The apparent centralization in both proof-of-work and proof-of-stake protocols is “tragic because it’s antithetical to the cypherpunk ideals” that birthed the the bitcoin and blockchain movement, Tomer Afek, the CEO at the crypto platform Spacemesh, has argued. To back this assertion, Afek told News that only two Bitcoin mining pools control more than 50% of the network’s hashrate while the top five pools control more than 75%.

‘Centralization and Consolidation of Mining Resources’

For Afek, the concentration of the Bitcoin network’s mining power among a few players should worry decentralization proponents because it means such “centralized actors” are accountable to no one. According to the Spacemesh CEO, the situation is even worse with protocols that use the proof-of-stake consensus mechanism.

To Illustrate, Afek claims that in the vast majority of chains using this mechanism, it is “a tiny coterie of inside investors and early team members [who] control the lion’s share of coins.” This inevitably enables such individuals to exert undue influence over the network.

Turning to the often less talked about competitive nature of the race to mine the next block, Afek, former investor at venture capital firm Evergreen VC, lamented how this is potentially contributing to the “centralization and consolidation of mining resources.” When this is combined with the “single winner” for every block interval requirement, this can only result “in congested block space and high transaction fees for users.”

Meanwhile, in written answers sent to News via Telegram, the CEO also offered his views on allowing anyone with a computer and storage space to participate in a network’s consensus process. He further revealed why his organization spent five years researching and developing before emerging from the shadows. Below are Tomer Afek‘s answers to questions sent. News (BCN): Proof-of-work mining often draws flak for its energy consumption but its competitive nature is less talked about. Can you tell our readers more about the competitive nature of this consensus mechanism?

Tomer Afek (TA): Satoshi Nakamoto solved the Byzantine Generals Problem in an ingenious way: by replacing one actor, one vote with one CPU, one vote. This allowed permissionless, public networks based on this solution, known as Nakamoto Consensus, to flourish, but in doing so they inevitably give rise to a competition to be the first miner to solve the cryptographic puzzle and successfully mine the next block.

Nakamoto consensus is secure and has served Bitcoin well, but it has some downsides. For one, the interval between wins is unbearably long for all but the very largest miners, which creates strong pressures towards centralization and consolidation of mining resources (the rule of large numbers works in favor of miners and reduces variance). For another, the network must ensure that in the vast majority of cases there’s only a single winner during the block interval. This means difficulty must remain high and throughput low. In practice this results in congested block space and high transaction fees for users.

All of this is to say nothing of the energy intensity inherent in proof of work mining, and of the cases where in fact miners are not economically incentivized to act honestly, a phenomenon known as selfish mining.

BCN: Are you in agreement with this notion that proof-of-work and proof-of-stake protocols have failed to live up to the original idea of decentralized blockchains?

TA: There’s been a worrying and frankly tragic trend towards massive centralization in both proof of work and proof of stake protocols over the years, tragic because it’s antithetical to the cypherpunk ideals that gave rise to Bitcoin and the blockchain movement. While it’s true that Bitcoin has a thriving ecosystem of users who run their own nodes and Bitcoin is therefore somewhat inoculated against certain forms of attack, in practice only two pools currently control more than 50% of Bitcoin hashrate and the top five pools control more than 75%. This trend should be worrying to anyone who cares about decentralization since these pools are centralized actors largely acting with little to no accountability and requiring the trust of their constituent miners.

The situation in proof of stake chains is even worse. In the vast majority of such projects, a tiny coterie of inside investors and early team members control the lion’s share of coins, stake, and thus influence over the network. Even Ethereum, which only recently abandoned proof of work and long claimed to stand for decentralization, is now subject to massive and growing centralization due to economies of scale related to staking, and MEV.

BCN: Can you explain to our readers the difference between competitive mining and race-free mining, maybe with an example?

TA: It’s really quite straightforward, and is down to simple statistics and probability. If you as a home miner, even one with the resources and acumen to acquire and operate a Bitcoin mining ASIC, attempt to mine solo, from home, without joining a mining pool, you can be expected to successfully mine one block every 30 years on average, due to the competitive dynamics described above. You can of course join a pool, and most do, but then you’re paying a portion of your rewards to the pool operator and you’re trusting them to honestly calculate and pay out rewards with little to no accountability.

By contrast, with Spacemesh, a home miner with even the minimum required resources (256GiB free hard drive space, a consumer-grade desktop computer, and an always-on broadband Internet connection) is guaranteed to earn a reward at least once every two weeks. So there’s no reason to join a pool and no need to outsource trust to a pool operator.

BCN: Your company Spacemesh was reportedly in the research & development phase for about five years before coming out of the shadows. What problem were you trying to solve and is the solution still relevant today as the industry has evolved considerably in the last five years?

TA: In brief, Spacemesh is doing something that no blockchain before has ever attempted to do: to make mining from home both accessible and economically sustainable for ordinary Internet citizens forever. Doing this has required developing a suite of bespoke, cutting edge protocols and technologies, a feat that turned out to be harder and take longer than any of us expected. The good news is that, as mentioned above, the Spacemesh network went live in July and we’ve now proven that these technologies are viable and secure.

Among other technologies that we’ve developed, this required creating a bespoke consensus mechanism known as proof of space time that’s a hybrid of proof of work and proof of stake. Like proof of work, it’s permissionless, such that anyone, anywhere in the world can boot up a new miner anytime without permission and without specialized hardware or expensive stake. Like proof of stake, it’s green, requiring 99% less energy than an equivalent proof of work network.

We believe that these problems—fairness and accessibility to home miners, permissionlessness, and environmental friendliness—are only more relevant today than when we started.

BCN: Could you describe blockchain topology and the difference between chain topology and the mesh topology that your platform uses?

TA: The key innovation that allowed Spacemesh to solve the competitive mining dynamic described above, and introduce a new era of cooperative mining, is the mesh topology. In a legacy blockchain such as Bitcoin, as described above, all miners compete to successfully produce the next block, an inefficient and energy intensive process. By contrast in Spacemesh many miners collaborate to produce each block: currently, 50 miners submit their opinion on the next block, and the decentralized, permissionless protocol assembles votes from honest participants into the next canonical block. These “opinions” from many miners form the mesh topology.

BCN: Do you believe that allowing anyone with a computer and storage space to participate in the network’s consensus process will lead to a resurgence in crypto mining?

TA: We don’t have to wonder! We’re seeing this play out before our eyes now among the Spacemesh community. We have an active, engaged community of tens of thousands of miners, most of them home mining enthusiasts who have dusted off old mining gear, after having previously given up GPU mining for Ethereum or hard drive space mining for Chia, and booted up new Spacemesh miners. The proof is in the pudding: 50 TiB have already been committed to the Spacemesh network and the epoch-on-epoch growth since genesis has been overwhelming.

Of course, we won’t stop here! It’s still not as easy to mine Spacemesh as we would like. The onboarding process still has a few bumps and the resource requirements are still higher than we’d like. Our vision is to enable mining across the entire range of consumer-grade hardware, down to and including a $100 Raspberry Pi and smartphones. There’s no theoretical reason the Spacemesh protocol won’t support this in the future. We’re well on our way, having already significantly reduced the required resources.

Spacemesh is the IKEA of blockchain. We know that ordinary people place a disproportionately high value on things they participated in building themselves, a well studied psychological phenomenon known as the IKEA effect. We see today that diehard Spacemesh miners wouldn’t part with their hard-earned Smesh coins even for prices far above where they currently trade on the market.

What are your thoughts about this interview? Let us know what you think in the comments section below.

By admin

Related Post

Leave a Reply

Your email address will not be published. Required fields are marked *