Mina Protocol - Issue #73
In this newsletter, we are profiling Mina Protocol [MINA]. In previous newsletters, we have profiled Bitcoin, Cardano, Solana, Litecoin, and many others. Access all our newsletters in our archives at madcapx.substack.com.
The Short of It
Listed as #88 on CoinMarketCap, Mina is an interesting blockchain since it is the world’s lightest blockchain. As an investment, it has not found a bottom yet.
Mina is a layer-1 protocol with an extremely small blockchain. The project started as Coda Protocol but rebranded to Mina in late 2020. It was created by O(1) Labs, founded by Evan Shapiro and Izaak Meckler.
The ecosystem’s utility token, MINA, is inflationary and has no supply cap. It has a yearly inflation target of 7%, although this could be changed via community governance. It currently has a supply of over 820 million, and there is an eight-year plan for distribution.
Mina uses a variation of Ouroboros Proof-of-Stake (as is used by Cardano) for consensus but is unique in having a super small blockchain, only 22k in size compared to the multi-gigabyte sizes of some popular blockchains. It accomplishes this by using a cryptography technique called zk-SNARKs, which stands for “zero-knowledge succinct non-interactive arguments of knowledge.” This was first invented by Silvio Micali (of Algorand). The cryptocurrency Zcash also uses this zk-SNARK technology. The network does not need to verify a transaction with every block created; rather, it depends on the small snapshot of the current state of the blockchain (the zk-SNARK). This, in turn, allows everyone on the network to act as a validator because it is easy to keep a copy of the small blockchain on any device. There is a drawback to this, as transaction history look-ups are unavailable and have to be done via searching archive transaction data, which is not currently decentralized. Also, the speed of finality for a block on Mina is slow, as it needs many more confirmations than standard blockchains. Hence, the chain only allows about 22 transactions per second.
As everyone who runs a Mina wallet is also running a full node, making them a validator, there are two roles one can take: block producer or SNARK producer. Like stakers in other protocols, block producers can be selected to create a block and earn rewards, transaction fees and network fees. SNARK producers work on compressing the data in the network by generating proofs of transactions, which they then sell to block producers to earn a portion of the block reward. Instead of staking directly, holders can also choose to delegate to an existing staker.
Mina has smart contracts to create apps, which they call zkApps. A Typescript-based SDK is coming soon for developers. You can read more about developing zero-knowledge apps in their documentation. An EVM bridge, oracle integration, and support for non-native tokens are coming later this year.
Assuming that Mina will weather the current bear crypto market, we can hope that it will come out strong during the next bull run as it is still early in its lifecycle stages. Keep an eye on this if you are interested in an ambitious project that is more than just a run-of-the-mill Ethereum clone.
The markets, in general, have been going through a downturn recently. For example, S&P 500 Index peaked at the beginning of 2022, 5 months ago. Bitcoin topped out in early November 2021, 7 months ago. MINA found its highest point mid-September against BTC, 272 days ago, nine months ago.
During the MINA/BTC bear trend, there have been good upside moments within support and resistance of up to 100% gains. Over the last few days, MINA broke support with a rally today of 16% back to the support. Though will this act now as resistance?
MINA/USD pairing peaked mid November at $6.68 and is down as of today 91% to a low of $0.56. Though as a positive MINA is one of the few that are green in a sea of red today.
The Other Trend Lines
The crypto market has been hit hard. Bitcoin is down 67%, ETH is down 76%, and high-flying Solana has lost 89%. You’d think with losses this high, we would have dropped out of the long-term trend; the danger is definitely there, but if BTC bounces off $19,000 or $20,000, the long-term bullish trend continues. The previous high of $19,891, hit in late 2017, seems like a good place to touch.
Once BTC broke below $28000, there wasn’t much support until the 200 weekly moving average at $22,370. It has acted as good support in the previous downturns. On December 10, 2018, BTC found support at $3215, bouncing perfectly off it.
Of course, BTC and other cryptos can continue further down, so make sure you understand risk management with your trading and don’t use money you can’t afford to lose. We also always recommend to self custody if you are holding long-term holdings.
This portfolio section gives you an idea of what sort of return you can get when investing in crypto assets.
BTC/USD FUND is up 115% since October 1st, 2020. Since this is a long-term holding, it is best kept in cold wallet storage or a safe custody solution. We continue to see a long-term hold position as our best stable alternative. This past week bitcoin has been ranging between $22,600 and $31,589 USD in value.
FUND 3 started on November 16, 2020, with $1000 USD in value and was invested into BTC, LTC, ETH, and ADA. The total amount of BTC value from the four coins has had a gain of 45% since the start. The USD fund value is up 102% since the beginning. We will hold these positions to see how well it does against our BTC-only portfolio. LTC is down -56% against BTC. ETH is up 91% against BTC since the start. ADA has a gain of 228% against BTC and 349% to USD.
BLWX Fund started on February 22, 2021. They all are assets we have profiled, and we are interested in how they will perform in 2022 against BTC. BAT has a gain of 22% against BTC since the start; LINK is down -55%, WAVES is up 2%, and XMR is up 41%. Overall, against BTC, the fund is up 2% and down -56% against USD.
Overall, Bitcoin should be your first choice as an investment in crypto, though many digital assets can give you amazing gains if you manage your risk. As a long-term investor, we see it as our largest portfolio investment. If you are a day trader, there are many great assets to put on your watch list. Look through our previous newsletters to find some.
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MadCapX research newsletter is written by the Madbyte Team. You can learn more about Madbyte and MadCapX on our websites.
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Disclaimer: Nothing in this newsletter is intended to serve as financial advice. Therefore, do your own research and due diligence before applying any of the techniques highlighted in this post. Any risks or trades based on this newsletter are committed at your own risk.