What Is Mina Protocol? (MINA)
The Beginner's Guide to Mina
Mina Protocol aims to be a lightweight blockchain that maintains a constant size of just 22 kB, regardless of how many transactions are committed to the network. This size should allow anyone to operate a node and help secure its network without needing sophisticated computer hardware.
By keeping the entire blockchain smaller than most pictures on your phone, Mina plans to overcome blockchain size issues that have plagued other projects as they grow. Mina Protocol’s native cryptocurrency, MINA, is used to facilitate network transactions and distribute fees between users.
As blockchain technology has gained popularity, the number of transactions stored on most platforms has increased significantly. For instance, the Ethereum blockchain was just over 5 GB in April 2016, but expanded to more than 220 GB by April 2021. During those five years, millions of transactions were broadcasted to the blockchain.
Because blockchains are decentralized ledgers of historical transactions, running a node (which stores the entire history of the blockchain) has required greater computing power and energy as the blockchain grows. This has often made it increasingly difficult for average users to participate in the upkeep of the blockchain. Many feel this also opens the blockchain to centralization risk, as those with the greatest computing power are most efficient in managing the large size of the chain.
In response to this issue, Mina’s developers used a cryptography technique called zk-SNARKS to create a payment-oriented blockchain that does not require each node to record the complete record of historic transactions. This effectively lowers the computational requirements needed to support a full blockchain network. Mina reasons that if more users can run nodes and validate transactions, more nodes would be created which would support the network in becoming more decentralized and secure.
Who Created Mina Protocol?
Mina Protocol was created by the team at O(1) Labs, founded by Evan Shapiro and Izaak Meckler in 2017, with the aim of using cryptographic computing as a way to give people control over their digital lives.
After four years of building and testing their platform, the team at O(1) Labs launched the Mina mainnet on March 23, 2021.
The Mina Foundation hosted a community token sale in April 2021 that raised $18.75 million for the project. Moving forward, the Mina Foundation will oversee grants for community developers and maintain the Mina network’s assets.
How Does Mina Protocol Work?
The key to Mina Protocol is the incorporation of zk-SNARKs, which stands for “zero-knowledge succinct non-interactive arguments of knowledge.” This is a computing concept first developed by MIT professor and Algorand founder Silvio Micali that allows users to confirm they have certain data without revealing that data to each other. Another popular cryptocurrency that uses zk-SNARKs is Zcash.
In Mina’s case, this means that the network does not have to verify a transaction with every block that is created. Instead, the blockchain is represented with an easily verifiable cryptographic proof (the zk-SNARK). This proof is much smaller than most other blockchains and represents the state of the whole chain, rather than the latest block.
Combined with a Proof-of-Stake consensus mechanism, Mina claims their implementation of zk-SNARKs significantly cuts down on the resources needed to process and record transactions.
In order to send and receive transactions on the Mina network, each participant is required to run a node. Additionally, Mina Protocol requires two specialized nodes within the network to run effectively:
- Block producers select which transactions to include in the next block and win that block’s reward. In that way, they are like the “miners” or “validators” of other blockchains.
- Snark workers dedicate computing power to help compress network data and generate proofs of transactions. Block producers can then bid on these proofs, for which snark workers are paid in MINA.
Why Does MINA Have Value?
MINA is the token used by Mina Protocol to execute network transactions. Users can exchange MINA like any other cryptocurrency, or choose to stake their MINA to earn a reward while securing the network. MINA also serves as the payment medium of the MINA Protocol, incentivizing block producers to create blocks and rewarding snark workers who prove transaction validity.
MINA token is also used to interact with “Snapps,” which are decentralized applications (dApps) built on the Mina Protocol. For example, Teller, one of the first-ever Snapps, is a credit risk platform that helps users prove their credit scores are above certain thresholds (necessary for traditional financial services such as loans) without sharing their private data.
The initial supply of MINA was 1 billion tokens. The total supply will increase over time, but inflation is set to decrease from 12% to 7% over the first five years. Further decreases in the inflation rate will be subject to Mina Protocol’s governance.
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Why Use MINA?
Users may find value in Mina Protocol’s goal to solve a major problem facing many other blockchain solutions. By making their blockchain as small as possible, Mina aims to ensure deeper security and decentralization by making it more accessible for the broader public to run a node.
Additionally, the MINA token could see further utility and value if Snapps earn widespread adoption across the blockchain community.
Investors may want to purchase and add MINA to their portfolio should they believe lightweight blockchains could be adopted more broadly and solve many of the challenges other blockchains face as they scale.
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