SmartPool

The Problem

Mining in Cryptocurrencies is Highly Centralized

More than 80% of mining power in Ethereum emanates from 5 mining pools. Similarly, the main 8 pools control the same fraction of mining power in Bitcoin.

Transaction Censorship and Single Point of Failure

Pools dictate the transaction sets in new blocks, not miners.
Pools are subject to continuous DDoS attacks. If a big pool goes down, the security of the network is significantly compromised.

Mining Solo is Difficult for Small Miners

High variance of returns, hard for users to plan economically. Decentralized mining pools for Bitcoin (e.g., P2Pool) exist, but are inefficient and not applicable to Ethereum.

Centralized Pools Take High Fees

to cover for their operation costs and gain profits.

The Solution

Decentralize Pools by Leveraging Smart Contracts

We essentially replace the centralized pool operators by smart contracts, which is run and managed in a decentralized way on the blockchain.

Mitigate Transaction Censorship Threat

Miners can propose their own sets of transactions.

Guarantee Low Variance

Although being decentralized, our pools can guarantee the same variance in payments as centralized pools.

Low Fees

The decentralized formation of SmartPool does not require any infrastructure to operate the pool.
SmartPool may take negligible to almost zero fees to maintain the pool front-end and to develop new features.

How It Works

We use Ethereum smart contracts to build a decentralized pooled mining protocol called SmartPool. Our solution implicitly replaces the centralized pool operator by network participants who run the Ethereum network.

SmartPool includes several novel data structures and design choices which make its protocol secure and efficient. Specifically, we devise a new mechanism to verify and record miners' contributions to the pool without centralized operators. SmartPool's efficient probabilistic verification drastically reduces both the number of messages and the costs to run the pool for miners. Using a novel data structure called the augmented Merkle tree, SmartPool's batched share submission and efficient payment scheme remove any incentive for submitting invalid batches.