Varys Capital is pleased to announce an investment in Mintlayer’s seed round. Mintlayer’s mission is to provide access to decentralized finance (DeFi) in an accessible, user-friendly, and flexible manner.
Digital assets represent a rebellion against the ever-decreasing value of fiat currency. Even under prime economic conditions, no bank will pay enough interest in a savings account to match the loss of value from the average 2% yearly effects of inflation. In response, digital asset chains if they so choose can be structured to mint tokens to have finite and knowable supply if they so choose, as is the case of Bitcoin. The meteoric rise of Bitcoin and the assets that followed such as Ethereum clearly demonstrated the level of the movement – however, its popularity has engendered growing pains that cannot be resolved directly through on-chain modifications.
For example, concerns over the centralization of digital assets continue to grow, and with centralization comes the possibility of government over-regulation and interference. In March of 2021, the countries of Nigeria and Turkey both clamped down on the purchase of digital assets using their respective currencies; though Turkey has since rescinded their ban. Similarly, in the United States, the owner of Bitfinex and Tether was directed to pay a $18.5 million fine to settle charges that it commingled funds. The more roadblocks that government agencies put up, the more decentralized transactions become necessary.
Mintlayer’s decentralization and tokenization solve both these concerns. The trade of tokens pegged to native assets enables transactions to occur off their native chains, avoiding congestion and fees while still retaining their value. This also allows assets to move without being subject to KYC/AML, unless the token issuer themselves wishes it, in which case such a stipulation can be set with access control list (ACL) rules. Decentralized markets such as Mintlayer will put traders back in the driver’s seat without being subject to the mechanical limitations surrounding on-chain transactions, with the goal of preserving the value and use case of Ethereum.
As it is its own chain, Mintlayer also has to take security seriously. Mintlayer’s DSA (Dynamic Slot Allocation) combines the best of both the Proof-of-Work and Proof-of-Stake algorithms. Mintlayer’s checkpointing system acts as an escape hatch against potential 51% attacks, and with random stakers being chosen to participate in the chain’s maintenance, everyone potentially has a chance of being chosen to participate in the chain’s maintenance, depending on how much they stake.
Decentralized finance is the way of the future for digital assets, but many exchanges do not provide convenient user experiences, and the learning curve can be steep. Mintlayer is not built for hyper-fast exchanges, but rather for buying and holding for investors and casual traders, low-frequency professional trades, public offers of companies or individuals, settlements between services, and exchanges based on bilateral agreements. Mintlayer generally serves the same use case as Ethereum, but is also built to resolve the drawbacks that have arisen, working around the problems of high fees, the necessity of technical expertise, and potential concerns of systemic failure due to the coin’s decentralization.
Liquidity is one of the most important facets of an exchange, and Mintlayer provides incentives to market players to increase liquidity on the platform. When users buy assets on the exchange, they pay a premium over the same trade that would have been done on a native chain. However, those buyers get to maintain privacy, are not subject to KYC/AML procedures, or trust a third-party custodian. Additionally, liquidity providers allow other users to find matches for their orders immediately, who can speculate by leveraging that premium price. The more liquidity available on the platform, the better the user experience, and the more trust that users will have in that experience.
If you have questions about our fund or would like to be sent investor documents, you can contact our investor relations department at [email protected].
