Fairminting with Counterparty

This post dives into Counterparty’s latest feature: Fairminting. This addition brings a fresh twist to token creation on Bitcoin’s blockchain, blending decentralization with flexibility. If you’re familiar with BRC-20 or Runes, you’ll find Fairmints both familiar and possibly better.

MINTS

Since 2014, Counterparty has been a pioneer in embedding token functionality into Bitcoin and Fairminting is its newest evolution. I didn't initially love the term "fairmint." Surely you can have unfair fairmints? But it is a term that can potentially become recognizable as referring to MINTS on Counterparty specifically. So, it has that going for it.

What I want to bring your attention to through this post is one innovative feature: soft caps. It highlights the ways an account-based model is more flexible than a UTXO-based one.

What is Fair Minting?

The idea draws from Counterparty’s roots, like its Proof-of-Burn days when users sent BTC to an unspendable address to get XCP. More recently, it’s inspired by BRC-20’s “free mint” model and by SRC-20’s attempt to recreate that functionality on Counterparty.

The motivation? Make minting native to Counterparty. You can read the full backstory and technical motivation in this gist by Ouziel Slama. Here’s the short version: it’s about giving creators tools to experiment.

Normal Asset Issuance

It's worth mentioning that most Counterparty assets are "issued" rather than "minted"—meaning the entire supply is held by the issuer until distributed via sends, DEX orders, or dividends. Issuing remains the most popular method.

Since launching 4–5 months ago, only about 200 assets have been fairminted while over 2200 assets have been normally issued.

Three Ways to Fairmint

Fairminting comes in three distinct modes: one is familiar, two are new.

  • Miner Fee Only:
    Users pay only the Bitcoin miner fee to mint tokens, effectively making the process “free” aside from network costs.

  • XCP Fee to Issuer:
    Users pay an XCP fee per token unit, with the fee directed to the issuer. This mode facilitates fundraising while still distributing tokens fairly.

  • XCP Fee Burned:
    Here, users pay an XCP fee that is burned rather than transferred. This model increases scarcity by reducing the circulating XCP supply.

These modes serve as the foundation for an array of token distribution strategies, further enriched by customizable parameters such as soft caps, hard caps, commissions, and specific minting windows.

Core Settings and Their Impact

Fairminting isn’t just about choosing a minting mode—it’s about tailoring the entire token issuance process. Some of the key parameters include:

  • Soft Cap & Soft Cap Deadline Block:
    Sets a minimum threshold that must be met for the mint to “graduate.” If the soft cap isn’t reached by a given block, the mint is canceled and funds are refunded. This feature paves the way for safer experiments in token launches.

  • Hard Cap:
    Defines the maximum supply that can ever be minted, ensuring scarcity.

  • Commission:
    A fraction (e.g., 0.05 for 5%) deducted from the minter’s tokens and paid to the issuer. This creates a revenue-generating mechanism for launchpads or platforms.

  • Start & End Blocks:
    Limits the minting period, creating urgency and a clear timeframe for token launches.

  • Premint Quantity:
    Allows the issuer to secure an initial allocation before public minting begins.

  • Divisibility and Locking Features:
    Decide whether tokens can be split into fractions and whether asset properties can be permanently locked after minting.

Standard Use Cases

Fairminting supports all the usual token use cases on Counterparty. Whether you’re looking to:

  • Issue a Memecoin:
    Create the next viral meme coin with a fixed supply or even an open mint model for NFTs.
  • Conduct an ICO:
    Launch a token sale where early supporters contribute XCP in exchange for tokens, with the issuer benefitting from a fee or commission.
  • Open Mint NFTs:
    Leverage an open mint structure to let anyone participate in creating scarce digital collectibles.

These standard scenarios work just as well under Fairminting as they do with traditional issuance methods, but Fairminting’s flexible settings add exciting new dimensions.

Innovative and Creative Use Cases with Soft Caps

What really sets Fairminting apart are the possibilities unlocked by the soft cap feature. Here are a few ideas worth exploring:

1. Mining for Memecoins

Imagine a platform where every memecoin launch has a standard soft cap and deadline.

  • Concept:
    Users “mine” for the best memecoin by minting tokens. The XCP paid during minting is escrowed by the protocol. If the coin fails to hit the soft cap by the deadline, your XCP is returned—protecting you from a dud launch.
  • Potential Dynamics:
    Should a memecoin hit critical mass, early adopters benefit from being in early on a potential cook. If it doesn't "bond" or "graduate", you get to try again. And if the XCP is burned, you reduce supply while driving demand.
  • Future Possibilities:
    In future updates of Counterparty, you could imagine the XCP might even automatically fund a liquidity pool. In the interim, a third party could collect the XCP and place a DEX order for the entire supply at the minting rate, with a two-month window for exit—offering near–no-loss exit opportunities.

2. DAO-Like Funding Initiatives

Fairminting can also serve as a mechanism for DAO-style funding.

  • Concept:
    A token mint could represent a funding initiative. If the soft cap is reached, the project gets funded; if not, the funds are returned.
  • Dynamics:
    The tokens in this case act more like badges, proving your contribution to an initiative. While the funds are immediately available (a downside if you prefer milestone-based releases), routing the XCP to a neutral platform or foundation could help bridge the gap between funders and project teams.
  • Outcome:
    This model offers a win–win: contributors gain a badge of participation and potential secondary value, while projects only proceed if they garner sufficient community backing.

3. Community–Driven NFT Curation

Fairminting could redefine how NFT collections are curated on Counterparty.

  • Concept:
    Instead of relying on centralized curators to approve or reject NFT submissions, set up mint parameters—such as a hard cap and a tiered soft cap (for example, a higher soft cap for a limited run of 10 tokens versus a run of 100).
  • Mechanism:
    Any NFT submission that reaches its soft cap becomes accepted into the collection, effectively allowing the community to curate the collection organically. You could identify them by an asset name prefix or a certain description or a mined address prefix or through a platform.
  • Challenges & Opportunities:
    While there is a risk of creators minting their own tokens just to hit the threshold, setting a high soft cap could mitigate this, leading to genuinely community–endorsed collections.

My Own Fairminting Experience

I launched the first fairmint on Counterparty and named it MINTS—a name I’d owned (or squatted) for a decade. While the initial distribution of MINTS wasn’t ideal due to rudimentary tools at the time, I remain intrigued by the potential dynamics Fairminting can introduce.

It's clear to everyone, at this point, that the downside of this model of launching tokens is having less control over who the holders of the token are and whether their goals align with yours. If someone wants to mint 10, 20, 30% they probably can, for better or worse.

Even so, we’re only just beginning to explore what these new dynamics can do for token launches, community engagement, and even decentralized funding.

Conclusion

Counterparty’s Fairminting feature offers unprecedented flexibility in token launches. By supporting all the traditional use cases—from memecoins and ICOs to open mint NFTs—while adding innovative twists through soft caps and other customizable settings, Fairminting empowers projects to tailor tokenomics to their exact needs.

Whether you’re mining for dank memecoins with built–in safety nets, funding DAO initiatives, or curating NFT collections through community validation, Fairminting provides a rich toolkit for the next generation of decentralized applications.

Happy minting!