Mina Protocol and the MINA cryptocurrency
Blockchains store all information about transactions, which makes them completely transparent to an outside observer: any user can view the chain of transactions from beginning to end in a browser. Each node (and blockchains have hundreds or thousands of them) stores a complete copy of the transaction history.
However, there is a problem with the growing amount of information, and one of its solutions is the Mina Protocol, which will be discussed in this article.
What is the Mina Protocol?
The Mina Protocol is a "compact" blockchain protocol whose size does not change over time, regardless of the number of transactions in the network. The designers of this blockchain sought to create a network whose size is comparable to the length of a message or a small media file. Due to this feature, Mina Protocol is also known as a "minimalist" or "concise" blockchain.
The protocol was launched in 2021 by O(1) Labs and is currently the lightest blockchain in the world at just 22KB — the same amount of storage space as a ~11,000-character text. Before the launch of the blockchain, Mina went by the name Coda Protocol.
What problem does the Mina Protocol solve, and how is it structured?
The Bitcoin protocol has become one of the most significant technologies of the 21st century, and its emergence marked the beginning of a new financial era. However, the technology behind the first cryptocurrency and its blockchain has several drawbacks, such as low bandwidth and an ever-increasing amount of transaction data.
According to observers, the size of each copy of the Bitcoin blockchain already exceeds 528GB. With more than 10,000 nodes, the total amount of data already exceeds 5,300TB. The growth rate of data volume is also worth considering: for example, in 2016, the size of a copy of the Ethereum blockchain was just over 5 GB, and in 2021, the figure will exceed 220 GB.
Therein lies another problem with the old generation of blockchains — the ever-increasing demands on miner and validator nodes. While a dedicated server is enough to run a node in Proof-of-Stake, Bitcoin mining based on Proof-of-Work will require expensive specialized equipment (ASIC).
The Mina Protocol is based on the Zero-Knowledge Proof consensus mechanism and uses the OuroborosbSamasika mechanism, a Proof-of-Stake (PoS) variation. The Mina blockchain has two states: verification and update. Each block stores only the last block verification data (snarks) but not the transaction information itself, so the developers achieved a minimum block size of 22 KB. This also solves the problem of scalability. As a result of the approach used in Mina Protocol, the system requirements for nodes will always be minimal: in fact, the node can be run even on an old PC.
In terms of mechanics, Mina Protocol combines the properties of Bitcoin and Ethereum blockchains, except the transaction processing technology. Mina Protocol uses an account-type accounting model like Ethereum. Two other features distinguishing Mina Protocol from Bitcoin are compatibility with the Ethereum Virtual Machine (EVM) and multiple roles for network nodes.
There are three types of nodes in the Mina Protocol network:
- Verifiers — nodes that validate snarks;
- Block producers — nodes similar to validators that combine transactions into blocks and write them to the blockchain. Block producers contribute their cryptocurrency to the staking and receive rewards for mining new blocks;
- Snarkers or pruvers produce snarks — tiny-sized certificates to verify the state of the network without revealing the contents. Block producers pay pruvers for snarks.
Mina cryptocurrency
Like any first-level blockchain, the protocol has its cryptocurrency, MINA. The coin is the protocol's central payment unit, used to pay network fees and reward validators mining new blocks.
MINA is an inflationary cryptocurrency; it has no limit on the number of coins issued (issuance). Currently, almost 1.1 billion MINAs have already been given. Approximately 260 million MINAs have been mined over the past year, and the average annual inflation rate has been ~35%. According to the project's White Paper, the target inflation rate will gradually decrease until it reaches 7% annually.
Regarding capitalization, MINA cryptocurrency is ranked 63rd in the CoinMarketCap ranking, reaching $803 million. MINA is one of the few cryptocurrencies that reached an all-time high of $9.91 immediately after listing on the exchange.
During the crypto market's bull rally in 2021, the price rose to nearly $6 twice but never renewed or even peaked. As of November 2023, the MINA cryptocurrency is trading at $0.79 — almost 92% below its all-time high. However, since the beginning of the year, the cryptocurrency has gained 83.7%.
Project outlook
Except for fast and cheap transactions and small blockchain size, Mina Protocol does not stand out significantly from many other Tier 1 networks with a developed ecosystem. It provides users access to a wide range of decentralized applications. Essentially, Mina is a "lighter" and faster version of Bitcoin, although even the first cryptocurrency already has its ecosystem.
However, the Mina Protocol team has presented an extensive roadmap for the project's development. One of the significant future updates is Minaverse: Mina Protocol developers are working on a bridge between EVM blockchains and classic Internet applications (Web2).