Mina Protocol Review: The Succinct Blockchain
Nearly all the existing blockchains are massive in size, and for good reason. Blockchains use a distributed ledger technology that requires that they record and store every event and transaction that occurs on the network.
Naturally these transactions and events increase over time, and can even become exponential when the blockchain becomes extremely popular and heavily adopted. Eventually it may become impractical to store all the data and information. As an example, the Bitcoin blockchain size is 348 GB as of June 2021 and the Ethereum blockchain size is 248 GB as of June 2021.
As the size of the blockchain grows it begins presenting a problem as the massive size means it takes too much hard drive capacity and too much time for most users to consider running a network node. That’s a huge barrier to entry that goes against the decentralized nature of blockchains. The Mina Protocol was designed to improve on this situation.
Mina Protocol is a cryptocurrency with a succinct blockchain storage and verification mechanism, which limits and maintains the total blockchain size consistently.
The Mina Protocol was rebranded from the Coda Protocol in September 2020, and was created by O(1) Labs in 2017 with the goal of making cryptocurrencies more user-friendly and accessible to all.
The Mina Protocol
The Mina Protocol is a newly launched blockchain protocol making it possible for anyone in the world to participate with full node security. Any device, even smartphones, can participate since synching with the Mina blockchain only requires the download of a few kilobytes of data and a few milliseconds of computation. This is a dramatic difference from the massive gigabytes of data and extensive computations required with traditional blockchain protocols.
The Mina Protocol was developed by O(1) Labs as a way to address the ever increasing size of blockchain data by creating a compressed or succinct blockchain that’s only the size of a few tweets.
With the massive size and computational requirements of the blockchain done away with end users now face almost no barrier to entry in participating in blockchain validation.
Why is the Mina Protocol Needed?
Before taking a closer look at what the Mina Protocol is doing and how it does it, we should first get an understanding of how most blockchain protocols address transaction validation.
In the typical blockchain (think Bitcoin or Ethereum) the processor, also called a miner in Proof-of-Work blockchains or a staker in Proof-of-Stake blockchains, applies a transaction to the database. The full node observes the transactions being added to ensure they are behaving honestly. And then the transaction is packed in a block and added to the blockchain.
The individual end users of the blockchain and its cryptocurrency rarely do their own independent checks to verify the honesty of other participants. Instead they are comfortable delegating their trust to other network participants.
Why don’t most users actually participate in the validation of blockchain transactions?
- Resource requirements and complexity of running a full node discourages end users to do so.
- It is intensive to run a full node on a computer, impossible on a mobile phone.
- Easier to trust third parties to complete this validation independently.
Whenever a new blockchain emerges it’s pretty easy for anyone to operate a full node. The new blockchain is inevitably quite small, and has little in the way of computational demands. However as time goes by and more transactions are added the size of the blockchain grows to hundreds of gigabytes, or even terabytes. This makes it unfeasible for most people to run their own full node due to the cost of the equipment needed to do so.
Called the “succinct blockchain” because of its small size, Mina Protocol is defining a new mechanism for blockchain verification and storage that limits the total size of the blockchain consistently.
According to the developers of the Mina Protocol, its blockchain will always remain just 22 kB in size, no matter how long the blockchain exists, or how much activity occurs on it. This will ensure throughput remains high and that all stored records are easy to corroborate.
This comes with the benefit of keeping the entire database accessible and verifiable by pretty much any internet connected device since the storage requirements of the blockchain are so incredibly small.
It also means there is no effective barrier to entry, since most of the world’s population owns a smart phone, and the smart phone is powerful enough to act as a node in the Mina Protocol network. This aids in decentralization and in blockchain security.
Maintaining a low resource requirement for verifying transactions in a block trustlessly is the first step to creating a sustainable and scalable solution to the problem of bloated blockchains and increasing centralization.
What Makes the Mina Protocol Work?
Like many of the current blockhains in existence Mina is a payment-oriented blockchain offering transactional functionality. However it does use different transaction semantics than most of the popular transactional blockchains, such as Bitcoin.
Specifically, Mina Protocol uses an account-based model like Ethereum rather than the UTXO model used by Bitcoin. In this account-based model the current state of the blockchain is a list of all the account balances instead of a list of all the unspent coins.
In the Mina Protocol each block created contains a commitment to this current state in a Merkle tree, and not to the entire state. Because of this each full node isn’t required to store the entire state, but can verify account balances efficiently via the state commitment contained in the last block header.
However system provers (which are analogous to Bitcoin miners) do need to store the full state in order to use it as part of the witness when proving the validity of new blocks.
The Mina Protocol is also using a new proof-of-stake consensus protocol called Ouroboros Samasika. It is the first provably-secure PoS protocol for succinct blockchains. It was necessary to create this unique consensus protocol since existing off-the-shelf consensus mechanisms were not suitable for use with a succinct blockchain framework.
This is because the natural approach to consensus often requires nodes to store the full transaction history of the blockchain since the information needed to tell apart an honest chain from a dishonest one is likely to involve details at the point of the fork; since it is possible for a party to learn about a fork long after it occurred, it may need to store the entire history to assist in the chain selection process.
This is indeed the case in the known PoS consensus mechanisms. Furthermore, other PoS consensus mechanisms rely on a trusted external advice for bootstrapping.
In its current implementation the state proof size for the Mina Protocol is just 864 bytes and verification is completed in roughly 200ms. This means that any device that can support this level of computation, such as the current smartphones, can verify the current state of the system with no trusted advice.
There are a number of optimizations that have been utilized which include incrementally computable SNARKs and parallel scan state. This assists in the improvement of transaction throughput beyond what can be achieved through sequentially computed proofs.
In a nutshell the idea is to take all the blocks that need to be absorbed in a proof and then distribute the proving across parallel provers. There has also been a special incentive structure introduced that helps to maximize prover participation in the network.
zk-SNARKs in Mina
As mentioned above, the Mina Protocol is powered by a Proof-of-Stake consensus mechanism as well as zk-SNARKS or what is called “Zero-Knowledge Succinct Non-Interactive Argument” technology. The unique zk-SKARK mechanism used guarantees the authenticity and genuineness of transactions without the need for many footprints. Basically it allows an entity to prove it is in possession of information without revealing what that information is.
This means each block produced is accompanied by the production of a zk-SNARK proof. This new proof also serves as valid proof that all prior blocks are also valid. With this mechanism in place all the nodes in the network are able to move forward simply by relying on this data and storing only it, rather than needing to store the entire transaction record of the entire blockchain since genesis.
zk-SNARKs function as unforgeable certificates that prove a computation was conducted and completed properly, without needing to prove the entire computation. In practice any computation can be turned into a SNARK.
This includes the verification of transactions in a block. If we create a SNARK from this it proves the accuracy of all the transactions within the block, without the requirement to show all the transactions. Thus the size of the block is effectively reduced to the size of a single SNARK, which is roughly 1 kB.
The SNARK verifies all of the rules for consensus and ensures:
- Transactions are signed.
- Transactions are valid.
- Consensus rules.
In the event the SNARK isn’t generated honestly it isn’t valid. If that occurs anyone n the network will instantaneously see that the SNARK is invalid, and they would also consider the underlying block and transactions as invalid. Since the SNARK is so small this verification can occur on nearly any device, including modern smart phones or Raspberry Pi devices.
Mina Protocol Benefits
We discussed some of the obvious benefits above, such as the benefit of keeping the entire database accessible and verifiable by pretty much any internet connected device, and of removing the barrier to entry for most of the world’s population. This enables equal participation in the network, while also increasing throughput dramatically since nodes are able to communicate effectively and reach consensus rapidly.
Furthermore, since the barrier to entry is low, this ensures wide distribution of nodes ensuring greater decentralization without relying on central intermediaries. The protocol also has an obvious privacy-focused design, where the SNARKs can allow information to be verified whilst being hidden mathematically.
Mina Protocol Roles
In most blockchain protocols there are a minimum of two roles that exist. One is the role of full nodes, miners or stakers, who verify every transaction in the network. The other is those who trust third parties to verify transactions for them, such as lite clients.
As a blockchain gains wider adoption it becomes increasingly expensive and difficult to verify the ledger, and so more and more users get pushed out of the first group and land in the second.
Consider for example that if you wanted to become a Bitcoin miner you would need to verify roughly 500 million transactions to gain full node security. This problem is compounded by other cryptocurrencies that have 10 to 100,000x the throughput of Bitcoin, thus generating gigabytes of data every single week.
The Mina Protocol is quite different in that its resource requirements aren’t just tiny, they are also constant. No matter how many transactions the network has processed, or is currently processing, users can be able to fully verify the current state of the blockchain with a single small zk-SNARK.
To support this, Mina has three roles in the network, each incentivized to participate by different mechanisms and each responsible for the smooth and secure operation of the blockchain. They are as follows:
- Verifiers – This group is responsible for continuously checking the state validity and maintaining the integrity of the network. This is done by downloading a small zk-SNARK and then spending several milliseconds computing to certify consensus information by routing Merkle roots to a recent ledger state. Verifiers are able to check the relevant parts of the blockchain, particularly the account balances.
- Block Producers – This group has the responsibility of producing blocks by providing the network with computational power and processing activity. They receive block rewards as an incentive for their participation, with the rewards coming from the fees paid by protocol users. The block production system features an auction-like mechanism whereby block producers include those transactions with the highest attached fees first and work their way lower from there. As in most PoS systems it is possible to delegate stakes to block producers to collect a proportional portion of the block rewards.
- Snarkers – These are the network participants who provide the zk-SNARKs to block producers for transaction verification. They are required to SNARK equivalent numbers of transactions as they are included in a block. Snarkers rely on posting fees or bids as an incentive for their service. If the bids are accepted and the services used then they are paid by block producers out of the pool of transaction fees. And since block producers naturally want to minimize the cost and Snarkers have to remain competitive, it enables a cost-effective marketplace.
Applications, Decentralization, and Scalability
The Mina Protocol was specifically designed to allow for ease of access to the blockchain through any browser or through applications without the need to download hundreds of gigabytes of data, and without delegating trust to any third party entity.
This allows for the use of an application such as a hyper-lite wallet where the user doesn’t need to depend on the developer for the proper usage of verification. Instead the validation process can be performed by the end-users without the need for hardware dedicated to that purpose.
With the Mina Protocol any device is capable of running as a validating node, including smart phones and in browser, or even the older feature phones.
With the current crop of blockchain protocols end users inevitably need to delegate trust to third party application and services. This is true of online wallets, or lite mining clients. In the event of a 51% attack or similar this could certainly be problematic since the act of verifying transactions is often concentrated in the hands of these service providers.
By giving end users the ability to easily become validating nodes on their own the decentralization of the network is enhanced since the validation is being disbursed to a far larger range of network participants.
Scalability has been an ongoing issue for blockchains, and in most when transaction throughput is increased to thousands of transactions per second it introduces the problem of a greatly increased amount of data that needs to be verified. In this case it is almost certain you end up with a blockchain that grows at a rate that’s faster than verifications can keep up with.
Because the Mina Protocol keeps its blockchain at a constant size there’s a way to mitigate this data bloat, making it possible to increase throughput by a much larger magnitude since the verification data is being compressed to a more manageable size.
The native token of the blockchain is called MINA, and it is used for all network activities, including as an incentive for network participants and as a form of payment. The initial supply of MINA is 1 billion, however the supply is not capped. In addition each MINA is divisible into one billion units that are called nanominas. All of this can be changed through on-chain governance.
Because the Mina Protocol is PoS based users are penalized for simply holding their tokens without staking by increasing inflation. This inflation dilutes the value of held tokens, giving users an incentive to stake and participate in the network. Block rewards are designed to adjust dynamically in response to the staking rate on the network, thus targeting the specific inflation rate set for the protocol.
The Mina Protocol Team
The project began in mid-2017. Evan Shapiro and Izaak Meckler wanted to make a protocol that could effectively be both decentralized and scalable. Izaak was studying cryptography at Berkeley for a PhD at the time and learning about zk-SNARKs. The two remain at Mina today, guiding and leading the project.
Evan Shapiro is the CEO of O(1) Labs, where the development of the Mina Protocol takes place. He is one of the two co-founders and began working on the Mina Protocol almost immediately after finishing his Master’s degree in Computer Science at Carnegie Mellon University. Other than his work with Mina and O(1) Labs he only lists a brief stint as an intern for Mozilla in his work experience.
Izaak Meckler is the CTO at O(1) Labs. After graduating from the University of Chicago with a Bachelor’s degree in Mathematics and Computer Science he spent a year working for Jane Capital as a software developer. He then returned to school and is still in the process of completing his PhD in Cryptography from Berkley in addition to his role at O(1) Labs.
The MINA Token
There have been several rounds of fund raising for Mina, beginning with a March 2018 private sale at $0.07 per token which raised $3.5 million in private equity. That was followed with a second seed round in April 2019, raising an additional $15 million with tokens sold at $0.15 each. The final private sale was in October 2020, raising a total of $10.9 million with a mix of $0.15 and $0.25 for the token price.
Mina held an ICO through CoinList on April 13, 2021, raising $48,150,000 in a matter of hours. Tokens were sold at $0.25 and 28% of the total token supply was sold off. There was a minimum purchase of 200 MINA and a maximum purchase of 4,000 MINA implemented.
MINA tokens were first listed and traded on exchanges on May 31, 2021 and opened at a price of $9.90, but with the entire cryptocurrency market declining at the time the price has retreated significantly and sits at $4.88 as of June 3, 2021. That said, after hitting a low of $2.76 the price has been recovering steadily, and the token price does appear to be stable.
Mina Protocol Investors
As you might expect given the three private funding rounds there are a large number of significant investors in the Mina Protocol. That in itself gives some strength to the potential future returns of the token.
Among these investors are famous serial entrepreneur and investor Naval Ravikant, Coinbase board member Fred Ehrsam, Andrew Keys of ConsenSys Capital and Charlie Noyes of Paradigm. Further, the organized funds supporting the endeavor are MetaStable Capital, Polychain Capital, Multicoin Capital amongst others.
The project also has the support of a number of high-profile advisors, including Luke Youngblood, the founder and CEO of Blockscale and Jill Carlson, the co-founder of the Open Money Initiative.
The Mina Protocol is using a unique approach to solve a number of blockchain problems, including bloated blockchain data, scalability, and increasing centralization.
All of these issues can occur on any blockchain, but they seem to be particularly troublesome for successful blockchains, where the increased usage causes total blockchain data to rise substantially, leading to fewer node operators, and too much data.
With the unique succinct blockchain approach being taken by the Mina Protocol the integrity and security of the blockchain can be maintained without compromising on scalability and decentralization.
While the mainnet has just launched and the adoption of the protocol remains low now, in the longer-term the project has a chance to become one of the major transactional blockchain platforms.
Also of concern is the drop in token price immediately following its release, but the recovery and steady rise since is promising enough to still recommend MINA as a long-term holding for those with a more aggressive investing mindset.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.