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Post / 2021-02-18 / Mina Foundation

Mina Token Distribution and Supply

This post intends to help the Mina community understand how the MINA token will be distributed at the launch of Mina’s mainnet and throughout its lifecycle.

Last Updated 05.26.2021 (see changelog at end of article)

Mina is the world’s lightest blockchain. It is a public and decentralized blockchain that is open for anyone in the world to participate in actively or passively. Individuals or companies can help increase the security of the network by becoming nodes or block producers, or they can help lower the cost of transactions by becoming SNARK producers, or they can be both. 

The MINA token is the native currency of the Mina blockchain, and is required to participate in block production and purchasing of SNARK proofs, via the Snarketplace

This post intends to help the Mina community understand how the MINA token will be distributed at the launch of Mina’s mainnet and throughout its lifecycle. 

Highlights

  • MINA is an inflationary currency with no supply cap. All tokenholders can stake or delegate to receive their proportional fraction of the inflation, with no lockup or bonding required to do so.
  • There will be up to a total of 1 billion MINA tokens (excluding future block rewards) distributed at launch, which will fully unlock over 8 years. (“Initial Distribution”).
  • During the first year of mainnet, accounts with lock-ups will receive block rewards to target an annual inflation of 12%. Inflation rate will decrease over time, eventually reaching 7% at steady-state (see “Inflation” for more details).
  • During the first 15 months of mainnet, unlocked accounts will receive up to double the block rewards that locked accounts receive (see “Supercharged Rewards” for more details). This incentivizes participants new to the network and unlocked tokenholders to stay loyal to the ecosystem.
  • An 8-year chart of the entire distribution schedule is available here:

Definitions

Genesis Block: The first block of the Mina blockchain. Includes all the MINA tokens that are a part of the Initial Supply. Tokens are deposited to the Mina addresses of their intended recipients as of this block. 

MINA token: The native currency of the Mina blockchain. MINA tokens are required to stake and produce blocks on the Mina blockchain. They’re also the exclusive currency of the Snarketplace, which is used by block producers and SNARK producers to buy and sell SNARK proofs. Each MINA token is divisible up to 9 decimal places. 

Mina Foundation (MF): Mina Foundation is a non-profit organization that is domiciled in the Cayman Islands. It is the steward of Mina, and owns and manages all of its tangible and intangible assets. More on the Mina Foundation and its board can be found here.

O(1) Labs: O(1) Labs is a San Francisco based startup that incubated Mina. O(1) Labs’ mission is to use cryptography and cryptocurrency to build computing systems that put people back in control of their digital lives. It continues to contribute to the project via code contributions and operational support. More on O(1) Labs can be found here.

Staking and Delegating: Mina is a Proof-of-Stake based blockchain. As such, the right to become a block producer on the network is earned by staking MINA tokens. Holders of MINA tokens can also choose to delegate their tokens to another block producer, for them to stake. As opposed to some other Proof-of-Stake based blockchains, staking in MINA doesn’t have slashing or bonding periods. More on Mina’s staking dynamics can be found here. Those interested can also read more about tokenomics simulations for various attack scenarios here.

Time-locked accounts, Lock-ups and Unlocking: Vast majority of tokens in the Initial Supply are subject to protocol enforced lock-ups. Tokens held by the Mina Foundation and O(1) Labs Endowments are subject to self-enforced lockups, and both entities are committed to adhere to the unlock schedules in their respective sections below. Locked up tokens cannot be transferred out of their accounts, but can be staked or delegated. Accounts that enforce lock-up to tokens are called Time-locked accounts. By default, unlocking of lock-ups happens on a per-slot basis, but can be configured to occur periodically or via a cliff mechanism. As tokens unlock, they can be transferred to another account, or can be kept in the original account. If the owner of an account tries to transfer more tokens than unlocked, the transaction will fail. More about the unlock logic configurations can be found here.

Initial Distribution

The Initial Distribution MINA is up to 1 billion tokens. This number includes all of the categories of token recipients in the distribution schedule, except for block rewards, which are minted anew by the protocol with each block after its launch.

Inflation

MINA is an inflationary currency with no supply cap. This decision was made in order to incentivize a high level of staking participation in the early years of the protocol, which will increase the level of decentralization. Mina’s “Supercharged Rewards” (discussed in a later section) also achieve this objective. Since staking is open to all tokens on the protocol (without the risk of bonding or slashing), any token holder is able to avoid getting diluted by staking or delegating.

Ongoing inflation is generated via block rewards, which get paid to block producers via each successful block’s coinbase transaction. The Mina Foundation has proposed the below block reward schedule and inflation targets for the minting of MINA tokens beyond the Initial Distribution:

4.Block Reward Schedule and Inflation Targets

It should be noted that it is up to the Mina community to propose changes to any of the numbers above. If the majority agrees that the inflation schedule should be higher or lower, new targets can be adopted via hard forks.

1 At the mainnet launch of Mina, block rewards will be fixed per account to the target inflation rate. During the first few months, until dynamic rewards are introduced via a protocol update, inflation will be the referenced 12% if all 100% of tokens are staking, but proportionally less if less are staking.

Initial Distribution Categories

5.Expected Allocation of Initial Distribution 02182021 6.Expected Circulating Supply 02182021-01

1) Community Distribution (42.3% of Initial Distribution)

7.Community Distribution Full PieChart 8.Community Distribution 02182021-01

1.a) Pre-Mainnet Genesis Members (4.4% of Initial Distribution)

9.Community Distribution Pre-Mainnet GFM PieChart 10.Community Distribution Pre-Mainnet GFM 02182021-01

As the world’s lightest blockchain, powered by participants, Mina is first and foremost a community-owned project. Starting with the first open source release of its code, and accelerated by the launch of its public testnet in Q3 2019, Mina has been supported and enriched by thousands of contributors. 

The most committed and qualified of these contributors have come together to form the Genesis Program. The Genesis Program prepares participants to become Mina’s first block producers and ensures high decentralization upon mainnet launch. As well as node operators, the Genesis Program is also made up of developers and community builders with a variety of skills and backgrounds. Their contributions include building tooling and apps, creating documentation, organizing community events, and reporting critical bugs. Over 59 countries are represented and our GFMs have over 1,500 years of collective coding experience.

Becoming a Genesis Founding Member is the highest honor in the Mina community. Genesis members are rewarded and given a responsibility via personal MINA token grants. Each Genesis member gets 66,000 MINA tokens delivered to them at launch. These grants unlock over 4 years, with an initial cliff 1 year after Genesis Block. These grants are required to be staked, otherwise they are forfeited. In total, 4.3% of the Initial Distribution is allocated to 663 Genesis Members selected throughout Mina’s numerous testnets. 

1.b) Community Sale (7.5% of Initial Distribution)

11.Community Distribution Community Sale PieChart 12.Community Distribution Community Sale 02182021-01

The MF recognizes that one of the most efficient ways to decentralize the ownership of a public blockchain is via capital contributions. At a yet-to-be-announced future date, the MF may elect to conduct a token sale of 7.5% of the Initial Distribution to non-US persons only. This Community Sale will be held after mainnet is fully functional. Tokens purchased during the Community Sale by small-sized purchasers will be locked for 40 days, but will become fully unlocked afterwards, forming a super majority of the available liquidity on any market that may form around MINA tokens.

1.c) Project Grants (11.0% of Initial Distribution)

13.Community Distribution Project Grants PieChart 14.Community Distribution Project Grants 02182021-01

Perhaps the most important mandate of the MF is to involve a diverse and global set of contributors to improve, grow and contribute to the Mina Protocol. These projects will span a wide range, from protocol improvements to Snapps projects, and from operational contributions to community efforts. Project Grants will be under the control of the MF, and will unlock over 4 years. The MF will periodically report grants it has given out in a transparent manner.

1.d) Supercharged Rewards (4.6% of Initial Distribution)

15.Community Distribution Supercharged Rewards PieChart 16.Community Distribution Supercharged Rewards-01

Although a majority of the Initial Distribution unlocks over time, some portion does not. In order to foster a high staking ratio and orderly markets, the MF has decided to provide extra block rewards( i.e. Supercharged Rewards) to block producers that stake with unlocked tokens during the first 15 months after launch. Mechanically, the Mina Protocol will pay out extra block rewards via coinbase transactions, whenever a block is produced by an address that does not have any time-locked tokens. If a fully-unlocked address delegates to an address that has time-locked tokens, the address which delegated the tokens is still eligible for Supercharged Rewards. 

Supercharged Rewards will not exist at the Genesis Block, and will be minted by the protocol itself, according to the below ruleset. As a result, Supercharged Rewards are not a part of Initial Supply, but are a guaranteed part of Initial Distribution.

17.Supercharged Rewards Distribution Table-01 1: Inclusive of yield/inflation from Normal Block Rewards

1.e) Post-Mainnet Genesis Members (8.8% of Initial Distribution)

18.Community Distribution Post-Mainnet GFM PieChart 19.Community Distribution Post-Mainnet GFM 02182021-01

The Post-Mainnet Genesis Members distribution will not exist as of the Genesis Block. The MF has made the decision that because it consists of a material amount of MINA tokens that won’t be distributed for a while (see below), it is in the best interest of decentralization for the protocol to adopt the functionality required to mint and distribute these grants with buy-in from the entire community, via a hard fork. The MF anticipates being able to propose this upgrade to the community within 9 months of Mina’s mainnet.

Post-Mainnet Genesis is intended to be a continuation of the Pre-Mainnet Genesis Members. As such, its goals are to reward and prepare the most qualified members of the community to become active stakeholders of the protocol. All Genesis Founding Members (GFM) are fully AML/KYC’d and verified, and contribute to the project over months via technical or community work. The MF anticipates granting MINA tokens to community members over 4 years. The proposed grants would have the same unlock schedule as Pre-Mainnet Genesis grants—4 years with 1 year cliff.

1.f) SNARK Mining (6.0% of Initial Distribution)

20.Community Distribution SNARK mining PieChart 21.Community Distribution SNARK mining 02182021-01

A big part of Mina is SNARK production. In Mina, while block producers provide security for the network and allow it to reach consensus, SNARK producers keep the blockchain at a fixed size. Block producers need to work with SNARK producers to make sure every transaction gets SNARKed. More on this dynamic can be found here.

SNARK producers end up selling the SNARK proofs they produce to block producers. Although this incentivization is helpful to sustain some SNARK production capacity, there will be times where demand for SNARK proofs will surpass available supply. In order to ensure that the cost of transactions don’t get expensive, 3-6 months into mainnet, the MF intends to propose a scheme where SNARK producers are subsidized via a mechanism called SNARK mining. Each SNARK producer that produces a valid SNARK proof will get subsidized by the protocol itself, regardless of whether its proof is purchased by a block producer. Economically speaking, this will be similar to mining in Proof-of-Work chains, but will not have a say in consensus or securing the chain. 

SNARK mining won’t exist at mainnet launch, and is expected to be added at a hard fork 3–6 months after mainnet launch. The MF anticipates proposing SNARK mining goes on until 4 years after mainnet launch. MINA tokens distributed via SNARK mining will be minted fresh, and will not have any lockups associated with them. 

2) Mina Foundation Endowment (6.0% of Initial Distribution)

22.Mina Foundation Endowment Distribution PieChart 23.Mina Foundation Endowment Distribution 02182021-01

The Mina Foundation (MF) is a fully independent and non-profit steward of Mina, founded by a diverse group of industry leaders. It will be proposing the Genesis Block and coordinating the initiation of first block producers on the network. Beyond the network’s launch, the MF will carry out its mission to create and maintain a vibrant, decentralized network and currency powered by participants by supporting initiatives to decentralize and improve the protocol via grants and open-source projects. More on the MF’s mandate and target activities can be found here.

This endowment will allow the MF to operate independently and ensure the network and the MINA token operate smoothly throughout its lifecycle. In order to allow various strategies to be deployed at the launch of the network, 20% of the MF Endowment will be unlocked at launch. The remainder of the endowment will unlock on continuously over 3.5 years, starting 6 months after launch. The MF will separately disclose the full use of the endowment via reports released at its discretion.

3) O(1) Labs Endowment (7.5% of Initial Distribution)

24.O1Labs Endowment Distribution PieChart 25.O1Labs Endowment Distribution 02182021-01

O(1) Labs will continue to contribute to Mina, with a focus on developing tooling for Snapp developers. As such it is important that it can attract future talent with the right incentives, a big part of which is grants in MINA tokens. O(1) Labs Endowment enables O(1) Labs to grow its team and continue investing more into the Mina protocol. It unlocks over 4 years from mainnet launch.

4) Backers (20.5% of Initial Distribution)

26.Backers Distribution PieChart 27.Backers Distribution 02182021-01

Mina has been built over 3 years by a team of world class engineers, cryptographers and operators. Part of this talent today sits under O(1) Labs, LLC, a San Francisco based Delaware, USA partnership. In order to fund its operations, O(1) Labs, LLC has raised funding from a total of 46 well-known institutional and long-term oriented backers. A list of notable backers can be found on the project’s website. Per O(1) Labs, LLC’s constitutive documents, each unitholder in the LLC, including backers, will receive a pro-rata share of MINA tokens, as of the Genesis Block. In order to foster decentralization, O(1) Labs has picked its backers such that no single one holds more than 3.3% of the Initial Distribution, and only 7 have more than 1%. 

The total share of MINA tokens allocated to backers is 20.52% of the Initial Distribution. These tokens unlock over 18 months from launch, with no single Backer having unlocked their entire allocation at launch. In addition, all tokens allocated to Backers are fully locked until 40 days after the Community Sale, such that Backer tokens only receive the first tranche of their unlocked tokens once Community Sale tokens start unlocking.

Fundraising History

Throughout the past 3 years, O(1) Labs, LLC has raised funding at various implied prices per MINA token. A full fundraising history can be found below.

28.Backers Fundraising History Table-01 29.Backer Unlock Schedule 02182021-01

5) Core Contributors (23.6% of Initial Distribution)

30.Core Contributors Distribution PieChart 31.Core Contributors Distribution 02182021-01

Core contributors of Mina consist of O(1) Labs and its advisors. Founded in 2017 by Evan Shapiro and Izaak Meckler, O(1) Labs brings together a world class team of engineers, cryptographers and operators. This team of approximately 30 full-time employees has incubated Mina and been a core contributor to the protocol over 3 years. The O(1) Labs team will continue to be an important part of Mina, as they work to optimize the protocol and provide tooling for Snapp developers, and it is important that they are incentivized to remain a part of Mina over the long term. 

Each team member has grants made available to them, which vest over 4 years, with an initial cliff 1 year after their joining O(1) Labs. In addition to their vesting schedule, each team member has also agreed to an unlock schedule for their vested tokens that stretches out over 2 years from mainnet launch. 

6) Block Rewards

32.Block Rewards 02182021-01

Block rewards are awarded to all network participants who stake or delegate their tokens. These rewards are paid to stakers or delegators at the target rate described in the “Inflation” section above. 

Since these block rewards are available to everyone, and since all tokenholders are able to stake or delegate without the risk of slashing or bonding periods, we consider these block rewards to be an integral way of distributing tokens to Mina community members.

Initial Supply

33.Initial Supply Token Circulation Schedule 02182021-01

The subset of the Initial Distribution that is included in the Genesis Block is called the Initial Supply. The Initial Supply consists of the majority of categories described above. The subset of categories that will not be available in the Genesis Block are “Post-Mainnet Genesis Members”, “SNARK Mining”, “Supercharged Rewards”, and “Block Rewards”. 

In order to maximize decentralization, the Mina Foundation has decided not to include these categories in the Genesis Block, and instead these will be minted over time. In the case of “Post-Mainnet Genesis Rewards” and “Snark Mining”, the Mina Foundation will propose updates to the protocol such that if adopted by the Mina community via hard forks, the protocol will be able to mint and distribute such tokens to their intended recipients. In the case of “Supercharged Rewards” and “Block Rewards”, this logic is already included in the mainnet launch version of Mina, and “Supercharged Rewards” will start getting distributed from the Genesis Block onwards. More on the mechanics of each of these categories can be found in their respective sections under the Initial Distribution Categories section. 

All other categories of the Initial Distribution will be available and created as of the Genesis Block, and are collectively called the Initial Supply. The Initial Supply of MINA is 805,385,694 MINA tokens. Initial Supply includes the categories of “Mina Foundation Endowment”, “Backers”, “Pre-Mainnet Genesis Members”, “Core Contributors”, “O(1) Labs Endowment”, “Community Sale”, “Project Grants”, and “Testworld Rewards”. Recipients with allocations of tokens under each category will receive their balances to addresses they submit to the Mina Foundation prior to the minting of the Genesis Block. More on the mechanics of each category can be found in their respective sections above.

34.Initial Supply Zoom In 02182021-01

Circulating Supply vs Staking Supply

Circulating Supply is what is represented in all of the charts up until now. Due to the majority of MINA tokens being time-locked, the Circulating Supply of MINA starts off small, and increases over time. Circulating Supply increases in three ways: 1) When time-locked tokens are unlocked; 2) When block rewards are minted, creating new tokens; 3) When new distribution categories are proposed and adopted via hard forks.  

In contrast, Staking Supply represents all tokens that are in existence (both time-locked and unlocked). All MINA tokens that exist are eligible for staking, no matter their lock status. As a result, Staking Supply increases only with block rewards and other freshly minted tokens. 

It is also worth noting that the Mina Foundation Endowment and O(1) Labs Endowment tokens are all scheduled to be delegated to block producers run by community members. More info on this can be found here.

35.Staking Supply 02182021-01

Summary

Mina is the world’s lightest blockchain, powered by participants. Its use of zero-knowledge proofs and other cutting-edge technology allows users to always stay in control, no matter how large and powerful the blockchain becomes. And it enables powerful and novel Snapps use cases. Throughout its public testnets, it has grown to become one of the largest and most engaged communities in the crypto industry. With this post, the Mina Foundation has created a transparent resource to inform the community about the distribution of MINA tokens. 

MF plans to distribute additional information about topics included in this article as it gears up to launch Mina’s mainnet. We also invite block explorer developers to put together dashboards which compare the information shared with actual token movements on-chain. 

We’d also like to remind everyone that we’re only about to begin Day 1 of Mina. There’s many ways to get involved, so join us in our community hub and check out http://minaprotocol.com/community or http://minaprotocol.com/get-started to have your say in the project. 

Finally, if you detect any errors or inconsistencies with any of the data provided, please reach out to us on the #general channel on the Mina Discord. There’s tons of data and complex models behind the Mina distribution, so help us make it as accurate as possible!

 

Appendix: Changelog

05.26.2021

  • Clarified in the Highlights that Supercharged Rewards are “up to double” the usual block rewards during the first 15 months. Reflecting the fact that Supercharged Rewards are double usual block rewards in the first 5 months, and then a lower bonus rate in the subsequent months. See Supercharged Rewards heading for the full schedule.

03.23.2021

  • Updated number of Pre-Mainnet Genesis Members to 663 from 661
  • Updated number of tokens in Initial Supply to 805,385,694 from 805,121,694 to to reflect the increased number of Genesis Members
  • Amended share of Initial Distribution of “Pre Mainnet Genesis” to 4.4% (from 4.3%), and correspondingly the share of Post Mainnet Genesis to 8.8% (from 8.9%) to reflect the updated number of 663 Genesis Members
  • Corrected a small subset of Community tokens (Testworld Rewards, 439,000 tokens in total) from a 12 month unlock schedule to a 6 month schedule
  • Added language to clarify that tokens held by the Mina Foundation and O(1) Labs endowments are subject to self-enforced lockups
  • Added language to clarify that addresses with fully-unlocked tokens are still eligible for Supercharged rewards when delegating to an address that has time-locked tokens
  • Added link to the Mina Foundation’s delegation policy

In creating this guide, we have been guided by the level of detail and transparency other blockchain projects before us have shown with their own token distribution schedules. In particular, we would like to recognize the NEAR Foundation for putting together an exemplary guide, which inspired a good amount of the content and structure in this post.

Disclaimer: Information provided herein includes estimates as of the date of publication and their accuracy is not guaranteed. Neither O(1) Labs nor MF makes any representation that any data provided herein will remain unchanged when mainnet launches. Statements may be forward-looking and are not intended as guarantees of future performance.

About Mina Protocol

Mina Protocol is being incubated by O(1) Labs, the leader in zk-SNARKs and verifiable computation. Mina Protocol, the world’s lightest blockchain, provides a foundation for the decentralized digital economy (Web 3.0), by affording all participants fully P2P, permissionless access to the chain, from any device. By utilizing recursive zk-SNARKs, the Mina blockchain always stays the same size — about 20 kilobytes (the size of a few tweets). Recursive zk-SNARKs allow nodes to rapidly share and update proof of the correct blockchain state across the network. This breakthrough application of zk-SNARKs solves the issues of scalability and high barrier to entry for nodes that have plagued legacy blockchains to-date. By making it easier for nodes to participate, Mina improves decentralization and therefore security of the network. The Mina blockchain can be easily accessed from any device, including phones and browsers, and can be seamlessly integrated into new decentralized applications (dapps).

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