Proposing a (potentially less contentious) difficulty drop solution

Summary:

David Manheim, an economist and game theorist, proposed a possible compromise solution to the halving-difficulty-drop problem in Bitcoin. There is a split in the discussion on the list about the costs and benefits of a potential solution. Lukejr suggested that the activation of any emergency solution should only occur if there was a stall after the halving. However, Paul Sztorc noted that this problem could get disastrous with some bad luck very quickly. The methods implemented by many altcoins with smooth/dynamic retargeting are not suitable, as people didn't sign up for them, and there are stability issues.Manheim's proposal is for a short temporary dynamic difficulty retargeting after the halving which will allow for a fix while making it clear that the original rules of Bitcoin shouldn't be discarded. He suggests using the remaining 1344 blocks of the 2016 blocks after the halving for a dynamic retarget without changing the schedule otherwise. The initial retarget difficulty would be half of the previous one, but it would quickly stabilize at the appropriate level using any dynamic method. However, the probability of orphaned blocks increases for a couple of blocks. At block 421344, the system reverts to using the current method, and that can use the entire last 2016 blocks to smooth out the lower difficulty adjustment that occurred.The proposal could be used for the three halvings after this one with correspondingly shorter retarget windows since 210000 isn't divisible by 2016 until we're down to the 1.25btc coinbase reward, with 336 blocks until the next retarget. The only remaining question is what temporary retargeting method should they use? Smooth difficulty readjustment methods have been implemented by many altcoins, such as Kimoto Gravity Well (KGW) and Digishield. Heavycoin's temporal retargeting is another such method.

Updated on: 2023-06-11T04:23:37.161366+00:00