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What is the Utility of MLT Tokens?

2022-12-21

Mintlayer’s MLT tokens will have many utilities in the decentralized financial system that we are building on the Mintlayer blockchain. The use cases for the token will evolve further as the ecosystem does.

Ultimately developers and users will need MLT tokens to create other tokens and MLT can be used to access all other applications on Mintlayer. MLT will be the native token that will facilitate transactions on the Mintlayer blockchain.

Most casual observers do not realize just how many actions will actually create a transaction. Some smart contracts will use dozens of transactions that will all require a small fee.

Eventually, the project plans to allow transaction costs to be paid by any token that is accepted by the block producer. This will be implemented in later versions.

The utility of the MLT token will evolve in three phases.

Phase 1: Testnet Utility

Before the launch of the mainnet, MLT tokens will be available for developers and the public. They will be able to use MLT tokens to purchase services from RBB Lab. This will be the first utility of MLT.

3 Phases of MLT Token Utility

This utility is crucial to help early developers access the expertise of Mintlayer’s creators, to facilitate sponsorship of the ecosystem fund, and to allow participants to accumulate enough tokens to stake immediately once the mainnet is launched.

Phase 2: Mainnet Utility

During the first iteration of the mainnet, MLT will be required for all transaction fees. Developers will be able to use MLT to execute smart contracts.

Mintlayer will essentially become a sidechain of the Bitcoin blockchain as the development team continues to integrate a robust DeFi feature set that is both user friendly and secure.

The MLT token will be at the center of our proof-of-stake consensus mechanism. Users can stake their MLT tokens to participate in the consensus mechanism, which will earn block rewards. Participants that cannot afford to stake the minimum block commitment will be able to pool their MLT tokens with others to meet the requirements of a block producer.

Phase 3: Decentralized Finance Utility

In the future, MLT will continue to be the native token of our expanded DeFi ecosystem. All transaction fees will always be able to be paid with MLT, but we plan on allowing blocksigners to choose any set of tokens to accept for transaction fees. This means that users will be able to choose the token to pay transaction fees from a list of tokens accepted by the blocksigner.

With the visionary and advanced nature of Mintlayer’s ecosystem, developers will be able to set up special nodes that fill niche use cases. Transaction costs may be paid in MLT, a token issued on Mintlayer, or even a combination of the two. Since we will build the DeFi infrastructure on the Mintlayer blockchain and DeFi primitives that are operated through the use of MLT, all the unique applications that focus on integrating other tokens will only increase the demand for MLT to be used in the overall framework.

Users will be able to deposit MLT and all other tokens on Mintlayer into liquidity pools associated with decentralized exchanges to earn a percentage of trading fees. Other Dapps like lending platforms will give users the opportunity to collateralize loans with MLT.

A good example of how developments within the ecosystem can drive the user demand for MLT would be looking at the relationship between Ethereum and Chainlink. In 2020 LINK’s potential was so prominent that their token started to close in on the market cap of ETH, the token the entire Ethereum ecosystem is grounded in. The new avenues that LINK opened ultimately trickled into a wide range of other Dapps on Ethereum, which led to massive growth that saw the ETH token’s demand increase substantially.

As the ecosystem on Mintlayer grows, native applications that are heavily adopted will increase the use of MLT. Developers have been interested in creating DeFi applications that are interoperable with native Bitcoin for years. We have built Mintlayer’s codebase from the ground up to be as simple and elegant as possible for developers to integrate. Incubator programs, accelerator programs and grants are available to stimulate the development of exciting projects.

The Future of the MLT Token

The MLT token is an essential part of Mintlayer, evolving to include more utility over time. New use cases for decentralized finance are developed every year. The MLT token will play some role in those developments, even if it’s just a small one.

MLT demand will increase as the ecosystem grows and new users are brought onto the blockchain. Increased demand will increase available block rewards, which will attract additional blocksigners.

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