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Mainnet

Dec 16, 2022 | Updated Dec 16, 2022
A Mainnet is a blockchain that is independent, complete, and runs by itself, where all crypto transactions are broadcasted, verified, processed, and recorded on its distributed ledger.

What is Mainnet in Crypto?

It is a blockchain network that is fully operational and deployed by its developers. Bitcoin and Ethereum are both Mainnets.  The term is used in contrast to a “Testnet”, which is a blockchain project that is still in progress and is not yet ready to be deployed. Testnets are often used to troubleshoot and test all the features of the MainNet network.

The Difference Between a Testnet and Mainnet

While a Mainnet is a live blockchain network, a Testnet is an identical network that runs parallel to it. Similar to a dev site for traditional websites, it is a mock system where developers can experiment with new ideas, gather feedback, and check the efficacy of a system before its launch.

A Testnet also allows developers to test updates and codes, build applications, and detect errors or bugs before implementing changes on the Mainnet. Since Testnets are not live, there is no risk of causing major disruptions on the network.

Testnets and  Mainnets are complementary systems that allow for smooth transitions for blockchain networks. 

For example, the different elements of the Ethereum merge operated on a Testnet before being implemented on the Mainnet. The network transitioned from the Proof-of-Work (PoW) consensus mechanism to a Proof-of-Stake (PoS) consensus, and developers conducted three testnet rehearsals before the final merge occurred on the Ethereum.

Developers use the testnet in the early stages of a project to detect errors before they are implemented on a fully functional mainnet. 

Decentralized Finance

Decentralized Finance (DeFI) refers to financial applications and services that are built on a blockchain and operate without a central governing authority (hence, “decentralized”).

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Token

Tokens are a type of digital asset that refers to a programmable unit of value or utility and can be used to represent ownership, access rights, or participate in decentralized applications.

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Impermanent Loss

Impermanent loss is a risk that occurs when participating in DeFi liquidity pools. It happens when the price of your deposited assets change from the time you deposited them.

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