Before we embark on this journey of exploration, let's define some essential search tags for our reference: ZK-SNARK, 22kb, ZkApp, Privacy, Scalable.
Mina Protocol stands out as the world's lightest blockchain, boasting a mere 21kb in size. To put this into perspective, Ethereum's blockchain is a hefty 389 GB, while Bitcoin's surpasses a colossal 991 GB. This compactness simplifies the expansion of the node network. With Mina Protocol, even an ordinary smartphone can effortlessly run a full node.
The innovative ZK-SNARK technology further elevates Mina Protocol's appeal. Rather than engaging in complex computations to verify information, entities involved only need to inspect pre-provided proofs.
The adoption of the Ouroboros Samasaki algorithm, originally developed by Cardano, ensures energy-efficient operations, departing from the energy-intensive Proof of Work (PoW) consensus.
Mina Protocol's ecosystem involves distinct roles: Verifiers, responsible for executing transactions, Block Producers, creators of blocks, and Snark Workers, tasked with generating proofs.
Mina Protocol's product portfolio encompasses the ZKApp (formerly Snapps, currently in the testnet phase), Zk-Bridge, a one-way bridge connecting Mina to Ethereum (with the reverse bridge in the works), Zk-Rollup (Zk-Fusion), and ZK-Oracle, among others.
Mina Protocol's trajectory unfolds as it gears up for the Testworld Mission 2.0, scheduled to kick off Track3 on 17th October 2023, followed by Track4. The culmination will be a significant hardfork, anticipated around Q1 2024. This roadmap aims to foster a robust ecosystem with a focus on trust minimization, ZK-programmability, settlement layer performance, recursive rollups, and the road to DAOification. The overarching theme is privacy and security in Web3.
There are 5 focus areas:
Trust Minimization
ZK Programmability
Settlement Layer Performance
Minaverse
Road to DAOification
At the time of this analysis, Mina Protocol boasts a market capitalization of $380 million, with 90.6% of the total supply already in circulation. Transaction fees are notably low, hovering around $0.01, and the throughput, measured in transactions per second (TPS), approximates 1.
O(1) Labs, the driving force behind Mina Protocol, was established in San Francisco in 2017. The project's mainnet was launched in August 2021, with Evan Shapiro serving as the CEO.
Mina Protocol has secured backing from notable entities through four fundraising rounds that began in August 2018. A total of $136 million was raised from over 20 investors, spearheaded by Paradigm. Other prominent names such as Coinbase Venture, Multicoin Capital, and Polychain also joined the party. Investors have acquired MINA tokens at a price range of $0.07 to $0.25.
Mina Protocol initiated its journey with the issuance of 1 billion tokens, subject to an 8-year unlocking period. The current annual inflation rate hovers between 8-10%. Additionally, the Mina Foundation Endowment will gradually unlock 0.11% of the supply, equivalent to 1.14 million MINA tokens (approximately $400,000) monthly over the next 19 months.
In the realm of Layer1 ZK projects, Mina Protocol faces competition primarily from Aleo.
Prominent projects under development on the Mina Network include:
ZekoLabs: Currently focused on constructing a Layer2 solution on the Mina Network.
LuminaDEX: This project is creating a decentralized exchange with Zk-Kyc for Anti-Money Laundering (AML) measures, supported by Jump Trading, BigBrain VC, and others.
Aurowallet: Serving as the primary wallet within the Mina network.
The enigmatic "21kb" represents the size of Snark proof, achieved through ZK-SNARK technology and recursive Snark processes. By providing proofs, transactions can be validated without requiring intensive computations. However, for specific applications like explorers or wallets necessitating access to historical data, Archive nodes store approximately 100-300GB of data. These nodes, while not participating in consensus, focus on data storage on platforms like Google Cloud.
Mina Protocol embraces decentralization with the provision of full node operation on Virtual Private Servers (VPS) and websites. Future endeavors involve enabling full node operation on mobile devices. This scalability feature facilitates enhanced network decentralization. According to Nakaflow statistics, the Nakamoto coefficient stands at 64, indicating a high degree of decentralization.
ZK-SNARK technology is known for its advantages but is not without its limitations. A comprehensive analysis of its strengths and weaknesses can be found in a16z's article.
Mina's current Transaction Per Second (TPS) rate is relatively low, hovering around 1. This issue arises because achieving higher TPS in a scalable Layer1 necessitates compromises in terms of security and decentralization. This is not a viable solution, given Mina's steadfast commitment to decentralization and security. The Mina team, however, has explored Layer2 solutions, such as Zk-Fusion, to alleviate network congestion.
As the pioneer of ZK Layer1 and ZK technology in the cryptocurrency realm, Mina Protocol has required substantial time for testing and development. Although many weaknesses of ZK-SNARK technology have been addressed, it remains important to scrutinize whether they have been entirely mitigated. The complex nature of the technology has contributed to a lengthy product development timeline.
The future holds promise for Mina Protocol, with the initiation of Track 4 testnet towards the end of the year and a substantial hardfork projected for Q1 2024. This milestone marks the transition of ZkApp to the mainnet, ushering in a more vibrant ecosystem. Additionally, the completion of the ZK-Bridge connecting Mina and Ethereum is on the horizon.
ZK-Fusion, a module for supporting smart contracts, and ZK-Oracle, Mina's native Oracle, are expected to debut in the latter part of 2024. Furthermore, it is anticipated that features such as Unsecure-loan or those requiring private contracts will gain prominence on the Mina Network.
Mina Protocol's price chart has witnessed intriguing developments. Following its Coinlist sale and listing during the market downturn of May 2021, it experienced a significant drop to $1. It achieved a notable pump in November 2021, largely driven by the "Lightest Blockchain in the World" narrative.
In early 2023, the price surged over 200%, leaping from $0.42 to $1.2, fueled by the burgeoning ZK narrative. Subsequently, the chart demonstrated weaker support, with a price consolidation phase averaging around 120 days within the $0.3-$0.6 price range.
Mina Protocol, a trailblazer in the realm of ZK Layer1 and ZK technology, commands respect for its six-year tenure. The extensive time taken to develop this technology is reminiscent of Cardano's trajectory, which involves a 5-10-year roadmap.
Its paramount strength lies in its early adoption of ZK technology, positioning it well to ride the ZK narrative wave. This narrative is expected to gain prominence in 2024-2025. Nevertheless, the extended downtrend and product development timeline may cast a shadow on its price performance, potentially discouraging some investors.
However, if the project introduces a hardfork during a bull run, coupled with a flourishing ZK narrative, it presents a promising opportunity for investors. The project's potential for return on investment (ROI) remains noteworthy.
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