Minima ($wMINIMA) Pitch Outline (Spring 2024)

Brock O Nelson

Published in

Oregon Blockchain Group

16 min readJun 10, 2024

An investment thesis for $wMINIMA, written for Oregon Blockchain Group’s Venture Capital style investment fund.

By Brock Nelson

General Background on Protocol

Minima is a Decentralized Physical Infrastructure Network (DePIN) focused layer 1 blockchain protocol that runs on device agnostic infrastructure for everyday solutions. Its ultra-lean design runs on all IoT devices and allows for complete decentralization, providing use cases for enterprise, DePIN, developers, and individuals alike. Minima works to solve issues that arise when protocols make advancements in scale and security. It reinforces a core principle of blockchain technology: eliminating single points of failure. Many Web3 platforms today have compromised decentralization to increase scale and security. Infrastructures that rely on miners, centralized sequencers, or other groups to perform functions for monetary incentives are easier to attack and are susceptible to centralization risks. Minima effectively addresses the blockchain trilemma by attaining infinite scalability and enhanced security without compromising on decentralization.

Minima is a validatory network with four distinct layers. The first Layer is Minima which acts as the on-chain value transfer for the network. This is where all on-chain transactions are processed by all nodes on the network. After initiating transacting relationships, transactions are then executed off-chain on the L2 for faster and cheaper transactions. The next layer is Maxima, the off-chain information transportation layer that runs over Minima. Censorship resistant messaging applications can be built using Maxima and are required for sending data for L2 communication. The L2 is Omnia, and operates as the off-chain value transfer for the protocol. Omnia offers fast, cheap, and scalable transactions through bi-directional payment channels using ELTOO. ELTOO is similar to but more advanced than Bitcoin’s Lightning Network. Users perform transactions off-chain on Omnia after setting up their transacting relationship on Minima. Through ELTOO and Minima’s scripting language, Omnia has essentially unlimited transactions per second. The fourth and final layer is MiniDapps. These native Dapps utilize Minima’s value transfer, Maxima’s information transfer, and Omnia’s unlimited TPS to be truly decentralized.

Macro Factors Impacting Protocol

Minima is positioned at the intersection of several key macroeconomic trends that are poised to significantly impact technological interaction in the coming years. The emergence of DePIN blockchain protocols signifies a shift towards distributed ownership and management of physical infrastructure. By leveraging economic incentives to coordinate physical resources, these networks decentralize physical infrastructure networks currently dominated by large corporations. Centralized entities service provisions at inflated rates for users, making things like 5G, energy grids, transportation, and telecommunication expensive and inefficient. This power disparity suppresses competition and innovation. DePIN inserts itself as a way to allow communities to participate in the operation of physical infrastructure. Network participants have the ability to participate in the development of real-world infrastructure through crowd sourcing and distributing resources. Powered by cryptocurrency, these networks build reward-based systems for crowd-sourced physical infrastructure services. DePIN is revolutionizing cloud storage/server networks, energy networks, sensor networks, wireless networks, the health industry, and more. Through DePIN, competition and innovation is elevated, helping to lower the price users pay for physical infrastructure.

In the coming years, billions of devices are projected to connect to the internet. Blockchain can be valuable in securing communication and data exchange among these devices. DePIN protocols are well-positioned to address this growing need with their secure and scalable infrastructure. They can facilitate secure data exchange between devices, fostering the development of a truly interconnected and dependable IoT ecosystem. Additionally, user concerns regarding data ownership and privacy are intensifying. As the volume of data collected by mobile devices continues to explode, there is a growing need for users to be able to control their data through a secure P2P network.

DePIN provides value for users of all devices, including electric vehicles. The transition towards electric vehicles has accelerated as environmental concerns and government regulations continue to increase. This shift requires robust and efficient charging infrastructure. DePIN protocols decentralize EV charging through P2P energy trading, allowing users to both monetize charging stations and utilize a decentralized charging grid. This is both energy efficient and lowers charging costs, creating a more sustainable energy ecosystem.

The Team

There are four doxxed team members on Minima’s website and 27 associated members listed on linkedin. CEO and Co-Founder Hugo Feiler has over 20 years of experience as a CEO and Managing Director in Marketing Communications for Tech, Automotive and telecoms. Hugo previously held prevalent roles of Co-Founder of Alpha Century, Managing Director of Grey London, and General Manager at Sony Europe. He co-founded Minima in 2019 with CTO Paddy Cerri, a full-stack coder who has been programming since he was nine years old. Paddy has worked in almost every computer industry, and most recently worked as a full-stack programmer contracting to the highest bidder. Paddy first immersed himself in Web3 in 2012 by running a Bitcoin mining rig on his home computer. He quickly became disillusioned with mining networks because of their competitive nature, and wanted to remove the need for users to rely on others for network participation. He concludes that complete decentralization is only possible if everyone participates as an equal to process and validate network transactions. Subsequently, Paddy and Hugo teamed up to create Minima, a network small enough for everyone to run a complete node on their mobile device.

CBO Richard Brown focuses on the convergence of AI, IoT, and blockchain. He Co-Founded Cna Soft in 2008, winning 1st prize for the best emerging technology at the UK ICT awards in 2010. He also Co-Founded Optilyx in 2021, an AI powered optimization engine for complex problems. Luke Edwards is another important member of the Minima team. As Head of Communications, Luke leads an international team of 15 to promote the brand and engage with Minima’s community of Nodes. He has over 10 years of experience working in community management and digital marketing. With industry-leading partners like Volvo, Worldline, and CEVT, Minima has an experienced team with lots of resources.

General Auditing Background for Protocol

Minima was audited by Hacken on December 1st, 2023. Hacken is a smart contract that has previously audited successful projects like Binance, WhiteBIT, Radix, and DAO maker. The audit covered all critical parts of including Consensus, VM, Transactions, and P2P among other features. Minima received a 6.5 out of 10 on code quality with minimal flaws including poor test coverage. However, document quality, architecture quality, and security all received very high scores. With many critical issues noted, Minima received an overall audit score of 10/10.

Specific on What Protocol Does

Like Bitcoin and Litecoin, Minima utilizes the UTxO (Unspent Transaction Output) model. In this model, a Transaction Output refers to a specific amount of Minima sent in a transaction, and is identifiable through a coin ID. Transaction Outputs must be added to a TxPoW unit before it can be posted to the network. TxPoW units are the core building blocks of Minima and consist of transaction outputs and other essential data. A little bit of ‘work’ must be done for the TxPoW unit to be added to the network as either a block or a basic TxPoW unit. Maxima enables users to do this work before sending a transaction if proof of work is displayed when the transaction is initiated. The basic TxPoW unit’s purpose is to display unconfirmed transactions across the network, further establishing that blocks are created by chance. As more transactions are sent, the network becomes more secure from accumulating PoW. If users are not sending transactions, they still help to secure Minima through the protocol’s pulse network. Every ten minutes, each Minima node creates a PING message with a TxPoW transaction that includes current block details, basic TxPoW units in the mempool, health and status of the node, and leaves the transaction blank. Ten seconds of work is performed to the PING message that is then sent to all other nodes. This synchronizes peer data by sharing the current mempool, shows that respective nodes are functioning, and adds security to the network. The entire pulse network is conducted off-chain, sending pulse messages to only immediate peers before a block is forwarded to the rest of the network.

Minima is designed to be resource-efficient enough that each user can run a complete node at all times. Minima is latin for tiny. At just 1 GB of data in size, the chain is small enough to run on any mobile device. In comparison, Bitcoin is 350 GB of data and ever-growing. The entire history of the chain is too long to store on a mobile device, so Minima must be constantly pruned or reduced in size. To keep track of tokens that were created in blocks that have been pruned, users must store coin proofs on the MMR database. Coins are stored as a leaf node in a tree structure. A proof path can be traced from the coin to a peak of the tree to prove the existence of the coin even if the block was pruned. Each user keeps the parts of the MMR tree they need to create proofs for their coins, including the peaks and root of the tree to validate coin proofs presented by other users. This greatly reduces storage requirements as just a fraction of the data in the network is required to be downloaded. When a user wants to spend their coins, they must provide a valid proof that the coins are unspent. All other nodes in the network have the ability to verify the proof through calculating if the root hash and peaks of the MMR tree from the proof match their own peak and root hash values.

To enhance protocol security, decentralization, and scalability, Minima utilizes a “HashCash and Burn” method. First introduced by Adam Backs, HashCash is a weaponized version of PoW that acts as defense against Denial-of-Service (DoS) to prevent email spam. It utilizes a distributed PoW model that solves traditional PoW’s centralization risks prevalent from relying on a small group of miners (i.e. 51% attack). For example, Bitcoin incentivizes miners to continue increasing computing power to increase economies of scale and earn greater fees. This inevitably leads to network reliance on large centralized nodes. Through this structure, one set of middle men that blockchain tries to avoid, banks, are swapped for a new set of middle men, miners. Distributed PoW does not incentivize mining, but instead requires users to do a small amount of ‘work’ (about 1 second) before a transaction can be posted to the network. Since each user runs a complete node and each node does only the work required to post their own transaction, each user acts as a complete and equal member. Effectively, the blockchain is completely decentralized and does not rely on a condensed group to execute functions. This also helps secure the protocol from DoS attacks as it would require a single machine on the internet to do millions of seconds of work to send millions of spam messages — an impossible task. However, if the network is under threat of a Distributed DoS attack, 50,000 mobile phones could send one million messages in just a few minutes.

To prevent Distributed DoS attacks on the L1 network, Minima requires a fee for transactions to be posted. Fees on Minima are burned. The burn is a self-regulating system that increases during heavy traffic or spam periods, and decreases when congestion is manageable. Thanks to the Burn, one million messages require one million fee payments, making the attack unsustainable. The Burn in Minima serves many purposes beyond preventing DDoS attacks. It has a deflationary effect on the $MINIMA token by reducing the circulating supply, making the remaining coins more valuable. This provides a strong incentive for users to process transactions. The Burn also acts as a scaling mechanism to order transactions and regulate traffic on-chain. Similar to fee models on blockchains like Ethereum and Bitcoin, the burn selects which unconfirmed transactions will be added to a block. If a transaction has a higher burn amount, it is more likely to be added to a block.

Why the Protocol Offering Matters to Consumers

Consumers benefit from Minima’s decentralized, scalable, secure, and ultra-lean blockchain that powers digital infrastructure on all IoT devices. Unlike PoW mechanisms which rely on condensed groups of miners who need specialized mining equipment, each user on Minima runs a full node. Users are not incentivized to mine, so each user is only contributing the amount of power they need to process transactions and secure the protocol. This creates energy efficiency and complete decentralization. Minima offers vast benefits for enterprises, with the ability to deploy a large number of nodes, transfer tokens and data between any set of nodes, and prove the value of a project before scaling. This reduces infrastructure costs, utilizing custom token use cases. Developers using Minima benefit in a multitude of ways, including easy access and ability to launch testnets and MiniDapps, instant token and NFT minting, development Minima and non-Minima based applications through the MiniDapp system, and more.

Minima is built for DePIN. The main value to users will come from Minima’s ability to connect any mobile or IoT device to the blockchain network and run solutions. Through this technology, automotive vehicles can engage in V2V, V2X, and P2P communication. This has large use cases for instantaneous rental car payments, parking payments, and EV charging. Public and private EV charging points are facilitated by Minima through the generation and transfer of tokens over a P2P network. EV users benefit from having a range of energy providers to choose from, and private chargepoint owners have the opportunity to earn income. Minima’s Network can also be utilized by vehicles to facilitate quick information transfer. For example, Motorsport vehicles can use this infrastructure to relay fast and accurate statistics to racing teams and fans.

All Minima users benefit from having access to a large, decentralized P2P network. Through Minima, users no longer have to rely on third parties. Running a full node on Bitcoin requires advanced CS knowledge and access to expensive, cutting-edge technology. To run a node on Minima, users only require a mobile device. One industry that can benefit greatly from Minima’s P2P network is telecommunications. With Minima as a tokenization solution and each individual running a node on their device, Minima creates a direct transactional link between telecommuting and customers. Mobile phone companies already integrate with Web3 by offering MiniDapp downloads like wallets and exchanges. Minima sees a future where mobile phone companies natively incorporate the Minima blockchain on their devices. This could be used to facilitate event ticket transfers and validations, access control, decentralized ID, and more.

Protocol Versus Competitors Chart

Protocol Go To Market Strategy Versus Competitors

Minima’s strategy is to empower users for their loyalty. By reducing barriers of entry, completely decentralizing the network, and offering a unique array of IoT use cases including V2V, V2X, and P2P communication, Minima encourages and rewards widespread adoption. This democratized approach ensures that the network’s growth is driven by the users themselves, fostering a strong and loyal community. Minima’s most distinctive advantage is its ability to run on any IoT device or mobile phone, which its competitors are unable to do. Running a full node on a traditional PoW network requires significant technical knowledge and costly equipment. Minima eliminates these barriers by enabling anyone with a smartphone to participate fully and equally in the network to facilitate broader adoption and engagement across a diverse user base. Unlike models that rely on miners or centralized sequencers, Minima’s design avoids single points of failure by distributing the workload evenly across all nodes, further enhancing the network’s resilience and security.

While traditional PoW networks like Bitcoin consume vast amounts of energy, Minima is energy-efficient and environmentally friendly. By requiring each user to contribute only the computational power needed to process their transactions, Minima ensures a sustainable and cost-effective operation. This efficiency is increasingly important as concerns over the environmental impact of blockchain technologies grow. Minima leverages its strategic partnerships and industry collaborations to enhance its market presence. Collaborations with prominent companies such as Volvo, Worldline, and CEVT showcase Minima’s potential to integrate into existing infrastructures and industries, providing real-world use cases and driving enterprise adoption.

By allowing anyone with a mobile device to participate in its network, Minima democratizes blockchain technology and fosters a robust, user-driven ecosystem. This approach not only ensures rapid adoption and scalability but also aligns with the growing demand for sustainable and decentralized IoT solutions.

How Token Extracts Value

Minima is powered by the native $MINIMA token which serves as the foundation for transactions, smart contracts, and operations within the ecosystem. $MINIMA cannot be traded directly on external exchanges due to its unique structure. $WMINIMA is an ERC-20 token minted on the Ethereum blockchain and represents a corresponding amount of $MINIMA. This gives users additional liquidity and accessibility, allowing them to participate in DeFi ecosystems and trade on Ethereum-based platforms. The separation of each distinct Minima layer allows for speedy, cheap, and scalable transactions. The token extracts value through token creation, utility use cases, value storage, and network effects.

Tokens can be created on Minima by “coloring” an amount of minima. To color a token, users take a fractional amount of Minima and assign it a unique and individual Token ID. This process essentially “colors” the fractionalized $Minima to distinguish it as an individual token. Once created, tokens can be used in place of $MINIMA for various transactions within the network. These transactions include regular transfers, smart contracts, and more. Token transactions do not increase storage requirements and are stored in the MMR (Merkle Mountain Range) Proof Database. Depending on the specific token, it can represent ownership in a project, access to certain features, or even serve as a medium of exchange within MiniDapps. Integration with MiniDapps like Maximize give users the opportunity to stake tokens for rewards. Minima’s burn mechanism increases demand for the token and creates scarcity. Tokens within a thriving ecosystem benefit from network effects that lead to positive feedback loops (the DePin flywheel), where increased adoption attracts more users, further enhancing the token’s value.

Tokenomics/Vesting Schedule

Upon vesting completion, 87.5% of total supply will be $MINIMA with the remaining 12.5% in the form of $WMINIMA. There was a total circulating supply of 218,500,000 at TGE (98,100,000 $WMINIMA). $WMINIMA supply was completely unlocked after 12 months and $MINIMA will be vested for 39 months until reaching a max circulating supply of 1B tokens. The max circulating supply will slowly decrease due to Minima’s burn mechanism. The team & advisors are experiencing a 3 month release cliff followed by a 36 month linear vesting schedule. All funding rounds will follow a similar release schedule but with 25–50% of tokens released at TGE.

16% of all tokens will be allocated to public sale (6% public presale, 10% treasury) to support, maintain, and improve Minima, with the aim to keep the network completely decentralized. This supply was unavailable during TGE and will be distributed over a 10-year period. 12% of supply went to node incentives for an invite program, early node runners, and users who continue to run a node six months after TGE. This token supply was 100% available at TGE. Finally, 23% of Minima’s total supply will go to its loyalty program & grants which will be distributed over a 10-year period. The loyalty program has technically ended, but users can earn yield on native Minima tokens through the MiniDapp Maximize. Yield is paid to users in native Minima who lock up holdings for a set duration of time to encourage consistent and long-term node running while reducing the total circulating supply for coins. Grants are reserved for novel use cases provided by developers and entrepreneurs to help the network grow.

Modeling/Ratio Analysis

Minima’s decentralization and security comes from its large number of nodes. As users can run a node on any mobile device, and each user is an equal and active participant, Minima does not rely on smaller sects of large nodes. In an interview in 2021, Minima’s CEO said that they strive to reach 1,000,000 validating nodes in the next few years. In comparison, Bitcoin has approximately 18,000 nodes, and Ethereum has over 10,000 nodes. As of November 2022, Minima scaled to more than 400,000 full nodes in over 187 countries while still in testnet.

Additionally, $WMINIMA is deflationary due to Minima’s burn mechanism and its capped supply. There will be no future $WMINIMA token releases which should help drive buy pressure and increase token price.

Road Map

After launching its testnet in 2021, Minima began token allocation in March of 2023. There is no roadmap outlined besides the token vesting schedule that will be complete in June of 2026. Minima’s robust tokenomic and vesting documentation gives us a strong reason to believe that the outlined vesting schedule will be executed as promised. The Minima network is set, now developers must continue to build MiniDapps to move protocol use cases forward.

Investment Thesis

Minima emerges as a strong contender in the DePIN space, offering unique solutions for decentralized and scalable blockchain infrastructure on all IoT and mobile devices. Minima tackles the scalability, security, and decentralization challenges faced by traditional blockchains with its ultra-lean design, promoting widespread participation and eliminating reliance on centralized entities. It positions itself at the forefront of the DePIN revolution, facilitating distributed ownership and management of physical infrastructure. Token creation, MiniDapp use cases, staking rewards, and a capped supply with deflationary tokenomics contribute to $MINIMA and $WMINIMA’s value proposition.

Minima boasts a decentralized network with over 400,000 nodes already in testnet, surpassing established protocols like Bitcoin, Ethereum, and leading DePin protocols like Helium. While the testnet and mainnet launch has been successful, widespread adoption is yet to be achieved. Overall, Minima presents a compelling investment opportunity with its innovative approach to blockchain infrastructure for IoT devices. Its ability to achieve complete decentralization, coupled with its infinitely scalable and secure infrastructure, positions Minima as a leader in the DePIN ecosystem. Its experienced team, strategic partnerships, and network effects position Minima for significant growth. As the demand for decentralized and energy-efficient solutions grows, $WMINIMA stands out as a promising asset in the evolving blockchain landscape.

Fund Recommendation