Fair Minting

Motivation

Fair Minting is a process whereby users are able to “mint” tokens in a decentralized manner. One user initiates the mint (either with or without a “premint”), and then other users are able to trigger it to create tokens for themselves. Fair Minting was likely inspired by the original Counterparty Proof-of-Burn mechanism, by which users sent BTC to an unspendable address and XCP tokens were generate for them automatically.

More recently, BRC-20 introduced a variant of the Fair Mint model that has been adopted by many fungible token protocols recently, including SRC-20 on Bitcoin Stamps. In this system, users are able to mint "for free" by paying only a miner fee: the term “fair mint” refers to the fact that the creator of the minting system is not enriched in the process, and that the minting process is decentralized

In 2023, Joe Looney introduced the ”XCP-20” Fair Mint model by setting up a dispenser on a burn address; its name is a tongue-in-cheek reference to BRC-20. Buyers, largely unaware that Counterparty existed—and this was not new in any way—sent massive amounts of Bitcoin to the burn address and received tokens in return. In this way, tokens got distributed, but the deployer was not directly enriched.

Design

It’s desirable to create a native mechanism for Fair Minting so that a burn address isn’t used. In the process, it is also natural to allow for multiple modes of operation that extend the Fair Mint model:

1. Miner Fees Only, with a Max Mint per Transaction
2. XCP Fee with a Price per Unit Token (Distributed to Issuer)
3. XCP Fee with a Price per Unit (Burned)

Additional functionality may be added as well:

• A “soft cap” mechanism, establishing a minimum amount of the token to be issued, optionally by a particular block height. (Before soft_cap_deadline_block payment will be escrowed trustlessly.)
• A commission in the new token sent to the creator of the mint for each mint operation (proportional to the quantity minted)
• A “Start Block” and “End Block”

Implementation Notes:

• Fair Mints will be possible by issuers of extant assets as long as those assets do not have locked quantities.
• The premint quantity will be credited to the issuer at the start_block.
• If an asset can be reset it can also be Fair Minted, but fair minting itself would not first effect an asset reset.
• Outside the fair minting period the hard_cap has no effect. To lock the quantity you have to use the parameter lock_quantity=true or use an issuance after the minting period.
• For the duration of the mint period, the state of description lock and quantity lock cannot be changed.

Implementation

It would be possible, to use the issuances.py contract and add the fair minting implementation to it. However, this contract is already 1000 lines long and it is preferable not to add complexity to it. New contracts will therefore be implemented but, to ensure maximum compatibility with other assets, the issuances and assets tables will be used: the creation of a fair minting will result in the creation of a line in the assets and issuances tables and then each fair mining will result in the creation of a line in the issuances table.

There will be two new contracts: fairminter.py and fairmint.py. These two contracts will respect the usual interface of all other contracts, that is to say the functions initialise(), validate(), compose(), unpack() and parse(). The first will allow the creation of a "mintable" asset and the second will allow users to "mint" this asset. After the minting period, a minted asset functions just like a locked issuance asset.

Function Signatures

compose_fairminter

Argument Name	Type	Defaut	Description
address	str		The address with which the transaction is signed and which is the issuer of the mined asset. This address receives the pre-minted assets, payments, and fees.
asset	str		The name of the asset to be mined. If the asset doesn't exist, it is created. If it exists, it must belong to the issuer (address) and not be locked. In any case, the issuances are locked for the asset as long as the fair minter is open.
asset_parent	str	“”	The name of the parent asset. The asset must exist and belong to the issuer (address). If <asset_parent>.<asset> doesn't exist, a new numeric asset with a random name is created. If <asset_parent>.<asset> exists, it must belong to the issuer (address) and not be locked.
price	int	0	The price for the quantity_by_price units of the created asset in XCP-satoshis.
quantity_by_price	int	1	The amount of assets received by the miner for the price specified with the price argument.
max_mint_per_tx	int	0	If price is different from 0, max_mint_per_tx designates the maximum quantity a user can mine with one transaction. If price is equal to 0, it designates the quantity the user receives with each transaction.
hard_cap	int	0	The maximum number of assets that must not be exceeded by the fair minter. Any assets created before the fair minter opens are taken into account when verifying the hard_cap.
premint_quantity	int	0	The quantity of assets to be mined at the creation of the fair minter. The pre-mined assets are sent to the issuer (address). If a start_block and/or a soft_cap are defined, the pre-mined assets are escrowed until they are reached.
start_block	int	0	The block from which users can mine assets. If equal to 0, the fair minter is available immediately after its creation.
end_block	int	0	The block until which users can mine assets. If equal to 0, the fair minter is only closed if a soft_cap is defined and not reached, or if a hard_cap is defined and reached.
soft_cap	int	0	The block until which users can mine assets. If equal to 0, the fair minter is only closed if a soft_cap is defined and not reached, or if a hard_cap is defined and reached. The soft_cap defines the minimum quantity of assets that must be mined, before soft_cap_deadline_block, for the fair minter not to be canceled and closed. Any assets created before the fair minter opens and premint_quantity are not taken into account when verifying the soft cap. As long as the soft cap is not reached, the mined assets, payments, and fees are escrowed. When the soft cap is reached, the assets are sent to the miners, the payments and fees to the issuer (address). If it is not reached, the payments are refunded, the assets destroyed, and the fair minter is closed.
soft_cap_deadline_block	int	0	The block before which the soft_cap must be reached (see soft_cap).
minted_asset_commission	float	0	Commission to be paid in minted asset, a fraction of 1 (i.e., 0.05 is five percent); the commission is deducted from the asset received by the minter and sent to the Fair Minter owner. If a soft cap is defined, the commissions are escrowed until it is reached.
burn_payment	bool	False	This parameter allows for the destruction of XCP used to pay for the assets. If a soft cap is defined, the XCP are only destroyed if it is reached; otherwise, they are refunded.
lock_description	bool	False	Allows locking the asset description. This operation can also be performed with an issuance once the fair minter is closed.
lock_quantity	bool	False	Allows locking the asset. This operation can also be performed with an issuance once the fair minter is closed.
divisible	bool	True	Indicates whether the asset is divisible or not.
description	str	“”	The description of the asset.

compose_fairmint

Argument Name	Type	Defaut	Description
address	str		The address with which the transaction is signed and which receives the minted assets.
asset	str		The name of the asset to be mined.
quantity	int	0	The quantity of assets to mine. If the asset price is greater than 0, quantity must also be greater than 0, otherwise the mined quantity will in all cases be equal to the fair minter's mint_per_tx.

API Changes

• New Routes
  • Get All Fair Minters: /v2/fairminters
  • Get Fair Minter By Tx Hash: /v2/fairminters/<tx_hash>
  • Get Fair Minter By Asset: /v2/assets/<asset>/fairminter
  • Get Fair Minters By Address: /v2/addresses/<address>/fairminters
  • Get Mints By Fair Minter: /v2/fairminters/<tx_hash>/mints
  • Get Mints By Asset: /v2/assets/<asset>/mints
  • Get Mints By Address: /v2/addresses/<address>/mints

Database Changes

• Afair_minting field will be added to the issuances table. This is the field that will be checked to prevent token issuance other than through fair minting.

• A new table fairminters will be created with the following fields:

  tx_hash TEXT, -- Fair Minter identifier
  tx_index INTEGER,
  block_index INTEGER,
  source TEXT,
  asset TEXT,
  asset_parent TEXT,
  asset_longname TEXT,
  description TEXT,
  price INTEGER,
  quantity_by_price INTEGER,
  hard_cap INTEGER,
  burn_payment BOOL,
  max_mint_per_tx INTEGER,
  premint_quantity INTEGER,
  start_block INTEGER,
  end_block INTEGER,
  minted_asset_commission_int INTEGER,
  soft_cap INTEGER,
  soft_cap_deadline_block INTEGER,
  lock_description BOOL,
  lock_quantity BOOL,
  divisible BOOL,
  pre_minted BOOL DEFAULT 0,
  status TEXT -- pending, open, closed, invalid: <reasons>

• A new table fairmints will be created with the following fields:

  tx_hash TEXT PRIMARY KEY, -- Mint identifier
  tx_index INTEGER,
  block_index INTEGER,
  source TEXT,
  fairminter_tx_hash TEXT,
  asset TEXT,
  earn_quantity INTEGER,
  paid_quantity INTEGER,
  commission INTEGER,
  status TEXT -- valid, invalid: <reasons>

For each row in the fairminters and fairmints table a row will be added to the issuances table.