The use of ML tokens in the Mintlayer ecosystem

The ML token has multiple functions in the Mintlayer ecosystem, including being the primary currency for transaction fees, token creation costs, and governance activities. It allows users to participate in the platform's Proof of Stake (PoS) consensus mechanism, thereby helping to protect network security. Users can stake ML tokens to become block producers (also known as validators) and earn rewards by validating transactions and creating new blocks.

ML tokens can also be used to access various services within the Mintlayer ecosystem, including token issuance, smart contract development, and security audits provided by RBB LAB. ML tokens serve as the main payment method for these services, providing developers with the resources needed to build decentralized applications (dApps) on Mintlayer. As the ecosystem grows, these use cases are also expanding, further integrating ML tokens into various financial activities and applications.

Staking Mechanism and Pool Creation

The staking mechanism of Mintlayer allows users to participate in network security by creating staking pools or delegating tokens to existing pools. Users who create staking pools need to hold at least 40,000 ML tokens, which accounts for approximately 0.01% of the initial total supply. Pool creators or validators are responsible for validating transactions and generating new blocks. Staking pools provide an inclusive mechanism where users with fewer tokens can delegate them to the pools without requiring a large initial capital to participate.

Staking rewards will be distributed within the first ten years of network operation. The rewards start high and then gradually decrease, encouraging early participation. For example, in the first year, 202 ML tokens are generated per block as a reward, but by the tenth year, this amount decreases to 15 ML tokens per block. After ten years, block rewards cease, and validators will only profit from transaction fees, forming a sustainable economic model as the network matures.

ML Token applications beyond stake

In addition to staking, ML Tokens have multiple uses, making them a versatile asset within the Mintlayer ecosystem. Transaction fees are the main function of ML Tokens. Whenever users perform transactions on the network, they need to pay ML Tokens as fees. Interestingly, Mintlayer also allows fees to be paid in other MLS-01 tokens, although this depends on whether the block producers are willing to accept other tokens.

Users who issue new tokens on Mintlayer must pay a token issuance fee priced in ML tokens. Currently, this fee is 100 ML tokens plus standard transaction fees. The issuance of new tokens will burn ML tokens, gradually reducing the total supply. With the increase of tokens on the network, this deflationary mechanism ensures a decrease in the supply of ML tokens, potentially increasing the value of remaining tokens.

ML tokens are also used for governance, allowing token holders to vote on network upgrades, protocol changes, and roadmap priorities. This decentralized decision-making process ensures that the community has a say in shaping the future of Mintlayer.

Token Allocation Model

During the Token Generation Event (TGE), 400 million ML tokens were pre-mined. The distribution of these tokens follows a well-designed model to support all aspects of the Mintlayer ecosystem. Some tokens are unlocked immediately at TGE, while the rest follow a vesting schedule. The initial unlocked supply is 15.82 million ML tokens, representing approximately 2.6% of the total supply.

The allocation model is as follows:

• Pre-seed round:0.62% (2.5 million Tokens)
• Seed Round Sale:13.65% (54.6 million tokens)
• Strategic Sales (Long-term and Short-term Attribution):19.5% (a total of 78 million tokens)
• Marketing and Listing:12% (48 million tokens)
• Protocol Development:10% (40 million tokens)
• Community Incentives:5% (20 million Tokens)
• Company Reserves:26.73% (106.9 million tokens)
• Team and Advisors:12.5% (50 million tokens)

Each category has a specific vesting schedule to ensure controlled token issuance and prevent negative market impacts from sudden supply increases. For example, tokens from seed sales unlock over 15 months, while tokens reserved for protocol development and the team are locked for four months and then gradually released over a longer period of time.

Investors and supporters of Mintlayer

Mintlayer inSeed Roundraised during the period5.2 million dollarsAttracted support from several well-known blockchain venture capital companies. The main investors participating in this round of financing include:

• x21 Digital
• Moonrock Capital
• ExNetwork Capital
• Moonwhale Ventures
• Kyros Ventures
• CSP DAO

These companies are known for their involvement in early blockchain projects and have provided funding for Mintlayer to develop its Bitcoin-based DeFi protocol. Other notable investors includeTitans Ventures、4SV、Black Dragon Capital、Lotus Capital,Sky VenturesAndBlockpact CapitalThese investors also participated in other important projects in the crypto space, such asSolanaAndPolkadot, highlighting its credibility and influence.

This funding is used to support the continued development of the Mintlayer infrastructure, particularly its decentralized finance functionalities, aiming to bring asset tokenization, cross-chain swaps, and decentralized exchanges to the Bitcoin network. Mintlayer positions itself as a sidechain for Bitcoin, allowing for more efficient financial transactions while maintaining the security of Bitcoin.

This investment allows Mintlayer to enhance its technology stack and prepare for further development, including the launch of its mainnet and additional partnerships aimed at expanding its ecosystem.

Vesting Period and Community Incentives

The ownership schedule of different pools is designed to promote long-term commitment from investors, teams, and communities. The company's reserves and strategic sales have the longest lock-up period, ensuring a large number of tokens are locked up for a considerable amount of time. This structure encourages long-term growth and reduces the risk of sudden sell-offs that could lead to market instability.

Community incentives help to grow the Mintlayer ecosystem. To promote participation, 5% of the total supply is allocated to community projects. These incentives are used to reward users who contribute to network development, promotion, and security. For example, users can earn ML tokens by participating in test network activities, reporting bugs, or creating educational content about Mintlayer.

Highlights

• ML tokens are used for staking, transaction fees, token creation, and governance within the Mintlayer ecosystem.
• Users can create a staking pool by holding at least 40,000 ML tokens, or delegate their tokens to an existing staking pool.
• Staking rewards are distributed over the first 10 years, and block rewards gradually decrease over time.
• ML tokens are also used to pay for services such as smart contract development and security audits.
• The token distribution contains vesting periods for various categories such as community incentives and marketing.