We want to provide the equivalent of the following trading experience to the miner.
- A Miner starts mining on P2Pool and earns some shares. These earnings are captured as a coinbase output on the P2Pool block. The amount on the coinbase output reflects the miner's hashrate on the pool.
- The Miner enters a contract with a market maker to trade P2Pool coinbase outputs for BTC. At this point we setup the LN channels or Ark VTXOs to enable the swap of the miner's p2pool coinbase UTXO with market maker's BTC.
- At any given time, if the miner has any P2Pool coinbase outputs in the current trading window, the miner's P2Pool coinbase outputs are traded for BTC.
- The market maker buys the P2Pool coinbase outputs and when it comes time to compute who is paid how much from the pool, the market maker gets paid in lieu of the miner who sold their coinbases to the market maker.
P2Pool was a blockchain of shares contributed by miners. Think of it as a blockchain of bitcoin weak blocks. However, P2Pool encountered a scaling limitation when bitmain put a limit on the size of the bitcoin coinbase transaction.
P2Pool used to pay all miners directly from the coinbase, however, with the limit imposed by bitmain, P2Pool could no longer scale to accomodate more than a few hundred miners. This was not enough hashrate for providing any meaningful reduction in payout variance.
To scale P2Pool, we need a payout mechanism that works past this limit imposed by bitmain on the number of outputs in a coinbase transaction. In P2Poolv2 we are aiming to provide transactions on the P2Pool blockchain and then support trading of P2Pool coinbase transactions with BTC.
By paying only a few market makers, say 10-50 market makers, via coinbase, and paying other miners when market makers buy their coinbases, we can scale the payout mechanism of P2Pool.
The original P2Pool was a blockchain where each block is a share mined by a miner.
The miner built their own blocktemplate and broadcast it. All other miners validate the blocktemplate and any shares the miner broadcasts as solutions for the blocktemplate.
The v2 sharechain is exactly the above, with two differences:
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Transactions support on the sharechain. These transactions are structured exactly as bitcoin - using Script and the UTXO model. We use rust-bitcoin to implement this, in effort to be as close to bitcoin as possible.
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The coinbase of each block has a single output, paying the miner an amount derived from their share of the pool's hashrate - we use PPLNS here.
We are working on p2poolv2 where a few parties are paid via the coinbase and the others have to trade their coinbases with market makers to earn BTC for their shares.
The figure below shows a coinbase from P2Poolv2 where the market makers are paid from the pool coinbase. The miners instead are paid out when they trade their P2Pool coinbase outputs for BTC.
There are a couple of constraints that we need to keep in mind when enabling the trade of p2pool coinbase for BTC.
- A P2Pool coinbase maturity. The coinbases can be traded after a day's worth of blocks. Given blocks are every 30s on P2Pool, we have to wait for 2880 blocks before the coinbases can be spent.
- PPLNS accounting window. After a certain depth, coinbases can no longer be traded as the shares are then used to calculate the payouts in the next bitcoin coinbase.
The figure below shows the trading window, assuming an 8 bitcoin block window.
We want to provide the equivalent of the following trading experience to the miner.
- A Miner starts mining on P2Pool and earns some shares. These earnings are captured as a coinbase output on the P2Pool block. The amount on the coinbase output reflects the miner's hashrate on the pool.
- The Miner enters a contract with a market maker to trade P2Pool coinbase outputs for BTC. At this point we setup the LN channels or Ark VTXOs to enable the swap of the miner's p2pool coinbase UTXO with market maker's BTC.
- At any given time, if the miner has any P2Pool coinbase outputs in the current trading window, the miner's P2Pool coinbase outputs are traded for BTC.
- The market maker buys the P2Pool coinbase outputs and when it comes time to compute who is paid how much from the pool, the market maker gets paid in lieu of the miner who sold their coinbases to the market maker.