Let’s take a journey back to Bitcoin’s early days, when mining was a solitary pursuit. The Bitcoin core of yesteryear was all-encompassing, serving as the mining and node runner. Nodes, in their dual role, acted as both miners creating blocks and keepers of the ledger.
It worked and made sense at the time of bootstrapping since Bitcoin wasn’t the energy-hungry hippo gobbling up hash rate to secure blocks, but as the network grew and monetised into the behemoth we’re working with today, specialisation had to take place and mining and nodes began to split as two very distinct operations that keep the network alive.
The modern Bitcoin network remains decentralised through the thousands of full nodes relaying transactions and maintaining consensus, while the number of nodes ticks up each year, especially as nodes become more interactive with second-layer networks like the Lightning Network; on the other hand, it has trended towards centralisation. Â
Optimisation and conversing resources
As mining difficulty increased after the first epoch, solo mining became less viable, leading to the birth of mining pools.
Pooled mining solved this problem by aggregating miners’ hash rates, enabling more frequent and predictable payouts, so you’re not at the mercy of the lottery that is solo mining, where it’s mostly famine and the unlikely feast of a full block reward.
Pooling and its predictable payout structures helped fuel the growth in hash rate, driving up the difficulty and ensuring the network became more secure than ever.
However, a trade-off was involved in this new efficiency gain; pools, not miners, began constructing the block templates. Instead of fulfilling all the mining duties, ASIC runners became passive hashers, focusing solely on producing as much hash rate as possible to improve their chances of securing a block, and left the block template construction to the centralised operators of the pool.
What is a Block Template?
In Bitcoin, a block template is a pre-formatted structure provided by mining software to miners. It includes crucial information like the version number, timestamp, and a space for transactions. Miners use this template to construct new blocks added to the Bitcoin blockchain.
Key Points:
- Getblocktemplate RPC: Miners use this RPC method to request a block template from a node.
- Transaction Inclusion: Miners select transactions from the mempool (a pool of unconfirmed transactions) to include in the block template.
- Mining Process: Miners compete to solve a complex mathematical puzzle (proof-of-work) to add the block to the blockchain.
- Block Reward: Successful miners receive a block reward in Bitcoin, currently 3.125 BTC per block.
Importance of Block Templates:
- Standardisation: Ensures that all blocks adhere to the Bitcoin protocol.
- Efficiency: Streamlines the mining process by providing a pre-defined structure.
- Security: Helps maintain the security and integrity of the Bitcoin network.
While a block has rules on how it is structured and submitted, the contents of those blocks can be customised based on a miner’s preference.
- An economically focused miner would opt for all transactions that pay the highest fee.
- A KYC miner might opt to exclude transactions from tainted addresses or CoinJoins.
- An anti-spam/non-standard transaction miner might want to exclude ordinal transactions from their blocks.
Miners’ ability to decide how they process transactions allows for an open market for users to compete for block space.
KYC and corporate mining centralisation
With miners freely handing over block template construction in favour of reward, focus centralisation reached a dangerous peak. If a handful of pools control more than 51% of the network’s hash rate, they could theoretically censor transactions, undermining the very principles of Bitcoin.
Since mining pools, especially KYC pools, are permissioned pools and publicly known entities, this can also become a bottleneck for transactions as governments could apply pressure and encourage censorship on this level of the network since it’s much easier to regulate a few big businesses (mining pools) than try to go after individual miners.
What is DATUM?
The DATUM protocol is similar to Stratum V2, another initiative to decentralise block construction. It has been in the works for some time but has yet to roll out fully to the network.
While having similar aims, DATUM aims to address a critical issue in the current Bitcoin mining ecosystem. This concentration of power has raised fears about the potential for transaction censorship, which could see certain transactions excluded from being confirmed, and 51% attacks, where a single entity controls more than half of the network’s mining power.
These issues could undermine the fundamental principles of Bitcoin’s decentralised nature.
DATUM, the new protocol, is a beacon of hope for individual miners who want to see Bitcoin thrive and abide by the network’s ethos.
DATUM gives miners the benefit of pooled mining without having to outsource transaction selection to the ocean pool operators. These operators currently have significant control over which transactions are included in a block, thus making it more difficult to enforce regulation.
How Does DATUM Work?
Miners will need a DATUM gateway, which communicates directly with their mining hardware, and a Bitcoin full node to peer with the Bitcoin network and manage block submissions. The gateway and full node can co-exist on the same hardware device.
This allows miners to instruct their mining hardware on which work to perform while OCEAN’s pool tracks contributions and reward splits accurately.
OCEAN will still coordinate the payout split from block rewards while all mining tasks have been moved back to the miners, giving them full control over the block design.
Another benefit for DATUM users comes in the form of coinbase payouts, which go directly to miners instantaneously and without custodial oversight. This ensures that every block found is rewarded in a decentralised, non-custodial manner—something no other pool or protocol offers.
Additionally, it lowers the risk of reward seizure versus standard pools and improves cash flow management for miners.
Let the market of miners decide how transactions are processed
The introduction of Decentralised Alternative Templates for Universal Mining (DATUM) by OCEAN is a significant leap forward in the blockchain mining landscape and provides miners with new incentives and a reason to point their hash rate to a different pool, improving competition in the pool space.
By tackling the issues of centralisation, high costs, and complexity, DATUM presents a compelling solution that promotes decentralisation and inclusivity.
As the mining ecosystem continues to evolve, DATUM has the potential to inspire a new wave of miners, fostering innovation and collaboration across the community.
Taking Ordisrespecting to the next level
It has not all been smooth sailing until this point; when OCEAN launched its block template policies, it was criticised for encouraging censorship as it took a stance against the Ordinals‘ craze.
But DATUM is a step in the right direction; instead of providing template policies, OCEAN can take a step back, and let miners pull a Miles Morales and do their own thing.
Do your own research.
If you want to learn more about DATUM, use this article as a starting point. Don’t trust what we say as the final word. Take the time to research other sources, and you can start by checking out the resources below.
