Not all Bitcoin miners are expected to do merged mining, so the players with an active role in the government of the sidechain would be a subset of the Bitcoin miners. This centralizes the government of the sidechain in the hands of few Bitcoin mining pools, especially considering that it is the mining-controller of the pool, not the miner itself, the merge miner. In case of a malicious pool in the Bitcoin ecosystem, the individual miners are likely to move the hashrate to a different pool, while a Bitcoin miner has no direct incentives in defecting a pool acting maliciously on the sidechain. Hence, in a merged mining system there are no economic incentives preventing a possible attack on the sidechain from a Bitcoin pool.
From a technical standpoint, there are no other ways to envision a Bitcoin sidechain with dynamic participants in the network, having at the same time the right incentives to guarantee the security of the chain. There are currently no other solutions in the market: a merged mining system like RSK risks to drift towards an oligarchy of malicious players, while Liquid is a private sidechain (non-dynamic federates) and the peg-in model has noticeable defects (the risk of stall and the need of a back-up recovery key).
Moreover, from a social perspective the token allows to achieve different valuable purposes:
• Network effect: if the exchanges list the token, they are installing the node, so they will be technically ready to receive all the tokens built on Mintlayer (such as Tether).
• Speculation brings more users. Statistically, at least some of them are beneficial to the network (running full nodes, contributing to the development, discussing fork updates etc.).
• Efficiency: Mintlayer allows batching/coinjoin transactions, even between different tokens. A batched payment weights about ⅓ of a traditional Ethereum transaction and grants more privacy against blockchain analysis.
• Long term scalability: as a Bitcoin fork, it fully supports Lightning Network, while Ethereum sharding has not been implemented yet.
• Sustainability: a fullnode can be run on an average pc which is not dedicated, while Ethereum requires dedicated 500gb SSD (and the space requirement increases of about 150gb/year), about 16gb RAM and a good CPU. Nowadays, to sync just a new week of Ethereum blockchain life, a fullnode requires about an entire day on the most powerful machines, which is unsustainable in the long run.
• Reliability: a Mintlayer non-pruned fullnode syncs as fast as a Bitcoin node (just slightly heavier when the blockchain is saturated), while an Ethereum archival node requires about 4terabyte, increasing of 2tb per year. To query for an intermediate balance state, a user must apply to an archival node, which is likely a third party. These “big scary” archival nodes might also disappear in the future: today it takes weeks to sync an archival node from the genesis or to reconstruct it from a fullnode.
The main goal of Mintlayer sidechain is tokenization. The native token represents the stake of the blocksigners: (a) the ownership of the slots and (b) the economic incentives to properly run the chain. Technically speaking, a difference between Bitcoin and Mintlayer transactions is, for the latter, the possibility of an Access Control List which allows for whitelisting/blacklisting the destination addresses or to create spending/receiving conditions (such as, that address can receive at most 100 token, or cannot spend before 1000 blocks). It is a core feature of the security tokens, which guarantees more compliance to legal requirements. ACLs today are possible on Ethereum, but not on Bitcoin.
• Mintlayer supports Lightning Network as a solution for long term scalability.
• There is no merged mining, but a POS system which allows for more decentralization, at least under the condition that the initial public sale is properly conducted (or alternatively, if there is a vivid market in which most of the tokens are handed over between different entities).
• It’s more likely to reach network effect (exchanges and services adoption) due to the existence of a native token likely to be listed on the exchanges.
• It’s a public chain with dynamic blocksigners, not a private chain between federates who made a commercial agreement with Blockstream.
• There is no possibility of stalling, in case of missing blocksigners.
• The average transaction size is much smaller.
• There is no need for a dedicated bundle of hardware/software/maintenance given by Blockstream.
Algorand blockchain is almost empty of transactions, but yet the node synchronization requires an amount of time comparable to what is required by a Bitcoin node synching 10 years of blockchain. Eos and Tron have a fee-less policy which led to massive spam of transactions at high frequency, and despite the fact that there have never been a great amount of value transferred on those chains, nodes that are not well connected to the peers encounter difficulties in catching up with the mainnet when syncing, even with powerful machines. Today, Tron may require more than a month to sync its blockchain whose size levitated to more than 400Gb in two years for a fullnode, while the centralization of the system is expressly acknowledged by the Tron Foundation itself: “co-governance by the Tron community and the Tron Foundation” (when indicating the “community”, the references is to only 27 super-representatives). In Eos the super-representatives and bookkeepers are only 21 nodes.