Discussion, re: lowering PoW reward since fair distribution is a success

General
1

[size=10pt]I agree with lowering the PoW reward immediately…[/size]

[ul][li]…since fair distribution is a success. This was also mentioned in Sunny King’s last weekly update, referring to a
reddit post.[/ul]

[size=12pt]Also, look at what the D7 pool is advertising:[/size]

The D7 Peercoin Pool administration regrets to inform our users about cease of all mining operations, effective immediately. We are choosing this path in light of recent operational issues and low demand. All Peercoin withdrawals will be available until the 20th of December, 2016, after which all interface with the D7 Peercoin Pool will be terminated permanently. We sincerely hope you have had good experience mining in our pool

This is probably due to the lower Peercoin price and the massive Solo SHA256 mining operations that are sucking the value out of Peercoin.

Lowering the PoW reward, will increase the price of Peercoin over time, it will bring d7 into more demand, and the large solo mining farms will probably transition to another coin that pays better.

If we do this, it has to be pretty quick. Sunny King, if we change the PoW reward, how fast can we do it?

Since Christmas / Holiday Season is upon us, we should do this immediately. I propose in in the next 10 days.

Suggestion: Effective Dec 1, 2016, lower PoW mining reward to 30% of what it is currently.

[size=12pt]I’ve revised my stance to support the one written by learnmore here:[/size]

https://www.peercointalk.org/index.php?topic=4780.msg45122#msg45122

2

I disagree with the proposal. PPC is meant to be a stable and secure cryptocoin. A big change like this would undermine its reputation of stability, especially if done quickly.

3

i don’t think its a good idea either

4

Agreed.

5

The PoS/PoW link in Peercoin is amazing.

Yes, raising the PoS-diff is the perfect the answer to dropping PoW-diff.
But no, I don’t know how to achieve that quickly.

6

Obviously I disagree.

Please give full disclosure Chronos. Are you currently mining peercoin in any way, shape or form?

Changing future block PoW rewards doesn’t make it less stable, or less secure.

The whole point of PoW was for distribution. Lowering the speed of distribution doesn’t change it from being stable or secure.

That’s an interesting tagline you chose to support your argument. Let’s discuss this further.

P.S. Obviously Sunny King saw some merit in the discussion, or he wouldn’t have included it in his Weekly Update.

7

Why? Please elaborate.

8

Good point. But 33% is rather arbitrary – how about removing PoW altogether? It’s not needed for security. It only inflates supply.

On the other hand, reducing PoW rewards by a percentage would possibly cause pools to be more likely, not less likely, to drop PPC support, since the mining ecosystem would tend to shrink as a result.

Full disclosure: I do not currently own any PPC, and I have never mined PPC. I’m just here because I like cryptocurrency, and many people in this community are my friends. :slight_smile: So you can safely disregard my opinion, if you would like.

9

Continual distribution via Proof-of-Work ensures that network security, provided through Proof-of-Stake, progressively hardens.
This hardening is an attribute defined by the state of dispersion the network exhibits. To maintain a decentralized network there
must be action against stagnation in supply concerning whom the new supply is awarded to. Also, I believe that the entropy
Proof-of-Work introduces helps prevent a bad actor from pre-calculating the next intervals for future proof-of-stake solutions which
would allow the actor to generate a few blocks in a row and execute a malicious attack that could potentially harm the network.

10

I agree that continuing Proof of Work is important, I’d like to see that saeveritt…

To address this from Chronos:

Large scale solo farms wouldn’t be able to function for low profitability and low hash power.

What happens is the opposite. Since solo mining is unprofitable, mining pools increase.

Most miners have seen this happen with every new coin out there. When difficulty is low, and rewards are high, solo mining works best. When difficulty is high or mining rewards are low, pool mining makes more sense, especially for small scale miners who enjoy doing it as a hobby, or to earn a few cents with some usb miners laying around at low cost.

I’m just trying to get a full understanding, that’s all… I suspected my opinion wouldn’t be popular with active miners. Thats why I had to ask.

As far as the 33%… It was actually 30% – and yes, it was arbitrary. I suspect that if it was vastly lowered, by a significant amount, that would probably end up raising the current market price, as well as, shake loose some huge mining farms that are mining and selling peercoin as fast as they can.

What we might end up with, is more Proof of stake minters and network users… which is the end goal. If PoW was more difficult, we wouldn’t have so many new coins in circulation.

At some point we should really consider this transition. We can let it happen naturally (as per existing code), or we can speed it up. Since adoption is slower than new developments out there, it makes sense we’d encourage it sooner than later.

In 2012 when the code was released, it was a guestimate on what the future holds. After 4 years, we have a better look. Surely everyone expected the coin code, and network be developed and improved. Sunny King always suggested the transaction fee of 0.01 could be adjusted at some point in the future. I never thought that meant that PoW rewards were engraved in stone either.

11

Rather than an arbitrary POW haircut perhaps we should look at directly linking POW difficulty with POS difficulty. If mining rewards become more scarce as minting increases then current stakeholders can “vote” for decreasing the proportion of POW rewards by putting more of their holdings to work in securing blockchain. As it is right now, POW and POS difficulties are largely independent and only POW leads to profit while POS simply matches inflation.

Another consideration would be to simply make POW difficulty unidirectional. Since block timing doesn’t depend on POW, the protocol could mandate that once miners hit a certain difficulty, they will have to at least reach that same difficulty again in order to continue minting no matter how long it takes. Along with the existing diminishing POW rewards at higher and higher difficulties, each generation of miners would eventually be priced out of the market while blockchain security would never suffer thanks to POS.

On the other hand, POW has thus far been very good for Peercoin because it keeps a steady supply on the market. A supply shock would surely boost PPC price in the short term but would quickly evaporate the market and lead to a bubble. Peercoin is not a pump-and-dump. Don’t be deceived by the nearsighted misappropriation of values at Coinmarketcap. Clearly a majority of current “investors” don’t even perceive the concept of “fair distribution.” In any case, I believe that it is still several years too early to refer to distribution as a “success” as if in the past tense anyway.

In my opinion, whether POW rewards are modified or not, the growth of Peercoin will derive more from recognition of its utility and accessibility (through endeavors like PeerAssets and PeerKeeper) than from exclusivity. SK has brilliantly designed supply to decrease in proportion to velocity through the .01 mandatory fee. If you want to see PPC priced higher, we should work on getting Peercoin into more hands rather than fewer.

12

Very good analysis learnmore. I agree with your assessment on the issue.

13

I am against disbanding PoW. I agree with Learnmore on the benefits of PoW. PoS coins usually have got very low volume, so new coins are important for having a decent trade volume. Just look where Copycats like Blackcoin, Mintcoin or Hyperstake have gone, which disbanded PoW very early on.

And the distribution still needs to improve. 8,500,000 Peercoin is sitting in the TOP 5 addresses.


That is more than one third of all peercoin.

Instead of simply disbanding PoW, I would favour a self-funding model for Peercoin like many other coins have it, for example Decred or Zcash. We could cut the mining rewards by 50%, and use the other 50% to finance development and marketing. Of course, it has a risk of corruption as it always needs trusted members of the community to control the private keys of the recipient addresses, and to fairly distribute the generated PPC to those ones who are doing work for Peercoin.
Even if it just ends up in paying for Peercoin banners on some websites, that’s still better than to reward random miners.

14

I was reminiscing over the 3 years that I have been a member of this community. Not exactly there yet… celebrating the anniversary next week. I was thinking of all the threads about PoW that have appeared during the 3 years. Then I check the forum and notice a new one.

I thought it would be beneficial to reference an old thread over the debate of the future of PoW.
https://www.peercointalk.org/index.php?topic=779.0

There are more threads with valuable discourse over this important topic. Some of these community members may have left or gone silent for the time being. Much can still be learned from their opinions.

As for the topic at hand. I am generally for the reduction of the PoW reward. A cost-benefit analysis would be a good measure to determine whether it is worthwhile to lower the PoW reward.

15

I don’t support any changes to PoW system.
This means I also disagree linking the PoS and PoW difficulty.

First of all, we want stability. Manipulating the algorithms is dangerous.

Lowering the reward won’t affect the profitability as the profitability is directly linked to the bitcoin mining profitability. It will just result in lower hashpower and therefore more PoW blocks compared to PoS blocks.
But maybe that’s what your after, more PoW blocks for more chain security?

Linking PoS and PoW difficulty is very dangerous. As the PoS difficulty would directly manipulate the PoW profitability. This can swing two ways. Either, PoW becomes so unprofitable that mining stops, or PoW becomes so profitable that or hashpower skyrockets together with our inflation.

So no changes for me.

16

The biggest challenge to doing this is that it requires a hard fork, to which all (or the majority of) nodes must update. In this case, there is an incentive for mining nodes to not update, because it reduces their revenue. Without the support of mining nodes, the update may not be successful, splitting the network.[/quote]

The community must come to a consensus on such a major overhaul of the network. As Chronos mentioned previously the hard fork could be dangerous given the incentives of the miners and those who do not agree with the decision.

It seems disabling PoW discussions are brought up debated and then pushed off to a later date. At what point will it be worthwhile to disable PoW? If not now when?

17

[quote=“hrobeers, post:15, topic:4096”]Linking PoS and PoW difficulty is very dangerous. As the PoS difficulty would directly manipulate the PoW profitability. This can swing two ways. Either, PoW becomes so unprofitable that mining stops, or PoW becomes so profitable that or hashpower skyrockets together with our inflation.

So no changes for me.[/quote]
Sorry, I meant earlier that PoS diff and PoW reward are linked. Which they are since the dawn of peercoin.

PoW reward is halfed every time PoS hash rate grows by the factor of 16.

Lines 829 and following of main.cpp are the ones I’m referring to.

18

Wrong, it is like this:

PoW reward is halfed every time PoW hash rate grows by the factor of 16.

19

Wrong, it is like this:

PoW reward is halfed every time PoW hash rate grows by the factor of 16.[/quote]
Yep, wow.

I believed it to be different for … two years?

What a day.

Willy out.

20

Here is some proof, this is me mining testnet with an ASIC.

multiple blocks in one second, you can see the reward drop steadily.