Known for censoring bitcoin transactions in 2021, Marathon is once again making headlines with an insidious attack against its competitors.
Marathon undermines competition
Marathon – the largest American miner – has been causing a stir since the launch of its “Slipstream” service, which cuts into the income of other miners.
To understand the imbroglio, we must remember that miners do not construct the transaction blocks themselves. It is in reality the “pools” which take care of this.
Miners pool their hashrate via pools in order to smooth their income. Large pools are Foundry USA, Antpool, f2pool, viaBTC, Ocean, etc.
All of these pools pay their miners via a system called FPPS (Full paid per share). In essence, miners are paid for each block, whether the pool found one or not.
The calculation is based on a formula taking into account the average reward of the last blocks. That is, the automatic reward of 6.25 bitcoins plus transaction fees.
Marathon is unique in that it is large enough (25 EH/s) to have its own pool. The problem being that with Slipstream, Marathon collects transaction fees mano-mano. The latter are therefore not taken into account in the calculation of the FPPS system.
Slipstream is a service for inserting inscriptions (like 4 MB ordinals) into bitcoin transactions. Here is the result :
The fees Marathon receives for inserting this ordinal do not appear in the on-chain transaction fees. They cannot therefore be taken into account in the FPPS calculation. The consequence is better remuneration for all pools to the detriment of miners.
In other words, Marathon is putting obstacles in the way of its competitors and calling into question the viability of the FPPS system.
The end of the FPPS system?
The FPPS system is a selling point to attract miners who prefer to receive their payments as regularly as possible. But there are two pitfalls.
As we just explained, pools can underpay their miners and pocket the difference. This will be more and more true as transaction fees represent a growing share of revenue (due to halvings).
The second problem is that pools can also overpay miners if they are unlucky. The risk is to go bankrupt.
Pools like Mara that carry out “off band” transactions make the bed of the pool Ocean which is the only one not to use the FPPS system. Payments are less regular, but miners receive their full dues. Everything is transparent thanks to payments made directly via the “coinbase” transaction.
In short, Marathon solicits transactions that nodes do not want to include in blocks. These large transactions require more memory and extend the IBD (Initial Blockchain Download) time.
Treating nodes as an inexhaustible resource that can be abused amounts to not understanding that the great advantage of bitcoin over shitcoins is its decentralization. However, this decentralization directly depends on the number of nodes.
Circumventing nodes by refusing valid transactions (OFAC), or imposing unwanted transactions on them (Slipstream), in both cases undermines what makes Bitcoin unique.
The power to select transactions should not rest with a handful of pools. It is high time to campaign for Stratum V2 in order to give miners the responsibility of choosing transactions.
The Ocean pool is the only one to have announced its intention to adopt the Stratum V2 protocol this year.
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