Surely, newcomers are always wondering about two terms - Mainnet and Testnet when investing in a project of blockchain .
In this article, I will explain briefly about these two terms. Besides, I will also give you a quick research on the influence of Mainnet on token price.
Hope this article can help you earn more money in the market!
Let's get started!
What is Mainnet?
Mainnet is the term used to describe the data of the blockchain protocol officially recorded on the blockchain.
Here many of you will ask: So only blockchain platforms have Mainnet, right?
It's right, but not enough.
With the above definition, we still have one case that can still be used from Mainnet.
These are the protocols built on the third blockchain platform, and they officially back up the data on the Mainnet of that blockchain platform.
Maybe you are interested in: What is blockchain? Blockchain handbook for newbies
The most typical example is Chainlink (LINK):
ChainLink implements Mainnet on the Ethereum platform. That is, after the Mainnet event, the data of the ChainLink protocol will be recorded on the Ethereum blockchain.
As you all know, the data recorded on the blockchain cannot be changed. Therefore, to avoid deviations, bugs, and so on, blockchain protocols need to be tested on a network called Testnet.
Refer to the article: What is ChainLink (LINK)? Full episode on virtual currency LINK
What is Testnet?
Testnet is an environment for developers to test all the features, and security of blockchain protocol before proceeding with Mainnet.
Because it is an experimental phase, the data has not been officially stored on the blockchain, so it is very flexible if there are security bugs, and transactions that fail.
What is the Mainnet Swap?
Mainnet Swap is the process of converting tokens from the original blockchain platform to the official blockchain protocol.
For example: Band Protocol (BAND)
Initially, the Band Protocol has run on the Ethereum blockchain, so the current Band token is BAND-ERC20. However, BandProtocol will implement their own blockchain (BandChain) in the future.
When the Band Chain Mainnet is successful, the Mainnet Swap Token process will take place to swap all BAND-ERC20 tokens to Native BAND running on BandChain.
The nature of swaps is to swap in a certain ratio, which is usually 1: 1. If the project converts at a higher or lower ratio than this, it will affect the token price.
Refer to the article: What is Band Protocol (BAND)? All about virtual currency BAND
Does Mainnet raise token prices?
As you all know, the Mainnet is an important event of any blockchains.
However, whether or not Mainnet affects the token price, no one dares to guarantee 100%.
More and more investors in the cryptocurrency market realize that the Mainnet is no longer an event that affects the price right at the time of Mainnet's release in 2019.
In early 2020, Coin98 did a quick research on the impact of this event.
The figures below show that:
- If you buy at the time of Mainnet and hold 31 days, you will have a 40% - 60% discount on the ticket.
- On the contrary, if you buy before the fixed time of the Mainnet about 62 days, you will have the opportunity to increase your account by 50-90%.
In particular, you can see that:
- The amount of interest earned will depend on the Market Cap of that token.
- Specifically, tokens with a Market Cap of less than $ 10 million are the coins that yield the highest interest.
Through this article, I hope you can understand more about Mainnet, Testnet, and its effect on the price of tokens. Then, you are able to make appropriate investment decisions for yourself.
If you have any thoughts and opinions on this topic, please comment below the article, so that the Coin98 team and I can discuss more with you.
Goodbye and see you again in the upcoming articles.