What is a mainnet?

Mainnet definition — A mainnet refers to the live version of an independent blockchain network, such as Bitcoin, which typically launches after a period of testing on a test network (testnet).

A testnet is a parallel version of the network that developers use to test its functionality to identify issues and troubleshoot any errors before it goes live.

The mainnet version of a blockchain is operational at full capacity, processing transactions by verifying each block and recording them on the distributed ledger.

A signature network (signet) is a testnet that requires an additional signature to validate blocks. A regression test (regtest) network is a testnet that is used for private development.

After a mainnet is launched, some developers continue to run a parallel testnet to try out new functionality before upgrading the live blockchain to avoid disruption for users.

A major upgrade to the way a mainnet functions often requires a spinoff from the blockchain, known as a hard fork, to introduce new features with a software upgrade that is not backward compatible.

A soft fork refers to a backward-compatible software upgrade that does not require the blockchain to split.

The launch of a mainnet is an important project milestone for cryptocurrency investors. A live launch takes a blockchain project from the planning stage to implementation and is a key step in the adoption of the network’s native cryptocurrency token or coin.

A mainnet launch and subsequent major upgrades can have an impact on the direction of a cryptocurrency price.

While an investor might prefer to wait before a mainnet goes live to invest in a cryptocurrency project, a successful mainnet launch can result in a strong price rally, while a launch that encounters problems can trigger a selloff.

At the same time, however, an initial mainnet launch may not be the biggest driver for a cryptocurrency price change, as prices are also affected by cryptocurrency market trends as well as partnerships and investments involving third parties.

Major updates and hard forks that improve a blockchain’s functionality and add new features can be larger drivers for the cryptocurrency price.

What happens when a crypto goes mainnet?

When a cryptocurrency goes mainnet, the blockchain on which it runs goes live as an operational public or private network.

Some project development teams hold an initial coin offering (ICO) or initial exchange offering (IEO) to raise the money they need to develop the testnet.

Once the testing phase is complete and the blockchain is ready to start operation, the developers launch the mainnet version.

Some development teams have opted to create ERC-20 compatible cryptocurrency tokens that run on the Ethereum blockchain to build interest in their projects and generate liquidity. Once the ICO raises funding and the mainnet launches, they phase out the ERC-20 tokens and swap them for the blockchain’s native token.

The ERC-20 tokens can be taken out of circulation and destroyed, or run in parallel to the native token.