Mastercoin, rebranded as Omni in 2015, is an open source protocol layer built on top of bitcoin that enables the creation of new cryptocurrencies and assets.
The project was intended to remedy what it called the two biggest barriers to bitcoin adoption: Insecurity and instability. It also claimed that the development of ‘alternative’ blockchains would impede the adoption of both the new cryptocurrencies introduced on these chains and bitcoin.
Mastercoin was founded in 2013 by J.R. Willet and was one of the first platforms to enable crowdfunding, more commonly referred to as initial coin offerings or ICOs. It also provides decentralized exchanges (DEX), which enable users to exchange crypto peer-to-peer, without a third party.
How Does Mastercoin Work?
Vision
Another use case promoted by the project was the use of the protocol to create layers with stable value. In other words, assets that could be pegged to other currencies or commodities. The stablecoin Tether is one such notable projects built on the Omni protocol (Tether also exists as ERC20 tokens).
Mastercoin had a related non-profit entity, the Mastercoin Foundation, which promoted usage of the project. Keeping with the rebranding of the protocol, the foundation is now called the Omni Foundation. Notable Mastercoin Foundation members have included Brock Pierce, the co-founder of tether, Blockchain Capital and Block.one, which launched the EOS platform. Craig Sellars is another Tether co-founder and is currently the chief technologist of the Omni Foundation.
Launch & issuance
The first mastercoins were generated through the protocol’s ‘exodus address,’ which it has compared to the genesis block of the bitcoin blockchain. People who wanted to procure mastercoins sent bitcoin to the exodus address before August 31, 2013 and received mastercoins equivalent to 100 times the amount of bitcoin they sent.
Network design
The Omni protocol is situated between the bitcoin protocol and the currencies built on top of Omni. Because all Omni transactions are recorded on the Bitcoin blockchain, it benefits from the security of Bitcoin’s network. Users are able to create ‘property tokens’ on the network which can be used for currencies, deeds, titles, and investments among other things.
Transaction processing
All transactions are stored on the Bitcoin blockchain and can represent transactions in the upper layers of the protocol. Some transactions on the protocol require fees while others do not. For example, tokens sent on the Omni protocol do not incur fees, nor do transactions which directly use Omni, create property on the protocol, or change ownership of the property. An example of a transaction that would require a fee is if someone utilized one coin to buy and sell a different coin.
Coding
The Omni protocol was built on the Bitcoin Core codebase.
https://www.coindesk.com/crypto/mastercoin
