EVM L2 BOOTSTRAPPING FUNDING

We are preparing to develop and launch the L2 EVM network on Waves, which will serve as a prototype for a future network designed to efficiently support multiple L2 solutions. This network will offer built-in consensus and state proofs for all participating L2 solutions. The first L2 network will introduce its own native token, which will be utilized for gas fees and funding L2 projects through the DAO.

The Node core team requests 200 k Waves for development of the EVM L2 from the Waves DAO treasury, paid as 1 Waves in each block from the Miners contribution to the Waves DAO. Thus the whole vesting period takes approximately 4.5 months.

The launch of the L2 EVM chain is very beneficial for the Waves Ecosystem in its own right. It will attract a new developer community to Waves, and allow it to carry existing EVM projects over to Waves and start new ones. The new L2 will be DAO governed, with 10% of the generated token supply managed by the community DAO. It will also provide liquidity incentives for projects launching on the L2.

The L2 consensus will be built upon the underlying Waves L1 consensus. This means that Waves miners can support the EVM L2 network and receive the native network token as rewards for generating blocks. The miners' contribution will be proportional to their stake in Waves when the network is established and their stake in MPT tokens during the launch phase, as explained below.

Here is an overview of the bootstrap workflow:

• Miners commit to supporting L2 development through the Waves DAO. In return, Waves DAO treasury receives L2 Mining Power Tokens (MPT) on Waves L1, in proportion to the total amount of Waves they contribute. Exchange rate for MPT is 1 MPT = 1XTN, so the conversation is made when swapping Waves coming from miners into MPT.

• MPT is used for mining a significant portion of the L2 native token supply, which will be used for paying fees and governance purposes within the L2 network. This mining process occurs during the initial bootstrap phase, with the goal of mining at least 50% of the total L2 tokens. The total supply of the native token of the L2 network will be 10 million tokens, with 5 millions tokens to be mined during the initial phase, in which only the miners who received MPT tokens participate. The phase will last for 1 year. After that the rest of the token supply will be mined according to Waves balance of participating nodes, with inflation halving approximately every half a year.

• We estimate the potential market cap of the new L2 to reach $100 million within one year. With an estimated amount of XTN converted into MPT to be of the same order it should allow XTN holders who execute the swap to exit their XTN positions without loss, and provide significant profits for Waves miners.

• The total supply of MPT tokens is 1 billion. All undistributed tokens will be burned. Miners will receive approximately 200k $waves worth of MPT tokens, which in absolute numbers should not exceed 10 million tokens. XTN supply is capped by approximately 600 million, which provides a cap on the total supply of MPT.

• MPT holders must stake their tokens in a designated contract on the Waves L1 network to participate in generating the L2 token supply.

• The mining contract consists of a list of nodes sorted based on the total amount of MPT they possess.

• XTN can be freely exchanged for MPT without any restrictions. This includes XTN held in Vires. The exchange rate is 1 XTN for 1 MPT token. It is advisable to make the swap while XTN is priced low. Through this we reduce the circulating supply of XTN, increase its backing ratio, let XTN holders exit their XTN positions, and potentially decrease the activity timeframe of the Feature 19.

• MPT holders need to select one of the nodes to lease their MPT to. Nodes determine the payout percentage and distribute the corresponding amount of L2 tokens back to the stakers in addition to mining tokens using their own balances.