Stratum V2 Update: Decentralizing Bitcoin Transaction Selection with New Sub-Protocol

The Stratum protocol has undergone a major transformation with its developers’ release of a new reference implementation (SRI) update for Stratum v2. This new update has been announced as a game-changer in mining as it empowers miners to select transactions through a new sub-protocol and their node. This brings democratization to transaction selection in pooled mining and decentralizes Bitcoin mining in general. In a recent press release, the developers have invited miners, pools, firmware makers, and the community to test the new implementation using the guidelines they’ve provided. They have also urged users to provide feedback after testing using a designated form. In this article, we will take a closer look at the new update and how it is set to revolutionize Bitcoin mining.

What is the Stratum Protocol?

Stratum is a mining protocol that is widely adopted by Bitcoin mining pools. It is responsible for how mining devices communicate with the pool’s server, and how new jobs are distributed to the miners. Stratum V1, the current industry-adopted protocol, is not entirely decentralized as transaction selection is still largely done by the mining pools themselves.

What is Stratum V2?

Stratum v2 is a more decentralized mining protocol than its predecessor. The most significant difference is that it enables miners to select transactions themselves, rather than leaving it to the mining pool. This ensures that transaction selection is done by miners themselves, making Bitcoin more resistant to censorship.

How does the Stratum V2 Reference Implementation (SRI) work?

The Job Negotiator (JN) is the primary component of the Stratum v2 protocol. It connects the mining device to the mining pool and facilitates the distribution of mining jobs. The downstream mining farm runs a JN that connects to a JN run by the pool and requests a unique identifier for mining jobs using the AllocateMiningJobToken message. The pool sends back a unique token and a coinbase output used for payouts.

The downstream JN then connects to a template provider, which sends a new template and SetNewPrevHash to the downstream JN. With these, a new job can be constructed and the downstream JN sends a CommitMiningJob message containing a proposed set of transactions to the pool. The pool always accepts the miner’s proposal in the current iteration, but in the next release, miners will have the ability to fall back to a different pool or solo mine if the pool fails to accept transactions selected by the downstream’s template provider.

Translation Proxy is another significant component of the Stratum v2 protocol. It sends a SetCustomMiningJob message to the pool, which verifies the work and sends back a SetCustomMiningJobSuccess message. The Translation Proxy then translates the message and sends the mining.notify message to mining devices, which submit shares to the pool through the Translation Proxy.

What are the benefits of Stratum V2?

The Stratum v2 protocol promises to bring a host of benefits to Bitcoin mining. Here are a few key ones:

1. Democratization: By enabling miners to select transactions themselves, Stratum v2 brings democracy to pooled mining, making it more decentralized.
2. Increased Resistance to Censorship: With transaction selection done by miners themselves, the risk of censorship is significantly reduced.
3. Better Security: Stratum v2 uses the encryption protocol TLS to secure the communication between mining devices and the pool’s server.
4. Better Efficiency: Stratum v2 protocol eliminates much of the communication overhead between mining devices and pool servers, resulting in better efficiency and lower latency.
5. More Control: Miners have more control over the mining process, which improves the decentralization of Bitcoin mining.

Conclusion

The new reference implementation update for Stratum v2 is a significant milestone for democratizing transaction selection and decentralizing bitcoin. Stratum v2 allows miners to select transactions via a new sub-protocol and their node, ensuring transaction selection is done by miners themselves. The implementation also improves encryption, complies with the latest spec updates, and plans to enable pools to perform spot-checks on block validity. The developers invite testing and feedback from miners, pools, firmware makers, and the community to improve the protocol further. The future of Stratum v2 looks promising, promising a more robust and decentralized mining protocol.

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