Bitcoin Decentralization Fund - subsidizing small mining pool operators

[toast]

We are all interested in preventing 51% and/or 26% attacks.

Let's discuss whether or not it is feasible to subsidize small mining pool operators (those with 5-25% of the mining power) to make it more profitable for miners to switch away from large pools. I am not terribly familiar with the various numbers you'd need to make this calculation, so I invite the community to try to figure this out.

I am sure many of the early adopters would be willing to donate to protect the value of their BTC. This can be a dynamic process, with subsidies scaling up with "centralization alert" level and scaling down as the pool gets closer to the 25% maximum.

I look forward to hearing what everyone thinks.

[eleuthria]

We are all interested in preventing 51% and/or 26% attacks.

Let's discuss whether or not it is feasible to subsidize small mining pool operators (those with 5-25% of the mining power) to make it more profitable for miners to switch away from large pools. I am not terribly familiar with the various numbers you'd need to make this calculation, so I invite the community to try to figure this out.

I am sure many of the early adopters would be willing to donate to protect the value of their BTC. This can be a dynamic process, with subsidies scaling up with "centralization alert" level and scaling down as the pool gets closer to the 25% maximum.

I look forward to hearing what everyone thinks.

You realize only one pool (GHash.io) is actually above 25% of the hash rate these days, right?

[toast]

Sometimes BTC Guild too, but I see your point. The purpose of this fund would be to discourage them from growing any bigger. Subsidies would only be paid if there is actually a threat. This is planning for the future.

So at the moment we would maybe give *very* minor subsidies to the 3rd through 10th biggest pools, inversely proportional to their mining percentage. But not before paying bounties for them to implement merged mining and other obvious incentives.

edit: sp

[eleuthria]

Sometimes BTC Guild too, but I see your point. The purpose of this fund would be to discourage them from growing any bigger. Subsidies would only be paid if there is actually a threat. This is planning for the future.

So at the moment we would maybe give *very* minor subsidies to the 3rd through 10th biggest pools, inversely proportional to their mining percentage. But not before paying bounties for them to implement merged mining and other obvious incentives.

edit: sp

BTC Guild is no longer 25% of *hash rate*.  It occasionally has days where it is above 25% of blocks, but nothing can be done to prevent luck.  Even a 10-15% pool can have a day where it shows up above 25% if they get a decent burst of luck.

[toast]

Ok, fair enough. But you are describing reasons we shouldn't need such a fund right now, rather than discussing whether such a fund would ever be necessary. People don't have to donate unless they think there is a threat.

Wouldn't just holding some number (what is the magic number?) of BTC in a fund with this stated purpose be enough to stop mining pools from attempting to get more and more miners? Right now the incentive structure is such that a mining pool operator always wants miners to join his pool. I think the community could re-shape this incentive structure so that at around 20% hash rate, miners start leaving for other pools because the large pool is becoming less profitable for them.

[jaked]

We are all interested in preventing 51% and/or 26% attacks.

Let's discuss whether or not it is feasible to subsidize small mining pool operators (those with 5-25% of the mining power) to make it more profitable for miners to switch away from large pools. I am not terribly familiar with the various numbers you'd need to make this calculation, so I invite the community to try to figure this out.

I am sure many of the early adopters would be willing to donate to protect the value of their BTC. This can be a dynamic process, with subsidies scaling up with "centralization alert" level and scaling down as the pool gets closer to the 25% maximum.

I look forward to hearing what everyone thinks.

I'd rather fund research & development to prevent such attacks.
Subsidizing behavior is brittle and temporary. The protocol itself should protect against such attacks.