Mintlayer is a layer-2 scaling solution built on top of the Bitcoin blockchain that aims to enhance its functionality and bring new use cases to the network.
Mintlayer will bring many benefits to the Bitcoin community.
Ability To Use Native Bitcoin
The biggest problem that Mintlayer solves is offering Bitcoin holders the ability to access DeFi and other applications without a wrapped token or token bridge.
Through the atomic swap mechanism, users will trade any token in the Mintlayer ecosystem for native Bitcoin, removing the need for a trusted third party. Attacks on token bridges were the biggest target for hackers in 2022.
This ability makes Mintlayer more appealing to institutions and organizations that are already using Bitcoin.
New Use Cases
Mintlayer will expand the use cases for Bitcoin. Tokenization, smart contracts, NFTs, and other tools that are not available or very limited on the Bitcoin blockchain will all be possible on Mintlayer.
These features enable new use cases for Bitcoin beyond just a store of value or a medium of exchange.
While projects like Ordinals and Stamps have allowed users to encode images into the Bitcoin blockchain, they have also introduced pollution. Most of the Bitcoin community believes that NFTs should be moved to Layer 2.
Mintlayer’s MLS-03 token fills the same niche as ERC-721, but is a special transaction type that doesn’t require users to write a smart contract to deploy. This makes them far easier to use, and it moves NFTs off the Bitcoin base layer. In the future, we will use NFTs for supply chain, government records, and many other uses besides simple collectible images. Bitcoin transaction volumes are already at an all-time high and would only continue to increase if users tried to incorporate these new features into Bitcoin’s base layer.
Bitcoin is the largest source of liquidity in the cryptocurrency sector. Still, crypto users are forced to bridge or wrap Bitcoin to use it on decentralized exchanges, and are often forced to sell into other assets that comprise trading pairs to buy other assets on centralized exchanges.
Tokens minted on Mintlayer can be purchased with native Bitcoin via atomic swap. This removes several layers of friction that Bitcoin holders face when they want to diversify their participation in crypto.
Developers are attempting to use Bitcoin to issue tokens. The new BRC-20 protocol (named not because it was the 20th proposal, but to capitalize off of the comparison to Ethereum’s ERC-20) uses an Ordinals inscription of JSON data to inscribe token creation onto the blockchain. Fees are relatively high because each inscription needs to be associated with sats, which also obfuscates the exchange of BRC-20 tokens. BRC-20 tokens also cannot interact with smart contracts.
Network pollution is at an all-time high because of users minting worthless tokens. Another issue is that it opens up the possibility for users to create an unregistered securities market on Bitcoin, which could lead to strict government regulation of Bitcoin itself.
Mintlayer tokens do not cause pollution of the Bitcoin network, and they are not commingled with other tokens or sats. Mintlayer’s MLS-02 token is designed to meet the needs of users that want to issue security tokens, but another user’s impropriety or ignorance will have no effect on tokens you mint.
The flexibility offered by Mintlayer’s layer 2 tokens is superior to the strict format and limitations of inscriptions such as BRC-20 and Ordinals. The creator or BRC-20 tokens acknowledge that they are worthless.
Even though uses like tokenization and NFTs will be special transaction types and won’t require coding a smart contract, Mintlayer will support smart contracts.
Mintlayer’s smart contracts will use Wasm. Since Wasm can compile from a wider range of programming languages, a larger group of developers are qualified to work on projects using Wasm. There are also more robust tools available for development.
A Layer 2 For Bitcoiners
We built Mintlayer from the ground up to be as interoperable with the Bitcoin blockchain as possible while still maintaining the robust feature set included in a DeFi platform.
Mintlayer uses UTXO accounting and maintains as many points of interoperability as possible without compromising function.
It only makes sense to maintain these core design features when building a DeFi platform for Bitcoin users. It boils down to refusing to compromise on Bitcoin’s core tenets.
Mintlayer Ecosystem Fund
Ultimately, Mintlayer will strengthen the Bitcoin community by attracting developers and innovators that want to build tools that do not exist within Bitcoin. To help facilitate and accelerate this goal, we have developed the Mintlayer ecosystem fund.
The ecosystem fund is a partnership between the various stakeholders in crypto. Potential developers can secure funding for their project and connect with collaborators to help with planning, strategy, marketing, and other essential disciplines.
Overall, Mintlayer’s value proposition for Bitcoin is to enhance its functionality and scalability, making it more useful for a wider range of applications and use cases, and potentially increasing its adoption and value.
The most important difference is Mintlayer removes the friction and security issues introduced by token bridges and wrapped tokens, allowing the largest pool of liquidity (Bitcoin holders) direct access to the financial tools that are required to replace the traditional banking system.