Miner Centralization

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@shea256

Hey Stackers! I love this community and want to pitch in to help on what I see as the number one priority right now.

I’m very happy to see this. Even though I don’t agree with everything on the technical side, your contribution brought life back into this forum, and I would argue that an active community that discusses technical concerns is even more important than the protocol that supports it.

@shea256

The current game theory of how Stacks mining is designed is leading to a low # of miners and low mining throughput. Below I will explain how to increase the number of miners and the total mining throughput.

Let me first explain the problem as I see it.

The fixed cost of bidding for a block drives a stable equilibrium of a small # of miners. There’s no shortage of those who want to mine. They just drop out because it’s only profitable to be the largest.

Shouldn’t the winning probability be in proportion to the BTC bid? So the bias towards large miners is created by the BTC tx fee?

If so, could the probability function just be adjusted so it becomes more fair in presence of tx fees?

@shea256

I have first hand experience of this. I was a miner for a bit and then drove up my % of the pie until I was #1 for an extended time. At that point I was unprofitable & forced everyone else into unprofitability. Then it became a game of chicken. I blinked as I didn’t want to keep losing $. This is something every miner experiences.

The key to solving this imbalance is that miners should only send bitcoin transactions once it is clear that they have won the round. This minimizes the # of tx’s per round (only the winner sends), and it ensures the fixed cost of the bitcoin tx fee doesn’t favor larger miners.

One might argue that reducing the spent BTC of non-winners is premature optimization as long as the winner can’t be accurately determined. I had a lot of mining transactions where the algorithm determined that I had won. But after weeks without payout, I think it’s most likely that I didn’t. I think the consensus algorithm should first work more accurately to determine the winner before conditionalizing on the top of this.

@shea256

How do you accomplish that? You have “bid to mine” transactions occur on the Stacks chain with $STX posted as collateral. The miner that wins the round then posts the transaction, & thus isn’t wasting tx fees on blocks not won.

So anyone who wants to mine will first have to have STX in order to post the “bid to mine” transaction?

I think it’s an important advantage of STX over all the PoS schemes around that there is no chicken-egg situation. No one needs to get past gatekeepers that will sell them STX in order to participate. This is an important factor for a global equilibrium. I’m reluctant when it comes to sacrificing the possibility for every BTC user to participate right away.