Braidpool: The second contender in decentralized mining

Yesterday, the Human Rights Foundation announced new grants for a variety of projects. I would like to focus and grant money on one specific project: Braidpool and grants. Kulpreet Singh We have been asked to continue the work to make this a reality.

The past few weeks have been dominated by discussion about Ocean’s recent launch and its decision to filter out inscriptions and other types of transactions deemed spam. The conversation about transaction filtering completely dominated the discussion, completely overshadowing the topic of improving the decentralization of the mining ecosystem.

Braidpool hopes to reset the conversation on this topic. Ocean is a centralized mining pool that aims to decentralize parts of its operations, namely block template construction and mining payouts (at least above an economically viable threshold), while Braidpool is a fully decentralized mining pool protocol. No aspect of the pool is left to a centralized entity in its design.

Pools typically perform three main tasks:

• They make up the block template that miners mine.

• That is, the nonce number each individual miner attempts to hash the block template to find a valid block, and they keep track of who finds a share that meets the shared difficulty requirement to get the next Coinbase chunk. compensation
• They manage block reward payments and distribute them to individual miners.

Braidpool handles all three in a distributed manner.

• Braidpool requires each individual hasher to run its own full node, constructing its own block template in the process.
• To keep track of who did what, Braidpool implements its own blockchain of sorts, made up of “weak blocks.” These weak blocks are essentially perfectly valid Bitcoin blocks mined by Braidpool members, except that they do not meet the difficulty goal requirements of the underlying network. They meet the low difficulty goals set within Braidpool. These weak blocks serve as shares in the scheme, allowing individual miners to keep track of who contributed how much work to the group effort to find the block.
• Like Ocean, Braidpool aims to handle the distribution of mining rewards among miners in a non-custodial manner, but takes a very different approach than Ocean. This aspect of the protocol has evolved quite a bit since I last wrote about it. Instead of integrating with Lightning Hub to facilitate atomic payments to miners when a block is found with Coinbase paying to the hub, they use a multi-signature threshold based FROST multi-signature, an m-of-n Schnorr scheme. Got to model. All miners in the pool send their Coinbase rewards to the FROST address, which consists of all individual miners requiring a 2/3 signature majority, and pre-sign a transaction that pays contributions to individual miners after a block is found. Periodically, the pool takes all past consumable Coinbase outputs, compresses them into one UTXO, and then updates the transaction tree, paying a proportional return to each miner.

One problem for Braidpool will be bootstrapping, the same problem that Ocean struggled with in the beginning. However, unlike Ocean, there is no “Braidpool company” to assist during the volatile and uncertain initial period of finding blocks. Who will go first? In practice, Braidpool needs to grow quickly into a large enough part of the network to smooth out luck volatility. Otherwise, miners who don’t achieve that growth and stay in the pool will simply lose money. Additionally, given the lack of a trusted “template provider of last resort,” Ocean will become a miner once it integrates Stratum v2. ~ have to Run your own node. This requires a seamless and intuitive user experience that does not prevent miners from participating in the protocol. As an open source project rather than a company, its UX can be fine-tuned and optimized over the next year during development.

The plan the protocol authors have for initially attempting full bootstrapping is very simple. Mining with Braidpool transfers the risk from actual miners to financial market makers. The fact that the output of off-chain transactions that distribute funds among miners can be assigned to any address opens the door to people purchasing the right to assign mining reward output to their own addresses. This provides the ability to structure futures, options or other financial contracts in addition to mining activities. These tools provide miners participating in Braidpool a way to mitigate the volatility risk associated with bootstrapping a new pool.

Going back to Ocean for a moment, they have made a very important contribution to this space in their efforts to pioneer an architectural change in the mining ecosystem to counter the prevailing centralization pressures. However, it is undeniable that they are not seeing sustained growth, and growth is essential for them to truly have an impact on the problems they were founded to solve.

Let’s hope that Braidpool can be an alternative to solving these problems without Ocean having to make controversial decisions that end up sabotaging their own efforts. Keep your eyes peeled in the coming days for a deeper look at Braidpool at a protocol level.