Introduction
This paper serves as a guide to understanding the value capture journey of Minima, the Embedded Blockchain. Herewith, we cover Minima’s Economic Eras, our bold goals, and most of all the protocol’s innovative design principles which include the purposeful absence of block rewards, a novel transaction-based governance mechanism and a form factor that makes virality much simpler, all of which contribute to the protocol’s long term resilience, agility, and embedded utility as a method of storing and building value.
Unlike many other chains which use complicated token flywheel mechanisms and artificial restrictions on supply / demand (some might call ponzinomics), Minima’s value proposition is much cleaner, relating directly to its potential for superior resilience, usability and accessibility. The path to a better appreciation of this value proposition requires both an understanding of the protocol’s underlying design principles, a timeline of how we expect certain conditions on the network to change (Minima’s Economic Eras) as well as an understanding of Minima in its final form, a system-on-chip (SoC).
Once arrived upon, Minima’s value proposition can never be unseen.
Core Value Drivers
Minima’s Core Design Principles
Building value within a robust, decentralized system requires key design principles that ensure accelerated network growth, security, and scalability.
Minima’s core design principle was to identify and exclude any and all centralization sinks (compromises that often drive networks towards centralization) whilst making decentralization easier than ever before. These principles help eliminate many of the attack vectors linked back to cooperation, coercion or sybil. Minima's commitment to removing centralization sinks and enhancing network resilience positions it as a leading choice for those seeking a robust and useful store-of-value in the digital age. Why do we feel resilience is the metric to be measured by? By way of a simple example, imagine two bank vaults, one with an oak door and one with a carbon steel door. Behind which of these vault doors would you store your wealth? When it’s explained like this the answer seems very simple. In time, wealth should naturally gravitate towards the most secure option.
Principle 1: Simplicity + Virality -> Ubiquity
The viral scaling of Minima to billions of full nodes is our ultimate goal. Removing any and all financial/technical barriers is the key to achieving this goal by encouraging broader node participation. From 1 billion coins to 1 billion transactions and finally onwards to 1 billion nodes, this is our journey. 1 billion nodes is not just an ambitious goal but a tangible pathway to unparalleled decentralization.
In recent years, blockchain has become an industry of highly complex cryptographic primitives, securing bloated ledgers, often requiring expensive industrial-scale infrastructure and resources. But in an era of shrinking device form factors, how is this type of blockchain supposed to fit in? Enter Minima. A blockchain built with shrinking form factors in mind, lightweight enough to run, in full, inside any device.
There is zero cost associated with buying a Minima node, zero token staking required for consensus-based staking and zero requirement for hydroelectric dam-scale power! This degree of barrier-free accessibility ensures that everyone can be a player Anyone can join the network as a structural validator without needing specialized hardware or significant financial investment.
Unparalleled decentralization can only be achieved with extreme accessibility which will drive our long-term value. We believe that future-proof, should be seen as a strong indicator of long-term value.
Principle 2: Commodity Money
Minima's use of Proof of Work aligns with the concept of commodity money, where the network currency is directly linked to an objective expenditure of energy. Analogous to the inherent value found in traditional commodities like gold, PoW requires energy expenditure for transaction validation, Minima can therefore be understood as a form of digital commodity money (as with Bitcoin).
Minima's consensus mechanism, known as Transaction Proof of Work (Tx-PoW), diverges from the status quo competitive PoW model by fostering a collaborative rather than competitive environment. In Tx-PoW, each transaction includes a small amount of proof of work, which collectively contributes to the overall security of the network. This design ensures that users only need to perform the minimum necessary work to get their transactions on-chain, making node running more efficient, scalable and accessible. By distributing the work across all participants, Minima reduces the risk of centralization that arises from the competition to accumulate mining power. Tx-PoW, combined with its emphasis on minimum work, enhances decentralization now and into the future.
Principle 3: Now & Forever
The Minima protocol is finished, no future hard forks are required or will be undertaken. Minima can already become part of a stack of global protocols that provide developers with a reliable, predictable tool for value and information transfer. However, Minima must remain flexible enough for future problems whilst also standing the test of time in terms of its decentralization. So how can this be achieved?
Remove Block Rewards
Traditional blockchain systems incentivize miners to increase computational power in the hope of earning more block rewards. In time this drives a network towards centralization and increases vulnerability to attacks. Minima disrupts this cycle by removing block rewards, thus eliminating the incentive for participants to amass disproportionate control, whilst encouraging participation without the competitive or economic pressures.
Transaction-Based Governance
Minima employs a form of transaction-based governance known as The Magic Numbers, a small set of default parameters included within all transactions broadcast to the Minima network. These values can be adjusted by any user when they send a transaction, allowing the collective actions of ALL network participants to guide the protocol's evolution rather than by a small group of token holders or validators. The four customisable Magic Numbers are:
- The maximum size of a TxPoW unit in bytes.
- The maximum number of KISS VM operations in a TxPoW (script complexity).
- The maximum number of transactions per block.
- The target value for the hash of a TxPoW header, that must be met before for a TxPoW unit to be sent across the network.
Allowing the network’s evolution to be driven by the organic behaviour of its users and basing governance on real network activity, Minima avoids the pitfalls of token-based voting systems and maintains a truly decentralized decision-making process.
Post Quantum Cryptography
Minima’s choice to implement quantum-resistant cryptography from the get-go is just another example of Minima’s future-proof design principles. In spite of the additional blockspace burden resulting from the longer quantum-resistant signatures, this means Minima must be ready now for what comes next.
Principle 4: Hard Capped Supply
With zero block rewards and no other issuance mechanism, the entire 1 billion Minima supply was created at Genesis. Hard capped at 1 billion coins, each Minima coin is divisible into 44 decimal places, ensuring plenty of granularity for machine transactions of the future and a never-ending supply of coin fractions for tokenization. This fixed supply model supports a deflationary economic environment and enhances the store-of-value proposition of the Minima coin.
Crucially, Minima’s unique security model, grounded in Principle 1, removes the need for a budget to pay node operators or miners. Unlike traditional blockchain networks that rely on continuous token issuance to incentivize participants, Minima’s architecture is designed to achieve security and decentralization without such incentives. By eliminating block rewards and focusing on a collaborative Transaction Proof of Work (Tx-PoW) system, Minima ensures that network participants are motivated by the utility and intrinsic value of the network itself, rather than by external financial rewards. This approach not only simplifies the economic model but also significantly reduces the risk of centralization, fostering a more resilient and sustainable decentralized network.
The total supply of Minima can never be inflated since all transaction outputs from the first Genesis block are recorded in a hash-sum Merkle tree structure. The root of this tree structure contains cryptographic proof of the total sum of all transaction outputs i.e. the supply, and is kept and verified by all users in the network.
Principle 5: Free Transactions Drive Adoption
One of the most compelling aspects of the Minima network is the cost of transacting. Unlike traditional blockchain networks that rely on users to pay fees to miners to validate transactions and secure the network, Minima operates without paid miners. In the early era of Minima’s growth, before blocks become full, transactions only cost the user a small amount of compute power to propagate their transaction across the network. This translates to essentially free transactions, serving as a significant catalyst for growth of the ecosystem.
Principle 6: Deflationary Burn
As Minima continues to scale and the number of transactions increase, there will come a point when blocks begin to reach capacity. At this stage, Minima’s native Burn mechanism for DDoS protection and transaction prioritization comes into play. Nodes have the option to burn an arbitrary amount of Minima in order to prioritize their transactions over others, removing these burnt coins from the circulating supply permanently.
This transaction burning mechanism introduces a deflationary element to Minima's scarce, hard-capped supply story.
The Burn will be driven by user demand and network congestion. As the network matures and usage patterns evolve, the amount of Minima burned may vary widely, influenced by transaction volumes, user behavior, and the overall growth of the ecosystem. It is predicted that Enterprises will utilize the Minima system on chip (SoC) at scale, placing nodes into the hands of consumers. Consumers will delight at the utility Minima unlocks for them, in turn generating more Enterprise demand for Minima SoC. This dynamic creates a virtuous circle of ever increasing demand for Minima and a corresponding explosion in node count and Burn.
This deflationary aspect, coupled with Minima's resilience via decentralization, hard-capped supply and utility ensures a unique economic model that can adapt to the needs of its users while driving long-term value accrual.
The Economic Eras of Minima
With these 6 design principles in place there will be three major economic eras throughout Minima’s history. During each, the network will experience drastically different levels of activity driven by the costs associated with transacting on Minima’s Layer 1.
Era 1. MERCURY - Zero Burn - Free & Easy. Growth and community. Continues until the current blockspace is full.
Era 2. VENUS - Volatile Burn - The Burn begins. Rates fluctuate wildly and continue to rise. Seeking stability we see growth in Layer 2 activity (sidechains and statechains).
Era 3. EARTH - Stable Burn - Democracy awakens as coordinated use of the Magic Numbers cools off the Burn by increasing block space. Continued growth of L2s.
The Economic Eras of Minima will be volatile by nature, but a rewarding time for all involved. Mercury is the first stop in this evolution, a time of free transactions for all. A time of great growth, of new communities, of solid foundations. But good things can’t last forever, increasing traffic leads each of Minima’s blocks to fill to capacity and so The Burn must begin. The advent of The Burn marks the end of Mercury, the free transactions era, and the beginning of Venus, a more volatile period where the ecosystem must learn to adapt to this new fee for getting on-chain. Projects established during Mercury's free and easy times will have gained a huge advantage and continue to grow and mostly dominate the ecosystem. Whilst some failed to adapt and burn out. The Earth era is reached when network participants finally coordinate the use of Minima’s Magic Numbers parameters to increase block space/script space, reducing traffic and The Burn rate to previous levels. Traffic and Magic Number parameter changes will become more closely monitored and coordinated by the community.
Meanwhile, the growth of Omnia (Minima’s Layer 2 solution - an implementation of Lightning’s ELTOO network) and other side chains / state chains will explode, shifting much of the L1 traffic to L2. But Minima’s L1 is unique and will not lose any security, because all layers on Minima must contribute compute power in order to transact. Any traffic on Omnia must also run a Minima Node. When messages are sent over Omnia, a tiny burst of Tx-PoW that secures Minima’s Layer 1 is required. So growth in Minima's L2 traffic continues to secure the L1. So regardless of where traffic concentrates itself, Minima will never run short of PoW.
Conclusion
The Minima protocol’s base layer asset, MINIMA, is a future-proof, commodity money built into a network capable of achieving extreme resilience. Extreme resilience is the holy grail of blockchain, helping a network navigate any and all potential threats related to censorship, takedowns, DDOS and more.
MINIMA’s potential as an embedded, deflationary, store-of-value stems from the extreme levels of decentralization the network achieves at scale. The capacity to reach unprecedented decentralization at scale is augmented by its inherent virality and ease of use. This is Minima’s version of flywheel economics. A decentralization flywheel.
Minima is the easiest blockchain to share and install, a succinct node footpoint, shareable miniDapps and decentralized DappStore allow anyone to build applications that leverage all that the Minima network has to offer. This inherent openness and accessibility will drive the network to extremes of decentralization which fortify it against all kinds of attacks, preserving the integrity of the chain and the longevity of value capture.
Furthermore, as the ONLY blockchain in the world that can run in full as a System-on-Chip (SoC), this will be the first-ever instance of chain-on-chip technology. This will allow the embedding of Minima inside any device or machine. The success of this silicon story will exponentially speed up the widespread adoption of Minima as Enterprises begin embedding blockchain SoC at the production line.