Author: Thomas Voegtlin 2015-05-10 21:48:39
Published on: 2015-05-10T21:48:39+00:00
In an email conversation in May of 2015, Mark Friedenbach proposed a new idea for adjusting the difficulty of cryptocurrency mining. He suggested that miners should be allowed to select a different difficulty for each block within a certain range, which would then be used for the proof of work check. This miner-selected difficulty would also raise or lower the maximum block size for that block by a function of the difference in difficulty. The proposed function was assumed to be a linear identity transform, but other functions could be used as well.However, there were concerns raised about how a linear identity transform between block size and difficulty would work. The miner's reward for finding a block is the sum of subsidy and fees, with the probability of finding a block being inversely proportional to the difficulty. The expected reward of the miner depends on this probability and the reward itself. When a miner chooses a new difficulty, it affects the size of the block they can collect fees from. In the best case scenario, the collected fees will be proportional to the block size. However, with the proposed linear identity transform, increasing the block size never increases the miner's gain. As long as the subsidy exists, the best strategy for miners is to reduce block size. Thus, it was suggested that a quadratic or other function with compounding marginal cost may be preferred over a linear function.
Updated on: 2023-06-09T20:13:54.607916+00:00