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MYST, migration and mainnet – what you need to know

By July 6, 2020 August 27th, 2020 No Comments

Update: 13/08/2020 – See the following blog post to see how our token migration and launch processes are changing.

 

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We are fast approaching the official launch of Mysterium Network. This will be the realisation of our founding whitepaper and the crowning of our world-first peer to peer VPN. 

In preparation, the network will undergo some big technical updates and transitions. This includes an upgrade of our native token MYST, which is a core component of Mysterium and which keeps the network sustainable, secure and permissionless.

Read our blog about our unofficial launch timeline and breakdown of how we’re taking Mysterium global. 

What is MYST?

MYST is a utility token (a type of cryptocurrency) at the heart of Mysterium Network. It acts like digital fuel, serving various functions and keeps the network humming along.

Transfer of value – MYST is used as the network’s native currency. If you’re using the VPN (consumer) you will pay using MYST. If you’re a node (provider of the VPN service) you will receive MYST. While additional tokens could be introduced in the future, this is the network’s reserve currency and standard for the time being. 

Identity registration – when you first sign up for the network, you will need a little MYST so you can receive and verify your unique identity. The registration is processed as a transaction, so it’s permanently “on-chain”. Once you receive your unique ID/address, you can start to receive and send payments. By committing a little financially, this proves you have skin in the game. It’s also designed to prevent lots of people signing up for free and creating spam accounts, which will help protect the network against DDoS attacks. 

Staking – nodes (providers) should stake MYST (lock it up as collateral) to prove they are even more committed to the network’s longevity and success (even more skin in the game). Staking is particularly necessary due to how our P2P payment infrastructure works (more on this in below sections). While nodes can start providing their service even with 0 tokens at stake, a stake of at least 12 MYST must eventually be committed. If the user doesn’t stake anything at first, the stake will be accumulated and collected automatically by the network over time as they provide ongoing value and continue to earn. The network will take 10% from each settled payment until the full 12 MYST is received.

Why use cryptocurrency?

Mysterium Network is a decentralised system, meaning its users can be located anywhere around the globe. These systems are also designed so that all users can be anonymous. As a censorship-resistant and anonymous virtual currency, cryptocurrency provides a way for all these participants to interact and trade with one another without trust and without third parties being involved (permissionless). 

While we could have used other (or even more popular) cryptocurrencies for payments within Mysterium, we needed an in-built protection mechanism for the network’s many different actors. MYST is not just used for payments – as a token unique to our system, it’s a representation of your active involvement and intention to participate within Mysterium Network. In this way, MYST enables more than just P2P payments. When network actors have skin in the game, they help increase the overall security of the network, protecting against various types of attacks. It also establishes a community around a purpose, so the network can grow and evolve with its token holders. 

This also gives us the flexibility to use MYST over several blockchains in the future (e.g. similar to Tether).

Hermes protocol, our P2P payments infrastructure

Mysterium Network is a peer-to-peer VPN service, made up of consumers and providers. For us to remain a permissionless network, we need to ensure that all payments must also be peer to peer. This will be facilitated by the Hermes Protocol, our unique infrastructure we designed to enable fast, frequent micropayments on a global scale. 

In brief, it creates payment channels (a special type of smart contracts) between network participants (consumers and providers) and a selected Hermes hub during their registration. Hermes will verify “payment promises” made by consumers to nodes and smart contracts will ensure that tokens are calculated correctly and are safe. Instead of users constantly paying nodes in high volumes (by doing expensive blockchain transactions), consumers can make “promises” to providers, similar to IOUs. When providers (node runners) decide they want to settle (get a payout) their income, the final tallied record is executed on the blockchain and sent as a single transaction. 

Related: Learn more about how micropayments works in Mysterium Network

Additionally, providers (node runners) must stake a certain amount of collateral. While you can stake nothing at the start, as described above, you can stake any amount of MYST to guarantee the size of your payment channel. This will be the amount of tokens you can earn before settling your earned token and confirming this final tally on the blockchain. It will also guarantee faster withdrawal of these payments sent to your personal wallet. 

EXAMPLE: I run a node and want to provide the VPN service. I stake 20 MYST to open up a payment channel with the network’s smart contract. This ensures that consumers in the network can start using my service, and I will keep earning MYST until I reach my staked amount of 20. When I’ve reached my maximum, I have to settle them into my ethereum wallet (ethereum will charge a transaction fee). After that, I can keep earning MYST again until I reach my channel limit and will have to settle again. If I will decide to stop providing services on Mysterium Network, I can get my initial 20 MYST stake back.

Here’s how it works in action:

  1. Use MYST to pay for your identity registration 
  2. If you’d like to use the VPN service, top up your account balance with MYST 

If you’d like to provide the VPN service, stake a certain amount of MYST tokens

  1. Consumers pay providers using “Payment Promises” (off-chain transactions)
  2. Providers can choose to cash-out these promises at any time

Staking is necessary for the function of payment channels. There needs to be an amount of tokens locked in a provider’s payment channel to keep it active and ensure that the smart contract can pay the amount corresponding to their Payment Promises. If your Payment Promise tally is higher than your tokens at stake, for example, then this could lead to a situation where there are not enough funds to pay you out. This protects users against the threat of double-spending. Similar locking tokens mechanisms are also implemented among other payment channel-based networks, such as Lightning Network, Lumino and Raiden. 

In the future, the staking component could change. Staking more MYST, and therefore having more skin in the game, opens up a few possibilities for loyal network participants. It could enable higher traffic (higher position in ranking = more users  = more income)   for providers, or even allocate a percentage cut of network transaction fees. 

What is token migration?

Migrating a token is simply to upgrade the smart contract of that token (its “standard”). In the case of Mysterium, we are migrating from the ERC-20 to the ERC-777 token standard. This is a 1:1 token migration so there will be no new tokens created. 

Why are we upgrading MYST?

Different smart contract token standards offer different functionalities. The ERC-20 standard is the oldest and most common standard, initially developed in 2015. However, this token standard has not aged well. For some time now, its limitations have been exposed as more complex smart contracts have emerged which offer more functionalities, and are therefore better suited for more use-cases.  The ERC-777 token standard was approved last year following collaborative, community-driven discussions that began in 2017. 

ERC777 is an extension of the ERC20 standard. This new standard brings greater benefits to Mysterium Network as it plays host to some important features and multiple quality of life improvements. It adds token receive hooks which are used in our payment system, enabling the auto-conversion of MYST to other tokens during settlement. This opens us up to all kinds of crypto communities, even alternative blockchains such as Bitcoin. It also reduces the number of transactions required for the registration of a Mysterium ID, therefore reducing the cost of fees.

As we create more liquidity for the MYST token through its listing on various exchanges, we also require a full audit of the token. With an ERC777 MYST token, we will perform an audit with aims to also reinforce trust in its security.

How will token migration work?

At the end of July, MYST token holders will be able to start migrating their tokens into the new token standard. This will become the standard MYST token used within Mysterium Network’s payment system.

All exchanges are informed and are preparing for the upgrade on their end. If you are holding MYST on exchanges such as HitBTC, the migration will be done automatically and you will not need to do anything. While the token migration is planned for the end of July, it may take some days for exchanges to complete the upgrade, so please keep this in mind. Trading inside exchanges is unaffected by this migration.

For those who have the technical capacity and knowledge to conduct the migration themselves, our developer tooling will be available. Taking a DIY approach, users will be able to use our custom tooling to migrate their own tokens. We will publish written and video tutorials on our website in advance, so check back for updates. 

While there will be no time limit for migrating tokens, please be aware that only the new token standard will be used in the Mysterium Network payment system and actively traded on exchanges. 

However, you will not lose your original MYST tokens if you do not migrate within a specific deadline. This means you can perform your token migration at a convenient time to you.

Your wallets which are supporting only ERC20 tokens will work fine with MYST token.

Our token will support both ERC20 and ERC777 interfaces. This means that any wallet which supports ERC20 can be used to hold MYST token.

We’ll be publishing more important details in the weeks ahead. In the meantime, join our Discord channel and download the app for Android, Windows or Mac to get a taste of the free version before we move to the pay as you go model.