In the ever-evolving world of Bitcoin mining, the launch of OCEAN marks a significant step towards a new age in Bitcoin mining. As Stratum V2 lays the foundation for individual miners to have more autonomy and take back some of the tasks that early miners once handled before pools were the norm, new pools like DEMAND, OCEAN and FediPool will lead the charge.
Addressing centralisation and collusion concerns
Bitcoin mining has become increasingly centralised in recent years, with a handful of large pools controlling a majority of the network’s hash rate. While it has brought excellent efficiency to how the network aggregates hash rate, this concentration of power raises concerns about potential manipulation and censorship.
Since mining pools construct blocks and, in a sense, can dictate what to do with the hash rate they are given, they have the ability to disrupt the network if they choose to or are influenced by a state actor. The larger the mining pool, the easier it is for regulators to target them and force them into compliance, such as censoring transactions.
The centralisation of power around mining pools also affects future upgrades to Bitcoin; since pools are the ones that construct blocks, miner-activated soft forks are more likely pool-activated soft forks.
Sure, miners could point their hash rate to the pool that signals what they want, but if other incentives like fees and pending payouts are stronger, they might not. This gives mining pools a lot more say in how upgrades are handled and makes ideals like Drivechains far less attractive, requiring miners to custody funds and issue deposits and withdrawals between the main chain and the Drivechain.
What is OCEAN?
OCEAN positions itself as a non-custodial, transparent, and miner-centric pool which aims to empower miners and foster a more equitable distribution of mining rewards.
OCEAN might be a new pool, but it has its roots in mining since it is a rebrand of Eligius by Mummolin Inc., which Luke Dashjr co-founded. OCEAN relaunch comes off the back of a successful completion of a $6.2 million seed funding round led by Jack Dorsey, along with investors like Accomplice, Barefoot Bitcoin Fund, MoonKite, NewLayer Capital, and the Bitcoin Opportunity Fund, among others.
As a new pool on the blockchain, OCEAN aims to attract miners from other pools and encourage smaller miners who gave up to spin back up and point their hash rate to this pool by offering 0% fees for the first two months of operation. After this teaser term, fees will apply to help pay for the pool’s operational expenses and future developments.
What does OCEAN bring to the mining pool market?
Mining pools have been a revelation in the efficiency of mining, allowing more miners to support the network and drive up the hash rate to all-time highs. Still, its current format seems to be reaching a point where it has to change, or it will hold back the growth in the next phase of Bitcoin adoption. The role of mining pools must change for Bitcoin to exist as a truly decentralised network with a robust asset on top of it.
Stratum v2 pools like OCEAN feel that offering more transparency and giving more control to individual miners will help with the distribution of the network and reduce the chances of cohesion or the dreaded 51% attack.
Non-custodial and transparent
OCEAN is a non-custodial pool, meaning that miners retain ownership of their coins at all times. This eliminates the risk of pool operators absconding with miners’ funds, a concern that has plagued the industry in the past. When miners use OCEAN, they get paid directly from the Bitcoin network in the coinbase transaction.
Additionally, OCEAN is transparent about its operations, publishing real-time data on hash rate, block rewards, and payout calculations.
Giving miners more autonomy
Under the current mining pool setup, individual miners are slaves in operation; they are solely focused on producing hash rate and are not concerned with any other mining process responsibilities. Actions like running a full node, sourcing transactions, and constructing the block template are left to the mining pool, but with OCEAN, Miners have direct control of the operations.
OCEAN will introduce a way for miners to perform block template construction independently while still having the benefits like consistent payouts that come with being part of the pool.
Dealing with dust
As smaller miners join a pool, they often need help to reach the payout threshold, leaving them exposed to eating the costs of mining, with their funds stuck with a custodian; this is not ideal for the average garage or home miner. Smaller miners and the mining pools they use now have a dust problem; they have generated funds, but they feel it would be a poor allocation of resources to pay out more frequently.
Considering the increase in on-chain fees, mining pool payout thresholds would only be encouraged to rise to reduce their own on-chain footprint and cost when paying out hash rate producers.
While OCEAN has a payout range of roughly 1 million sats over time, even reaching this level will become more complex. OCEAN stated they plan to incorporate Lightning payouts, which will solve the dust problem for small miners. Having funds move on this L2 will also serve the dual benefit of bringing more liquidity to Lightning, and miners might be more interested in running their Lightning routing nodes.
A new wave of mining pools
The launch of OCEAN is a welcome development for the Bitcoin mining community. By addressing concerns about centralisation and transparency, OCEAN has the potential to foster a more equitable and resilient mining ecosystem. While the launch seems successful and the hash rate for the pool increases, longevity will be essential.
The market will decide if miners will side with the traditional mining pool agreements given that they are becoming more onerous in the form of KYC mining pools and Green mining pools, or will they opt for the incentives presented by pools like OCEAN?
Will OCEAN be taking market share away from current mining pools, or will it attract an underserviced cohort reluctant to mine under previous conditions, effectively bringing more hash rate to the network?
Only time will tell.
If OCEAN can continue to grow and attract miners, it can play a significant role in shaping the future of Bitcoin mining.
Do your own research.
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