- Mina Protocol (MINA): A Really Crazy Crypto Project! Mind-Blowing Project
CRYPTO PROJECT RESEARCHES
Zero-Knowledge technologies will be one of the most popular topics in a couple of months thanks to Ethereum adoption, especially layer-2 protocols. Mina has really crazy way and the secret gem of my portfolio.
When it comes to making large returns on your investments. Investing in promising ICOs can be an effective strategy. Initial coin offerings (ICO) let you buy coins or tokens long before they list on exchanges, and often at a significant discount.
The problem is that most ICOs aren’t very good and those that are good see so much demand that you’re lucky if you get a chance to buy. One of these highly anticipated ICOs took place a couple of months ago for Mina than a native token of the Mina Protocol.
The investors who managed to get a spot in the Mina sale queue have already seen a 10 to 20x return on investment, but money isn’t the only thing that has people talking about the MINA Protocol.
Today, I’m going to tell you everything you need to know about the world’s lightest blockchain. What it is, how it works, and why the Mina token is one you have to keep your eyes on?
Disclaimer: All the content converted from Coin Bureau’s “Mina Protocol: A REALLY CRAZY Crypto Project!” video after getting the whole permissions.
What Is Mina Protocol?
Mina Protocol was created by computer scientists Evan Shapiro and Izaac Meckler.
Evan and Izaak have been close friends since high school and have been dabbling in cryptocurrency tech since 2011. Evan mentioned in an interview that the pair didn’t take cryptocurrencies too seriously until the 2017 bull run when they realized that all cryptocurrencies on the market had the same fatal flaw.
Now as you all know, every cryptocurrency has a blockchain that stores its transaction history. Each block in that chain has standard signs and new blocks are created at regular intervals.
For example, Bitcoin’s block size is 1 megabyte and a new block is created every 10 minutes. Every time a new block is added to the Bitcoin blockchain, this increases the size of the Bitcoin blockchain by 1 megabyte.
Bitcoin miners need to store Bitcoin’s blockchain history to make sure they’re processing the correct transactions, so they can earn BTC. Bitcoin nodes add security to Bitcoin by keeping an up-to-date copy of the Bitcoin blockchain.
Now Bitcoin nodes do not earn BTC for doing this, but many companies which hold or accept BTC as payment run a full node to enhance its security, and nodes are where most of Bitcoin security comes from.
As the Bitcoin blockchain grows it becomes harder for Bitcoin miners and Bitcoin nodes to store Bitcoin’s transaction history. Today Bitcoin’s blockchain is about 350 gigabytes large.
Now, Evan and Izaak argue that is only a matter of time before cryptocurrencies like Bitcoin become so large that only a handful of miners are nodes will be able to store their transaction histories. This gradual centralization means that cryptocurrencies would become vulnerable to attack and manipulation.
Cryptocurrencies could even become so centralized that there would be no different from today’s financial system. At the time Izaak was studying his Ph.D. in cryptography, a knew it was possible to use zero-knowledge (zk) technology to compress the size of a cryptocurrency blockchain into the size of a few tweets.
Realizing that they had found the solution to crypto’s critical problem, Evan and Izaak co-founded a software company in San Francisco called O(1) Labs in 2017 to create the Coda Protocol.
Coda Protocol rebranded to Mina Protocol called in September 2020 because of a 2019 lawsuit by an enterprise blockchain developer called R3, which said that the code it named was too similar to its Coda blockchain.
Although O(1) Labs develops and maintains the Mina Protocol, it’s technically owned by the Mina Foundation a non-profit in the Cayman Islands that was incorporated in February of this year.
The Mina mainnet went live in mid-march after nearly three years of development sponsored by some of the biggest VCs in crypto including Multicoin Capital, Polychain Capital, and Coinbase Ventures.
The Mina Foundation conducted the MINA token ICO in April and the MINA token began trading at the end of May.
Now I’ll get back to MINA token in a moment. But first, let’s take a look at how the Mina Protocol actually works.
Mina Protocol Technology
In a sentence, the Mina Protocol is a smart contract compatible proof of stake (PoS) cryptocurrency blockchain. There’s designed to have a constant blockchain size of 22 kilobytes.
This is possible thanks to Mina’s use of something called zero-knowledge proof switch were co-created by MIT professor and Algorand founder Silvio Micali.
Zero-knowledge proofs make it possible to prove something without needing to provide any information to support that proof.
Now, I know this can be really hard to wrap your head around so here’s a super simple analogy to help. Imagine you came across a massive chunk of solid gold buried in your backyard, and you wanted to tell all your friends about it. You know, they’re going to be skeptical about your discovery. So you’re going to need to provide them with evidence.
Other two ways you can do this, either you can bring that massive chunk of gold and physically show it to each friend, or you can take a photo of it and show them that instead.
In the context of cryptocurrency, bringing over the physical gold for your friends to check is the equivalent of needing to download a cryptocurrency blockchain’s transaction history.
It’s not easy, it’s not efficient and it’s very hard to scale since you have to carry all that gold to each friend and that takes a lot of time.
In the context of cryptocurrency, a photo of your golden discovery is a snapshot of a cryptocurrency blockchain transaction history, this is easy efficient and also very easy to scale. Because you’re taking around a photo instead of a heavy chunk of physical gold, which means you can show it to each friend faster.
Mina Protocol takes this idea to the next level by using something called Recursive Zero-Knowledge Proof.
Instead of turning every transaction and block into a 22-kilobyte snapshot, each additional transaction and block becomes a part of the same 22-kilobyte snapshot.
Now let’s continue the previous analogy to understand how that works. So, after digging up the gold in your backyard, you get a feeling that there’s more money to be found on your property. So, you start digging up your front yard, lo and behold you happen to find a small box containing a bunch of tiny diamonds.
Naturally, you’re going to want to tell your friends about the box of diamonds too. So you really want to show off both discoveries so you decide to take a photo of both together. Now, there’s just one problem and that’s that the piece of gold is so large that the box of diamonds is barely visible if you take a photo of both together. Not only that but you know one of your friends is a rather grubby fellow, who would snatch some of your diamonds from the box if you carried it around to show people.
To make life simple then you take a photo of the box of diamonds, you put it next to the photo of the gold and then you take a photo of both. So, you only have to carry one photo as proof.
This is basically how recursive zero-knowledge proofs work. There a photo of a set of photos. Technically speaking, a proof of a set of proofs.
Now one important thing to note is that zero-knowledge proof sing cryptocurrency aren’t exactly like photos in this analogy since they don’t actually reveal any data.
That’s why zero-knowledge proofs are used by some privacy coins like Zcash (ZEC) and it’s why Mina’s blockchain can stay at 22 kilobytes, even though more data is technically being added to it.
Obviously, all of this means is zero-knowledge proofs don’t come out of thin air, someone needs to do the work to take all these snapshots and this brings me to Mina’s blockchain architecture.
Mina Protocol Architecture
There are three key participants on the Mina blockchain, these are verifiers, block producers, and snarkers.
Verifies on Mina unlike notes on Bitcoin. Verifiers add security to the Mina blockchain by holding that 22-kilobyte zero-knowledge proof. Because 22 kilobytes is such a small amount of data to download. This makes it possible to turn everyone on Mina into a verifier.
Block produces on Mina are like miners on Bitcoin. They create blocks containing transactions and earn Mina tokens from transaction fees and block rewards. The difference that Mina’s block producers only store the current state of the blockchain and send a snapshot of this state to verifiers.
Mina also uses a proof of stake (PoS) consensus mechanism instead of a proof of work (PoS). Now Mina’s proof of stake (PoS) is a modification of Cardano’s Ouroboros proof of stake (PoS) which makes it possible for Mina to have no limit on the number of block producers that can join its blockchain.
Not only that but there is no minimum stake to become a block producer on Mina. No other slashing penalties for misbehavior.
Block producers earn block rewards based on how much Mina they’ve staked relative to other block producers and anyone can delegate their Mina to block producers to earn a cut of their block rewards.
Now, Snarkers on Mina are the ones tasked with taking snapshots of all the transactions taking place on the blockchain. They do not need to stake any Mina to do this.
Interestingly block producers pay snarkers for this service using a cut of their block rewards and multiple snarkers can bid for the same transaction snapshots on a marketplace called the Snarked Place.
Snarkers can also take snapshots of transactions in parallel and the snapshots they take don’t immediately have to go into the current block either. This is for cryptographic reasons that I honestly do not understand.
Anyways, even with all this complexity, and Mina transaction is not all that different from a Bitcoin transaction. When a Mina transaction is made, it goes into a pool of pending transactions that are picked by block producers based on how high the transaction fee is.
If the transaction fee is too low, it doesn’t get included in a block. Once the block producer has selected the transactions it wants to include in a blog, snarkers take snapshots of these transactions and bid to have their snapshots chosen by the block producer.
After choosing the snarkers who gave the most competitive bids the block producer takes a snapshot of all the transactions snapshots in their block.
The block producer then takes a snapshot of the current blockchain state and this snapshot gets sent to verifiers which can use it to confirm that. The current state of the blockchain is valid.
This top-of-the-line crypto tech makes it possible for Mina to do crazy things like proving you have a high credit score to decentralized applications without revealing your identity or your credit score.
What’s more, is that Mina doesn’t require a data oracle like other cryptocurrency blockchains. It can just take a snapshot of data relevant to the decentralized application from multiple websites.
Mina is even working to make it possible to turn email accounts into zero-knowledge proof snapshots, meaning you could log into applications using your email without actually revealing your email address.
I know your head is also probably about to explode right now, so let’s turn to Mina’s tokenomics, and price action before that happens.
MINA is the native token of the Mina Protocol. MINA is used for staking and will eventually be used for governance of the Mina Protocol.
MINA has an initial supply of 1 billion tokens with no maximum supply.
MINA’s annual inflation rate is 12% and this will drop to 7% after two years. This inflation schedule can be modified by community vote.
MINA’s Initial supply of just over 20% was sold to private investors across three funding rounds. The price of MINA during these rounds ranged from 7 cents to 15 cents raising just under 30 million dollars.
In total 6% was allocated to the Mina Foundation,
7.5% was allocated O(1) Labs and over
23% was allocated to the founders and early team,
34% of MINA’s initial supply has been earmarked for various community incentives and only 7.5% was sold during the MINA ICO on Coinlist for 25 cents each. This raked in another 18.7 million dollars.
MINA’s initial allocations are subject to various vesting schedules which can be seen here.
One important thing to note is that the tokens allocate to the foundation team and O(1) Labs are subject to quote self-enforce lockups, which means all those tokens are technically accessible.
Mina Price Analysis
When you combine MINA's vesting schedule with its base inflation, MINA’s effective annual inflation rate is somewhere in the neighborhood of 300%. That’s a lot of supply-side pressure and as basic economics dictate, if supply is greater than demand then prices will form.
This seems to be the case with MINA as it has been in deep red over the last week that said the crypto market, in general, has been bleeding ever since the crash in May.
As an altcoin, MINA is highly correlated to Bitcoin and we all know what Bitcoin has been up to recently.
Once the markets get back on track, however, I think that means it could see some impressive price action and this is for three reasons.
First Mina has a small market cap and this means that it wouldn’t take much money to push up its price compared to larger cryptocurrencies.
Second, there is a high likelihood that means it will get listed on more reputable exchanges in the coming weeks specifically on Coinbase.
As you will perhaps recall Coinbase Ventures backed the Mina Protocol, and this is one of the commonalities that many cryptocurrencies on Coinbase have.
The third reason why MINA has a lot of upside potential has to do with its relationship to Ethereum. For those who don’t know Ethereum founder Vitalik Buterin is a huge fan of zero-knowledge technologies because they can help Ethereum scale.
It shouldn’t come as much of a surprise then that the Mina Foundation and the Ethereum Foundation actually partnered in February this year.
Together, they plan to make it possible to use Mina’s technology on Ethereum and we’ll also be building a between both blockchains.
I suspect this partnership played a role in Mina’s April collaboration with an Ethereum DeFi protocol, which makes it possible to take out under collateralized loans in the DAI stable coin by providing zero-knowledge proof of your credit score.
This is all amazing stuff, but I’d be lying if I said everything was looking bullish for me now.
Mina Protocol Scalability
There’s no question that the Mina Protocol has hit the ball out of the park when it comes to decentralization. But the same can’t be said about its scalability and security.
Those of you who read my post about the, fastest cryptocurrencies will remember that there are basically two ways you can measure speed transactions per second and transaction finality.
Fastest Cryptocurrencies: Blockchain Speed 101
Transaction per second speed is getting one of the most important parameters among cryptocurrencies as same as…
In an interview with decrypt earlier this year, Mina Protocol founder Evan Shapiro was pressed about how many transactions per second Mina’s blockchain can handle. The answer was just 22 TPS. Now I’m not a cryptographer by any means, but as far as I understand, this sluggish speed has to do with how those zero-knowledge proof snapshots are created.
Not surprisingly, it takes a lot of computing power to create a zero-knowledge proof. In terms of time, it takes a standard computer about 30 seconds to do.
What this means is that every Mina transaction takes at least as long as it takes for snarkers to create a zero-knowledge proof of that transaction.
When you throw the bidding and selection process by the block producer into the mix you end up with some pretty poor performance which is also reflected in mean as finality.
As a quick recap finality refers to the point at which a transaction can be said to be valid. The likelihood that a transaction is final increases with each block that is added to the blockchain.
This is why you have to wait for all those confirmations when you’re depositing your cryptocurrency onto an exchange. In case you’re wondering one confirmation corresponds to one block.
On Mina, it takes 15 confirmations to be 99.9% certain that the transaction is valid. This works out to 1 hour, which is about the same time it takes for a Bitcoin transaction to be considered final.
Luckily the team at O(1) Labs has mentioned on many occasions that they are working on the scalability issue and I’m confident that it will be resolved in due course. I haven’t heard the same rhetoric from the team when it comes to Mina’s security, however.
Mina Protocol Security
Even though Mina’s code and consensus mechanism have been audited by reputable firms, none of them has addressed an important question that I’m sure many of you were thinking about earlier in the post.
If verifiers only whole a zero-knowledge proof and block producers only store the current state of the blockchain, where the hell does all of Mina’s blockchain history, actually get stored.
After all, you’d want to have the entire blockchain history, if anything goes horribly wrong. A similar question exists on Mina’s FAQ page and the short answer is that the full blockchain history is not required because of how the protocol is designed.
However, when I was reading through Mina’s documentation, I came across what appears to be an unofficial fourth participant on the Mina Protocol. This is the archive node, and as the name suggests archive nodes are the ones responsible for storing the entirety of the Mina Protocol’s blockchain history.
While the aforementioned answer from Mina’s FAQ page downplays the importance of archive nodes, Mina’s documentation notes that quote archive data is critical for applications that require historical lookup.
On the protocol side, archive data is important for disaster recovery in that it is needed to reconstruct a certain state.
In plain English, if any big problems arise on the Mina Protocol, they need to reference archival node data to get the blockchain back up and running. I wasn’t able to pin down how many archival nodes Mina has, but I couldn’t help but notice these archival nodes are apparently storing Mina’s entire blockchain history on the Google Cloud.
I don’t think I have to explain what implications this could have for the security of the Mina Protocol and the privacy of all its uses. Now, in defense of Mina’s developers what they have built is on the cutting edge of cryptocurrency and that is bound to come with a few trade-offs in the short term.
When you consider everything the MINA Protocol has accomplished and the potential it has a temporary reliance on big tex storage is almost negligible. Keyword almost Mina Protocol.
Mina Protocol may be the world’s lightest blockchain, but it has some of the heaviest techs you can find in cryptocurrency. Wrapping your head around zero-knowledge, the proof is not easy, and the fact that Mina uses an even more advanced version of that makes it an objectively hard project for the average person to understand.
The only reason that I was able to understand it was thanks to the analogy involving photos, which is almost the same as the one used by Mina’s Founders when they explain how their protocol works.
Mina blockchain is 22 kilobytes in size because it’s just a digital snapshot of the entire blockchain. Some call it magic, and I reckon that’s a pretty accurate term in this case since there does seem to be some sleight of hand going on here.
The small size of Mina’s blockchains theoretically makes it scalable secure and decentralized. Right now, Mina doesn’t seem to be very scalable. It doesn’t seem to be very secure and you could even argue that Mina isn’t all that decentralized either.
Now, this all depends on what definition of decentralization you’re using and this is where the magical sleight of hand seems to come in. MINA equates its block producers with Bitcoin miners and its verifiers with Bitcoin nodes. Because Mina has a lot of both it's decentralized.
There’s just one problem though and that’s that these are false equivalencies. Mina’s archival notes are much more similar to Bitcoin miners and especially to Bitcoin nodes. More importantly, archival nodes are arguably where Mina’s decentralization actually comes from now. My understanding of decentralization is that there is no single point of failure and the fewer points of failure there are the more decentralized cryptocurrency is.
One uncertain Mina has more than one archival node, if they’re all storing Mina’s blockchain history in Google Cloud then that is a single point of failure. This would basically invalidate what Mina set out to do which was to ensure long-term decentralization by maintaining In a small blockchain size. Now, on that note, it’s questionable whether blockchain size is really something to be worried about. The cost of data storage is getting cheaper, internet speeds are getting faster and some cryptocurrencies like Solana (SOL) has begun using decentralized storage cryptocurrencies to store their own blockchain history data on Arweave (AR).
Still, there’s no denying that Mina does truly have some cutting-edge cryptocurrency tech and I have no doubt that what they’re going to do in the coming months is going to change the crypto world forever.
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- Date of publication:
- Fri, 06/11/2021 - 05:41
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