hold this conviction.

This conviction and my persistent belief that it is in line with the values we share with the Sovryn community and leadership were the reason for our approaching the Sovryn community, and why I hope that ultimately, one day, our paths will cross again.

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Thanks for this Andreas, and best wishes to you and the Mintlayer team for a successful launch.

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I’m disappointed to hear that this is the outcome…

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I think what is happening here is that Sovryn is busy pushing out their own tokens. They have even stopped working on the platform. The limit order has been promised to arrive a long time ago and we are yet to see. Fast RBTC (Reverse Fast BTC) has been promised and still not implemented. SIP 31 gets pushed further and further away but the OG SIP and ZERO SIP brought forward. I am not sure this is good or bad for the platform, but the priorities have clearly changed. There has been no major improvement on the platform and this is a worrying issue because even if a product has very good fundamentals, without a good user experience it is doomed to fail, or the least not grow.

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