$136.20 -1.71%
LTC · 37w

Zen Protocol's Multi-Hash Mining allows you to create an alignment of incentives between miners and users, by allowing users to influence miner profitability. Great news right!?

Non-Outsourceable Proofs

Multi Hash Mining does not address the risks of mining pools to governance. If hashpower is concentrated between few pools, then individual miners cannot influence the protocol, even when their individual interests align with users. Whilst an alignment of interest exists between pools and users, there is always the possibility that mining pools will be, practically speaking, able to collude against the interests of users, since there can conceivable be only a few mining pools, which control the majority of hashpower.

This scenario can be ameliorated by making pools impractical, through a mechanism called ‘Non-Outsourceable Proofs’, which was proposed as an upgrade to Bitcoin in a 2013 research paper of the same name. Pools rely on the fact that their workers cannot ‘cheat’ — they cannot keep a valid block for themselves, and are instead compelled to share any block that they find with the pool in order to receive compensation for their efforts. Non-Outsourceable proofs of work intentionally make it possible for workers to ‘keep’ a valid block for themselves, without detection by a pool operator. Since the pool operator cannot distinguish between honest and dishonest workers, and workers always profit from dishonesty — for which they cannot receive penalty — workers are always incentivised to keep blocks that they find for themselves, making it impossible to effectively run a pool.

Pools were created to address the high variance of mining rewards — a miner needs consistent income, and it is not practical for them to be rewarded infrequently, even if those rewards are potentially high. The Non-Outsourceable Proofs paper addresses this through a mechanism known as ‘Scratch-Off Puzzles’ — a mechanism whereby miners are rewarded not only for finding blocks, but also for publishing shares, just as they are rewarded by pools. With Scratch-Off Puzzles, miners are given the full block reward for finding a block, unlike with pools;...

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