Thursday, 21 December 2023
by Rose White
Yesterday the Human Rights Foundation announced a wave of new grants for a diverse range of projects. I want to focus on one specific project and grant: Braidpool, and the grant Kulpreet Singh received to continue his work on actually implementing it.
The last few weeks have been dominated by discussions about Ocean’s recent launch, and their decision to filter inscriptions and other transaction types they deem to be spam. The conversation around their transaction filtering has entirely dominated the discussion, completely eclipsing the subject of improving the decentralization of the mining ecosystem.
Braidpool can hopefully be a conversational reset on this topic. While Ocean is a centralized mining pool that aims to decentralize parts of its operation, namely block template construction and mining payouts (at least above the threshold that is economically viable), Braidpool is a fully decentralized mining pool protocol. No aspect of the pool is left to a centralized entity in its design.
A pool conventionally does three main things:
Braidpool handles all three of these in a distributed way.
One issue with Braidpool is going to be the same problem Ocean initially struggled with: bootstrapping. Unlike Ocean however, there is no “Braidpool company” to subsidize the initial period of volatile luck and uncertainty in finding a block. This begs the question, who goes first? Any actual Braidpool must quickly grow to a sizable enough portion of the network to smooth out the volatility in luck, or those miners that stay with a pool not achieving that growth will simply wind up losing themselves money. Also, given that there is no “template provider of last resort” to fall back on, as Ocean will be once they integrate Stratum v2, miners must run their own nodes. This requires a seamless and intuitive user experience to not drive miners away from participating in the protocol. As an open source project as opposed to a company, that UX can be finetuned and optimized over the next year while it is in development.
The plan the creators of the protocol have for attempting to bootstrap the pool initially is very simple: push the risk of mining with a Braidpool away from the actual miners and on to financial market makers. The fact that an output in the off-chain transactions that distribute funds amongst the miners can be assigned to any address opens the door to people buying the right to have such a mining reward output committed to their address. This gives the ability to construct futures, options, or other financial contracts on top of the act of mining. Such instruments give miners participating in Braidpool a way to mitigate the variance risk associated with bootstrapping a new pool.
Back to Ocean for a second, they have made a very significant contribution to this space in trying to pioneer architectural changes in the mining ecosystem to counteract prevailing centralization pressures. However, it’s undeniable that they are not seeing any continued growth, and growth is a necessity for them to truly have an impact on the issues they were founded to address.
Hopefully Braidpool can be an alternative path to addressing these issues without making the contentious decisions that have led to Ocean arguably self sabotaging its own efforts. Keep your eyes peeled over the next few days for a deeper look at Braidpool on a protocol level.