{ "episodeId": "SLP681", "speakers": { "stephan": { "name": "Stephan Livera", "role": "host", "tag": "STEPHAN" }, "evan": { "name": "Evan", "role": "guest", "tag": "EVAN" } }, "segments": [ { "speaker": "stephan", "time": "00:09", "start": 9.27, "text": "Hi everyone, and welcome back to Stephan Livera podcast, brought to you by Bold. American listeners, you can buy Bitcoin over at Bold for the industry's lowest fees, and also earn the highest Bitcoin back rewards with the Bold debit card. Now, joining me on the show today is Evan, and known online as v n r p, sorry, v n p r c, and, known and what- Working on the project, known as Hashpool. So we're gonna get into all this, but, first off, welcome to the show, Evan. Thank you, Stephan. I've been a long time listener, so this is a real honor. Excellent. Well, thank you. yeah, so look, let's get into this project that you're doing, Hashpool, and, I guess we should start with, you know, start with why. Like, why are you doing this? I presume it's because you wanna make some effort towards decentralizing Bitcoin" }, { "speaker": "evan", "time": "01:01", "start": 60.58, "text": "anyone who has been paying attention in the Bitcoin space, particularly to mining, recently probably knows that, that the entire mining industry is sort of trending in this, direction of centralization. We've got large mining pools controlling-- there's one in the US and one in China that control effectively, two thirds of block templates that are produced, one third in the US, one third in China, roughly speaking. this is a, in my opinion, this is a sy-sy-stemic risk to- All of Bitcoin. If, if either one of these, mining pools or, or mining pool cartels, gets leaned on by their state government, they can do some very bad things to Bitcoin. They can, the, the double spend attack is like this theoretical thing where you, rewind the blockchain and sort of claw back one payment. That's like an academic attack. Really, the, the attack vector is if one of these, countries wants to sort of just mess With Bitcoin, they can, stop, blocks from being produced, they can censor transactions, all, all kinds of things that would crash the price, it would cause big problems for people living on a Bitcoin standard like myself, perhaps like you, and it, it would really-- it would really, I think, throw back the Bitcoin project, years, perhaps decades, if, if one of these attacks was, was pulled off for real." }, { "speaker": "stephan", "time": "02:26", "start": 146.42, "text": "So let's just elaborate a little bit, just make sure it's accessible for everybody. We'll do our best best to keep it accessible for people. So when we send our Bitcoin transaction, right? I, let's say I sign it on my cold card or I send it from my hot wallet on my phone, it goes in mempool, in the mempool, and we're, we're, you know, I, ideally, or you, we're hoping that it gets picked up by one of these mining pools into their block. And so I guess here's where we're getting into kind of maybe there's a little bit of debate exactly on where the issues are or if there is an issue, because some people would say, \"Oh, see, the, the hash rate itself is decentralized around the world, but maybe the creators of the Bitcoin mining machines are a little centralized towards, let's say, Bitmain and, you know, the Whatsminer or MicroBT, and, and then the element we're talking about here is that the- The pool level. So as you said, one of the large pools in the US, I think as I look now, Foundry has about twenty-eight percent, of the network hash rate, and then what's kind of colloquially referred to as Antpool and Friends, let's say, one of the, the Chinese-based pools, kind of, it's see, I guess the concern that people have is that there's a bot-- there's a bunch of pools that are Distinct in name, but actually effectively are proxy pools of ad pool. I guess that's the concern. Do you wanna elaborate from your perspective?" }, { "speaker": "evan", "time": "03:52", "start": 231.65, "text": "Absolutely. So there's a lot, you've touched on a lot of, important topics. There's, people talk about mining decentralization, there's a lot of different things that go into that. construction of the hardware, like you mentioned, the pools, really where the pools come down to is, construction of block templates. And from a protocol perspective, this is the So really the most important thing to ensure that the Bitcoin blockchain, can remain censorship resistant." }, { "speaker": "stephan", "time": "04:20", "start": 259.51, "text": "Gotcha. And I guess we should just explain the block template part, right? Like the simple way I'm understanding that is You as a miner, so the reason miners, a lot of them use a pool, is because solo mining is very, very difficult, and they wanna smooth out the variation or the variability a little bit, because they want-- if you're a miner, you've got electricity bills and all these other bills that you have to pay, and therefore you would like your payouts to be smoothed out over time. And the reason, and what people actually in practice do, is they point their hash rate towards a pool, and that pool selects transactions out of the mempool or mempools that go into its block, this This process is known as, you know, block template creation. And so I guess one of the efforts that we're talking about here related with things like Stratum v2 and maybe Dardum on the ocean side is to allow the individual miners to select what goes into the block that, as part of that template, block template creation, correct? Precisely." }, { "speaker": "evan", "time": "05:15", "start": 314.85, "text": "Yeah. So right now on the current design, the current, most popular mining protocol by a long shot is Stratum v1. And it sort of has this model where the pool, constructs the block template, or the mining pool decides whose transactions get to go in and who doesn't and there's a, a, an effort to-- so this is kind of a, it's kind of a bad, bad system. we can do a lot better, and we have protocols out there to do better. Stratum v2, as you mentioned, which is what I built, Hashpool on. Also, the Datum protocol from Ocean Mining allows the miners who are contributing hash rate to the pool to construct their own block template, and they send that upstream to the pool when they, when they mine a block, and this, this really decentralizes Transaction selection, which is what's important for the censorship resistant property of Bitcoin." }, { "speaker": "evan", "time": "06:11", "start": 371.48, "text": "My project really Well, there's a lot, there's a lot of things that go into it, and we'll get into more of that later. But, sort of the, the, the, the thrust to protect the Bitcoin network as a whole is to, decentralize this block template production. We have these protocols out there, they haven't seen a lot of adoption. and I think part of the reason is that, the large mining operations aren't incentivized to produce their own block templates. There's some risk in there, there's legal risk, there's also technical complexity. they wanna hash, they wanna produce hash as fast as possible and get their payouts on a regular basis, like you mentioned. That's just good business sense. we wanna protect that, capability for large miners. Really, the thrust of my project is I'm focusing on small miners. I started it, after, after I, I've been thinking about these ideas for a long time, but, but I didn't jump in with two feet until s-kind of the BitX movement kicked off. Once I realized that there was this organic demand for small miners, and then seems to be picking up steam and growing, th-then I realized that maybe there is something to this idea. but kind of the, I think, I think in order to enable small miners, so small miners just like large mining operations, they, they need regular payouts. people running, Bitexes today, they're sort of pushed into, solo mining. And the reason for that is that this is sort of the most accessible way to build your own block templates and control your own stack from top to bottom. Bitex runners are, are- They place a very high value on self-sovereignty. They wanna be their own mining stack. The problem here is, I, I don't believe this model is really gonna be sustainable in the long run because, like you said it's very, it's, it's, it's very unlikely that a particular miner is gonna find a block. I think we found two or three BIDX blocks in all of history Since the project launched." }, { "speaker": "stephan", "time": "08:16", "start": 495.66, "text": "Right, and it's colloquially the term I've heard is lottery mining, right? Like they're kind of just, kind of, they're doing it for the ethos and maybe for a bit of fun. They're not necessarily like professionally doing this, but the, it's kind of the vibe is people are kind of plugging in one or a few bit axes at home. And that's kind of, that's kind of the vibe, and they're kind of accepting that it's not necessarily a, a profitable play per se, but they're kind of ideologically doing this." }, { "speaker": "evan", "time": "08:44", "start": 523.9, "text": "Exactly. It's an ideological movement. And that's great. I mean, I think you need an ideological core to start a mass movement like this. This is the right place to start. I'm just looking forward in the long term, and I, and I think if e-everybody's not gonna become a, a Bitcoin maximalist, if we wanna achieve like But global, global decentralization, we need to provide a profit motive there. And in my opinion, people need regular payouts. They need their bitx to actually pay them, in order to, to motivate, you know, greater like hardware optionality. if you've, talked to, Tyler Stevens, guy from Denver, he's got the, HeatPunks movement. So, Bitcoin miners can be used to, heat your house or heat your water, and every, everybody uses Heat in some form. if we want to really monetize, that use case, we need an option for small miners to produce, hash rate and receive regular payouts. And my thesis is that small miners need privacy as well. there's not really good options today for small miner to mine in a self-sovereign stack and maintain their privacy. and the reason for that is, again, large pools are centralized today, and, they-- for the most-- most of them, KYC their users, so you have to create an account, which means the pool knows who you are, they know, sort of your IP address, they know how much hash rate you're producing, and they, perform all Of the payouts for that hash rate. So these three pieces of information sort of completely identify you, and it makes it, not private at all, unless you solo mine. Now, if you're lottery mining, like you said, you can win a block and no one in the world knows who you are or that you've won a block. You can keep that secret. I wanna bring that kind of privacy and sovereignty down to an accessible, place where you don't need to be, an ideologically driven, Bitcoin maximalist. Everybody to be able to just install a phone wallet, buy a bitx, plug it together, and be able to see the sats land from their bitx into their phone wallet in real time. and the way, the best way I think to accomplish this is using, a new-- well, a newly popular technology called eCash. I don't know if you've covered eCash on the show before." }, { "speaker": "stephan", "time": "11:09", "start": 669.34, "text": "yeah, so actually, I, I, have been hitting up Calais. I need to get him on, but I have covered like federated, mint technology. So, yes, but- yeah, not, in, not in depth in the cashew, specific example." }, { "speaker": "evan", "time": "11:28", "start": 687.5, "text": "Okay, so I'll, I'll give a real quick example of how eCash works. Does that sound good? So it actually was a, technology invented in 1982 by this, giga-brain cryptographer named, David Chaum. It's called Chaumian eCash. And the way it works is, i-i-if you check out his, his paper, it's really great. It's like nine pages, it's written in plain English, you don't have to like parse mathematical equations. He uses a metaphor, of writing, a, a metaphor using carbon paper and envelopes. So I'll quickly go through the, the metaphor. carbon paper, if you're aware, I'm, I'm dating myself, I actually have used carbon paper. The, the mo- the zoomers these days probably wouldn't know what it is, but With like a reactive pressure sensitive layer of something, something made out of carbon. But the way it works is you put a piece of carbon paper on top of a piece of regular paper, and you write on top of the carbon paper, and the pressure of the ball point pen tip-- you wouldn't wanna use a felt tip pen-- it pushes through, and your signature actually gets, impressed upon both pieces of paper. It's used for creating forms in duplicate very quickly. You sign the form once, and you've got four copies now. Signature on it. So the, eCash, blinded signature metaphor is this. Say you've got sort of a, a, a bank manager who needs to, sign certain banknotes or sign certain, messages. So I'm a user, I want to, to get a blind signature on some, message. I take it, I put a piece of carbon paper on top of it, I put it inside of an envelope so that no one can read what's inside the envelope. I take it to the bank manager, I get him to sign it, or her, could be a female, I get her to sign it, and then, she never looks inside the envelope, so I take it back out of the bank, I've got a blind signature now, I can open it up and pull out the piece of paper inside, and there is a message there that the bank manager has never seen, doesn't know what the contents are, but I have a valid signature that could be validated later on by doing signature analysis. What David Chaum did was he took this concept and just Cryptographic signatures, which is a super clever way to do it because handwriting analysis isn't exactly a science, it's kind of more of an art form, I guess. Not, not exactly super secure either, you can just forge someone's signature. You can't forge a cryptographic signature. So we bring the cryptographic security guarantees to this blind signing process. And the way it's used to represent money is, I just take a-- I, I need to, sort of peg in some- transaction into the bank, or we're calling it a mint in this case, 'cause mints create money, banks just store money that someone else created, perhaps. and also crypto- Cryptographers and Bitcoiners don't like the term bank, so we'll call them mints. what I do is I, I, I create a, I request to mint some eCash with the mint. They're gonna create a, Lightning, invoice. So I pay the Lightning invoice, or I, I send them some blinded signatures. I, I take this, cryptographically blinded secret I send it to the mint, they're gonna hold onto that. When I make my lightning payment, they're gonna sign these blinded secrets and send them back to me. They sign the outside of the envelope. Their signature gets impressed upon the secret message inside, but the mint doesn't know what the contents of the message are. They give it back to me, I open the envelope, I take it out, I perform a process, that's, that's a cryptographic process called unblinding. So now, the mint has my Bitcoin that I sent to them over Lightning, and I have effectively an IOU. With a valid cryptographic signature that the mint has never seen before, which is a s- if you think about it in the physical metaphor, it's kind of like a banknote with no serial number, or really, I get to pick the serial number, the bank signs it, and they've got a cryptographic signature that anyone in the world can verify. And I've got a bearer token asset, so I've got a banknote with a valid bank signature that represents some eCash or some, Bitcoin stored in the bank vault. this, this is like a, a different way to, it's kind of a different privacy-preserving way to have digital cash, and it has, different properties from on-chain Bitcoin. we really like Bitcoin because it's fully verifiable and fully trustless. eCash sort of is a perfect complement to Bitcoin because it sort of flips the script. it can be verifiable, there's a protocol I can get into that later, but I'm, I'm imagining the end goal, e-eCash will be fully verifiable and it will be fully private, unlike on-chain Bitcoin. And the trade-off is that we need to trust the mint. So we're sort of flipping this trustless privacy axis here. and what this gives you when you have both systems in parallel is you can very quickly and easily, move funds between on-chain Bitcoin or Lightning, which is very close to on-chain Bitcoin, into eCash, and you can get away from the sort of, The, the privacy problems of on-chain Bitcoin, you can have really, really, really great privacy in eCash, and in exchange you trust the mint, so you have to build these, trust relationships with eCash mints. so that's how eCash works." }, { "speaker": "stephan", "time": "17:11", "start": 1030.98, "text": "Gotcha. And so in practice, people might have some kind of cashew or, you know, eCash wallet and interact with the mint. And generally speaking, it's done with Lightning, as I understand, 'cause it's, you know, obviously faster for deposit and withdraw, and you can kind of think of it like a custodial- A form of Bitcoin in a sense that people deposit and withdraw quickly. And so then, you know, this can be used in various contexts. There is the context of the federated sense, like the FedE and the kind of federated context, and then there's the, which is like Sort of combined across multiple mints or kind of a quorum of guardians, let's say, and in the single mint is known as kind of Cashu, and then as I understand, what you're trying to do is almost like a combo of Stratum v2 and Cashu together to form a different way of having payouts." }, { "speaker": "evan", "time": "18:05", "start": 1084.91, "text": "Yes. So, okay, we've discussed, we've discussed how eCash works. Yeah, one, one quick note. Fedimint is great. Fedimint is a multi-sig model, and I think multi-sig models are really great for, Safely storing large amounts. Cashu is single sig, I think it's really better for small amounts. So, I'm targeting sort of micro-transactions. I think that's what Cashu is really gonna be good at. but so we talked about how eCash works, let's talk about how mining works. So mining pools today are, a-as we, as we said, they, they pool rewards. If you don't use a pool, it's called lottery mining, just like buying a lottery ticket. You're hoping to strike it rich, chances are very low, the reward is very high. there is something called a lottery pool, so you can go to work. People like to, people like to gamble, it's like a fun activity. nobody expects to win, but if you, you get together with ten people at work for a lottery pool, you're all gonna buy lottery tickets, you're gonna put them together and share the reward. So we've got ten tickets now, ten times as much chance of a reward, and we're gonna split the reward ten ways. This is exactly how mining pools work. Every time you mine, your, ASIC device is finding a may or may not be good enough to find a Bitcoin block. Very low chance, but it might be good enough. So we take all these shares, which are essentially lottery tickets, pool them all together. If one of them strikes, the lot- strikes it, rich finds a block. we're gonna divide up the rewards amongst everyone according to the number of lottery tickets they contributed or the difficulty of the lottery tickets that they contributed. So this is how pooled mining works, as you said, it, it reduces the variability of payouts. So if I have a bitX and I'm solo mining, I might win a block once every ten thousand years. If I have ten thousand bitaxs and they're all pooled together, we might win a block once a year, which is a much better payout ratio. I can actually pay my electricity bill if I get a part of a block reward once a year. what Hashpool does is essentially, a-a-and every mining pool today ha-is a, is a custodial model. They just have a database. When you send your share in, they give you a record in the database. You're trusting the pool to divide up the rewards fairly and account for your share of the, the pool. This is just how it, it had to be built. eCash enables us to essentially take this database and externalize it as a digital cash token out in the world. So the way Hashpool works is, when I send a mining share in, my bitx finds a share, it sends a blinded message along with that share. The, hashpool instance, which is a mining pool and an eCash mint, it's gonna sign that blinded message and give me that digital bearer token back. So now I've got a, a digital, IOU for some mining share reward. That is self-custodied. I hold the eCash token and I can trade it to anyone, and the mint is blind. They have no idea that these-- they know that a, if I trade, an eCash token, the mint knows that a transaction happened, but they don't know" }, { "speaker": "stephan", "time": "21:22", "start": 1281.76, "text": "who" }, { "speaker": "evan", "time": "21:23", "start": 1282.52, "text": "sent to whom. And they can't trace you that way." }, { "speaker": "stephan", "time": "21:27", "start": 1287.31, "text": "So I mean, one, one thing there though, would this not also require you to use some kind of Tor or VPN, 'cause otherwise the Mint will know your IP, right? Yeah. So Yeah. So you do need to take, protection. You do need to take, like, on the network side, they wouldn't know who you are if you use these network techniques, but at least on the kind of the payout aspect of it, they don't know how-- they don't have to KYC you and know that I'm, you know, Stephan Livera or whatever, right?" }, { "speaker": "evan", "time": "21:55", "start": 1315.09, "text": "Yeah, exactly. So they can, they can look at your IP and they know the hash rate you're contributing. Mining is very time sensitive operation. So when I find this share, it's only good for a, a, a small window of time. I need to get it to the pool so that they can account for my share before it times out, 'cause otherwise it's worthless. So we do connect, typically we connect to pools and, And, and make our, and expose our IP address to the pool, so they would still know who is mining. But once you get that, digital bearer token, you can trade those over Tor, you can trade those in a peer-to-peer manner, and the mint doesn't necessarily know which IP address or which user is connecting. You can just use a VPN. you could use a VPN for mining too. There is gonna be some risk of, of loss there. There's gonna be a little bit of extra latency," }, { "speaker": "stephan", "time": "22:45", "start": 1365.31, "text": "some latency added there, but maybe it's like Worth it for you? I don't know. Yeah." }, { "speaker": "evan", "time": "22:50", "start": 1370.19, "text": "Yeah, I mean, it's up to each user to decide their threat model and, and what trade-offs they're willing to make. For a bitx, okay, maybe it's worth it. You're not really mining up a lot of value here." }, { "speaker": "stephan", "time": "23:00", "start": 1379.9, "text": "Gotcha. And then these eHash tokens that the, hash pool is, you know, I guess I, I'm thinking that as I understand it, it's like, in this model, the hash pool is like the server, and let's say I'm the" }, { "speaker": "stephan", "time": "23:18", "start": 1398.17, "text": "Server, I would hold these eHash tokens, and then presumably, as you said, like how, how would we price those tokens? Like how would I go and sell them or whatever? How would, how would we price those?" }, { "speaker": "evan", "time": "23:32", "start": 1412.23, "text": "you have to estimate the, the chances of the pool finding a block, which you can do. I'm planning to make everything, public and transparent on the pool's side. Gotcha. But let's say me as" }, { "speaker": "stephan", "time": "23:44", "start": 1424.04, "text": "a client, could I do that? Or is that something you as a server would do?" }, { "speaker": "evan", "time": "23:48", "start": 1427.73, "text": "Well, if you wanna trade them, you're going to have to, whoever's buying and selling them is going to have to, Have some, some means of, of pricing them." }, { "speaker": "stephan", "time": "23:58", "start": 1437.83, "text": "The lead sponsor of this show is Bold, the banking platform designed for Bitcoiners. With the Bold Virtual Visa Debit Card, you earn Bitcoin back on every purchase. The more Bitcoin you buy with Bold, the more Sats back you get on the card. Buy $2,500 of Bitcoin and earn 3% Sats back. Keep stacking with Bold to earn up to 10% Sats back. Bold offers the industry's lowest fees on Bitcoin buys and sells with zero added spreads. When starting out, you can use Bold Wallet, Bald is also supporting self custody with Bald Vault, a two of three collaborative custody multisig for zero monthly fees. With Bald, you get your own FDIC-insured checking account to store and send fiat, pay bills, direct deposit your paycheck, and replace your legacy fiat bank. Sign up today and get zero fees on your first ten thousand dollars of Bitcoin buys and twenty-five dollars of free Bitcoin when you buy a hundred dollars of Bitcoin or more. Go to getbald dot io. This episode is brought to you by CoinKite, the makers of my favorite Bitcoin hardware wallet, the Coldcard Q. Now, some people think self-custody is too hard, but it's really about taking responsibility for your Bitcoin wealth and understanding that self-custody gives you a true feeling of liberty. The Coldcard Q has a full keyboard and big screen, it's got two secure elements and a true air gap, allowing you to go fully air-gapped using QR codes from seed generation to transaction signing. You can power the device using three triple-A batteries, so you don't even have to plug For PC or Nunchuk on mobile, and you can dial it into the right level of security and complexity that you choose. If you want a simple setup, just use twelve words and single signature. If you want passphrase, it's easy. If you want to add multi-sig or co-signing features, you've got those too. So go to coinkite dot com, use code livera to get ten percent off on your cold card or other devices and level up your self-custody today. Yeah, because I guess the problem here is they can't necessarily estimate what the over-- let's say I'm the client, I can't necessarily estimate what, how much hash power per se is being pointed to this pool in totality, right? So the pool can tell you" }, { "speaker": "evan", "time": "25:58", "start": 1558.05, "text": "how much" }, { "speaker": "stephan", "time": "25:58", "start": 1558.39, "text": "hash power" }, { "speaker": "evan", "time": "25:59", "start": 1559.35, "text": "is being pointed at it. Most pools make this information public. it's not, it's not a hard problem to solve at all. And also each mining share itself has a certain amount of proof of work that is in, integral to that mining share. if you've looked at, if you go to Minpool dot space and you look at it, pull up a block, look at the hash of the block, and you'll see a bunch of zeros at the beginning. This is just a two hundred fifty-six bit number, it's a very long hex string, and it's gonna start with a bunch of zeros. that is, if you convert that into binary, a binary number, and then just count up the zero bits, you got right there, inherent in, in the mining share, The level of difficulty. So you've got the value of, essentially, if we go back to the lottery ticket, analogy, you can just look at the share and tell how, how close it is to a Bitcoin block. Right there, and there's no like, you don't need to go anywhere else to get that information. And you can kind of value shares that way." }, { "speaker": "stephan", "time": "27:01", "start": 1620.79, "text": "Gotcha. So you can kind of estimate it from the outside, let's say. And I guess then- I guess from that, you could try to sort of back out like a loose estimate of how much each eHash token should be worth. Is that what you're, is that what you're going?" }, { "speaker": "evan", "time": "27:15", "start": 1635.25, "text": "Yep. You can also look at the mining pool and just count up how often they, just look back how often they hit, right? How often they get one out of a hundred" }, { "speaker": "stephan", "time": "27:22", "start": 1641.95, "text": "blocks or whatever." }, { "speaker": "evan", "time": "27:23", "start": 1643.25, "text": "Right. how many blocks a day do they find? How many blocks a month? Or, And that's, that's like a pretty good estimate going forward now if their hash rate changes drastically, that could change. But, there's already-- this is a well-studied problem. There's, there's, there's tools for this. I don't think it's gonna be a big challenge to, to solve that problem I think a much more interesting, problem to solve will be creating decentralized, markets to trade these shares. So, if you think about it, if I'm- And, and let's, let's think of a more practical economical example. Say I've got a water heater, and I'm heating my water with Bitcoin, with Bitcoin ASICs. So I, I only mine opportunistically when I take a hot shower, I gotta refill that hot water tank. So now, I am, I wanna, I wanna get some, some, I wanna get paid for my, for my hot water heater. and maybe I don't wanna hold them to maturity. I've got an electric bill due tomorrow, so I can take all the eHash that my hot water heater has mined up. Go find some, some buyer somewhere who's interested in, buying Bitcoin privately. This is KYC-free Bitcoin rewards. They, my, my theory is they should be willing to pay a" }, { "speaker": "stephan", "time": "28:40", "start": 1719.94, "text": "premium. Or they should be willing to pay, I mean, buy your, they should be willing to buy your eHash at a discount because you wanna get paid now, he's willing to wait." }, { "speaker": "evan", "time": "28:49", "start": 1729.15, "text": "Right. And if you think about it in terms of risk, what's really happening here is I'm selling," }, { "speaker": "stephan", "time": "28:54", "start": 1734.43, "text": "or they're, they're, yeah, you're selling him an eHash token, and I guess you and him have to kind of estimate what it's worth and then figure out what premium, discount, et cetera." }, { "speaker": "evan", "time": "29:05", "start": 1744.66, "text": "Yeah, so the buyer's just gonna decide how much it's worth, how much the privacy is worth for them. The seller needs to decide how much of a discount they're willing to accept to get immediate liquidity, because this is a, this is an instrument that only, it, it only gets converted from eCash to Bitcoin when the pool finds a block. And we can estimate when that is gonna happen, and we can estimate how much it's gonna be worth. but there is risk involved because Bitcoin mining is, is necessarily a random process. So maybe it'll take longer, maybe the share will pay out less, maybe they'll find a block quickly and the share will pay out more. So what's happening here really is, you take immediate payment and you offload the risk. So you're selling risk, or the buyer is buying risk, and in return, the buyer gets privacy. so I could, I could just buy up, if I'm interested in stacking Bitcoin over the long term in a KYC-free manner, I can just buy up all the eHash that's for sale and hold onto it until maturity, and, you know, the, the, the statistical randomness will, even out in the long run. So if I do this at scale, it's, it's a cheaper and more private way to stack Bitcoin, and importantly, it's more decentralized. So I'm just buying eHash from every- Everyone with a hot water heater, or everyone with a bitx, who's just heating their homes. and this is really, and when I think of Bitcoin long term I don't see these large, mining operations being a sustainable model. I think we have to get to a place where hash rate is decentralized globally in terms of geography and in terms of ownership, and this, this more private, more small scale type of mining, I think, is how we get there. Otherwise, like anyone, the men with guns can always just show up if you got all your hardware concentrated in a data center somewhere next to a power plant. you're always gonna be at risk of seizure from the government or whoever is in control of the physical machines. If you spread all of those miners across the earth and put them in people's hands where they're just using them to heat their homes or provide demand response, maybe you've got solar panels on your roof and you wanna top up your house battery. During the day and drain it at night. You can use demand response, which is a technique where you, if you've got excess power, you run, Bitcoin miners with it. To sort of increase your, electrical demand to match your electrical, production. likewise, you can, Also, if you've got right, the, the way demand response works, at power plants today is, the power plant will, or the power utility will sell. A contract to a Bitcoin miner, and the contract has a term where if we ask you nicely, we're gonna have you turn off your Bitcoin miners, and we're gonna sell that electricity that you would be burning to customers who need it. Maybe there's a heat wave in Texas or a winter storm or something like this. We can decentralize demand response as well with solar panels and house batteries in every house and ASICs in every water heater. In this way, we're gonna-- we can take this sort of very centralized large scale- mining operations and spread it across the earth, put more Bitcoin privately into more people's hands. And I, I think this model in the long run, this is how Bitcoin really scales to take over the world. That's sort of the whole thesis of the, the whole project." }, { "speaker": "stephan", "time": "32:37", "start": 1957.03, "text": "Got it. So let's talk a little bit about that guy who is doing the, the role of the decentralized eHash token buying and selling, the, you know, the eHash trader, let's say. Now he may be getting privacy and maybe he's getting coins at a discount, right? You could say, 'cause he's buying the, the eHash at a discount.' On the trade-off side, though, the downside is he is taking custodial risk, right? Like he is trusting the e- the hash- Pool operator, not to sort of rug him, right? Like, and across multiple hash pools, maybe he's like a, a trader operating across multiple hash pools. Is that, have I characterized it correctly there? Like, he has to take some custodial risk, right? And to, to be fair, all current Bitcoin miners who are using a pool are taking custodial risk right now, today. So it's not additional risk, but that's just, that's the risk of the game, right?" }, { "speaker": "evan", "time": "33:31", "start": 2010.51, "text": "Yeah, mining, pool to mining is inherently- The custodial, I've thought about this long and hard, I don't think there's a way to get away from it. It's just in the nature of pooled mining. Someone has to receive the block reward" }, { "speaker": "stephan", "time": "33:42", "start": 2022.02, "text": "and make the payouts. Right, and as I understand, like maybe in the early days, there were like some of these, like these attempts to do like really decentralized mining where like all the payouts from the block went to the individual miners, but then the problem, as I understand, and you correct me if I'm getting this wrong, but as I understand, it's like you eventually Based transaction and therefore there's only so many people who can be mining to that pool, and then it makes that pool less viable in competition with the global other pools out there, right?" }, { "speaker": "evan", "time": "34:15", "start": 2054.95, "text": "Yeah, you struck on it exactly. So there is a way to do Non-custodial mining. At least, well, let's clarify what are we custoding, what are we talking about. there's the shares themselves, the shares aren't necessarily custodial because they're not a real asset that exists yet, it's a speculative asset, it's a futures instrument. the Bitcoin itself, the hard money asset, it can be done in a way that's non-custodial, although it's pretty limited today with the technology of, with the, with the capabilities of Bitcoin consensus today. Ocean does a really great job of non-custodial mining. And you struck on it exactly. The problem is, so when you mine a Bitcoin block, the very first transaction in the block is called the coinbase, not the company, this is a lowercase c, Satoshi. She invented this term, that, that company just took the term and, and made it more pop-- they made it viral. But the Coinbase is the first transaction, it's where new Bitcoin get created that didn't exist before this block was found. This is where the block subsidy comes in, the twenty-one million. This is how the twenty-one million bitcoins get created, they all come in the Coinbase. in addition to that is all the fees. So you, you put some transactions in your block, each transaction pays a little fee, that gets rolled into the Coinbase reward as well. So, In this Coinbase transaction, normally, in, in, in every mining pool today, except for Ocean, the Coinbase transaction entirely flows into the mining pool's wallet, and then they issue payouts from their own wallet. This is custodial, this is custodial Bitcoin. O, what Ocean does and what I wanna do as well, is a non-custodial payout mechanism. you just pay your miners directly from the Coinbase, but there's kind of a trade-off here because it consumes block space, because each of these extra outputs takes up some space in that first transaction. So if you pay out to every single miner, if you've got a thousand miners in your pool and you find a block, that's a thousand outputs, you're gonna limit the amount of- It" }, { "speaker": "stephan", "time": "36:18", "start": 2177.52, "text": "becomes cost prohibitive very quickly." }, { "speaker": "evan", "time": "36:20", "start": 2179.59, "text": "Yeah, you're gonna eat up, you're gonna cannibalize the block space that's available for transactions, and you're gonna cannibalize the transaction fees that go to your minor payouts. So there's sort of a trade-off here. I actually, a-a-and, and there, it gets even worse. there's a lot of miner firmware, particularly old miner firmware from Bitmain, the largest, ASIC manufacturer, they lock down the firmware very tight. If you talk to, Scott nine thousand, the creator of the BitX project, you should get him on your show too if you haven't already. He's great. I've had, I, I have had him on, yeah. Excellent. they, they limit the size of the coinbase right there in the firmware." }, { "speaker": "stephan", "time": "37:04", "start": 2223.81, "text": "Gotcha. So it's not even just the software limits, there's actually also hardware firmware limits." }, { "speaker": "evan", "time": "37:08", "start": 2228.09, "text": "It's literally an attack vector from the The hardware manufacturers themselves can sort of limit the capability of, non-custodial mining. And if you look, I posted a delving a post on, using, a, a consensus change called CTV, it's a, a covenant proposal to sort of get around this limit. It's a really, it's a really great way to- Sort of take away this, this, tug of war between non-custodial payouts and maximizing the fee that you can find in a block. but we don't have to get into that. but, yeah, I guess, I guess the thrust of my argument is it's, it is possible to do non-custodial mining in terms of the block reward, and that's exactly where I wanna go, and we need better firmware and more open hardware and more open software to enable this to be" }, { "speaker": "stephan", "time": "38:06", "start": 2285.89, "text": "possible. To make it happen, right? And then I guess in the future, what you're saying there is with CTV or some other kind of covenant thing like a TX hash or whatever, we could make it further. Decentralized in what's happening kind of on chain in the blocks per se." }, { "speaker": "evan", "time": "38:21", "start": 2301.1, "text": "Yeah, we can completely destroy this, this, this, trade-off between, maximizing the fees in the block and maximizing the amount of non-custodial payouts. You still have to, you still have to put all these outputs in a transaction, but it can be in a future block. It doesn't have to be in the block. Right. And so I guess" }, { "speaker": "stephan", "time": "38:39", "start": 2318.65, "text": "the idea would be using CTV, you have some kind of template and it can kind of unroll out later. Is If I'm understanding you, yeah." }, { "speaker": "evan", "time": "38:47", "start": 2326.88, "text": "Yeah, it's just a fan-out transaction. A fan-out transaction is where you have a big fat input and a bunch of smaller outputs to the transaction. I see. Okay. And so we can" }, { "speaker": "stephan", "time": "38:56", "start": 2336.4, "text": "kind of use these covenant techniques to sort of optimize the way we- You do that stuff so that it doesn't have to all hit on chain at once and, people can kind of do more advanced things there. Although that's kind of, yeah, I'm struggling to understand exactly the, the, the, the operational parts of that, but that's kind of my level of understanding of it." }, { "speaker": "evan", "time": "39:18", "start": 2357.57, "text": "Yeah, the way it works, I'll just give you a brief overview. It, you can get an on-chain commitment using the Bitcoin consensus rules to all of those outputs. and that's why you need CTV or TX hash to do this, because right now, you can't create an on-chain Bitcoin consensus commitment to a future transaction. So this is really basic, like the most basic possible use of this. You can just commit to a fan out in the future that doesn't have to go in your Bitcoin block. But all of the miners who have one of these outputs, they have, they can-- you, you send the, the, the next transact, the fan out transaction, you just publish it online. It's not valid for a hundred blocks For, consensus reasons." }, { "speaker": "stephan", "time": "39:58", "start": 2397.88, "text": "That's, that's a normal Bitcoin consensus rule already, yeah." }, { "speaker": "evan", "time": "40:01", "start": 2400.52, "text": "Yeah. But, what Covenants gives you is a hundred percent Bitcoin consensus guarantee that this is the only possible way to spend this output." }, { "speaker": "stephan", "time": "40:10", "start": 2409.81, "text": "Right. So that miner can know, \"I've got this commitment, so I know I'm gonna get paid. I'm not like-- it's not trust me, bro.\"" }, { "speaker": "evan", "time": "40:16", "start": 2416.02, "text": "Precisely. Takes all the trust me, bro out of it. yeah. But you did-- you, you struck on another very important thing, which is the verifiability of payouts. and I, I, in the Hashpool project, this is more long term, probably after, a one dot o production release, but I think it's possible there is a, a, a protocol sketch That Calle put out a couple of years ago for a, a protocol called Proof of Liabilities. and essentially the way that works is, I'll dumb it down, you take the eCash mint, the eCash mint has all of these blinded secrets and unblinded secrets, the user has the unblinded secrets in their wallet, but when they go to exchange that token, they're gonna give that unblinded secret to the mint. So eventually, when you swap all the tokens, the mint eventually has all of these secrets blinded and unblinded. You can take these and put them into a report, put them, sum them up into a Merkle tree, and prove with a hundred percent accuracy all of the mint operations that have taken place. So, again, it protects the privacy of the users, but you can just, publish all of the data that the mint has and, and prove that every transaction that the, the amounts of the inputs matched the amounts of the outputs. So you can essentially audit your entire mint. The entire ledger of the men and, publish that audit, publicly for anyone to verify. And the way you would verify it is you would take those secrets out of your Cashu wallet or your Fedamet wallet on your phone. And just go look at the proof and follow up the Merkle tree and make sure that all of your eCash tokens are represented there. And if everyone verifies all of their eCash tokens then no one finds any cheating, then we have a reasonable, a reasonable guarantee that the mint is operating fairly." }, { "speaker": "stephan", "time": "42:06", "start": 2526.21, "text": "right. So that would actually be a big improvement on what we have today, because today it's very like, \"Trust me, bro,\" in terms of that aspect, right? And that's kind of one of the lines of criticism that is kind of thrown around, like, because some of the, let's say, some of the Ocean guys, or maybe also even like the demand pool guys, I don't know, they might have a criticism, of Well, I think especially the Ocean guys are saying, \"Hey, you are trusting in this FPSP payout model, you're really trusting them, and actually they may not be paying you out as much as what you contributed in, based on your proportional share, because maybe the fees were different or some other thing is different, and actually when you do go to- You know, they would say in the Dartum Ocean model, you actually do get paid out better or closer to your real share, and actually that's better for you as the miner. And I, actually, I believe even the, demand pool SV2 guys were also, 'cause they're doing full SV2, I believe they've put out some research as well saying SV2 Works better as well for the miners, and you get an increased payout, that way too. So, yeah, that's my understanding of it anyway." }, { "speaker": "evan", "time": "43:16", "start": 2595.96, "text": "Yeah, yeah, a couple different-- You touched on a couple different areas there, but I can go into detail. the, the real magic of combining eCash and mining is you can, you can-- so, mining is also a fully verifiable process. Every time your, your miner produces a share, you can look at that share hash, which we talked about earlier, compare it to the block template, make sure that it's, that it's mining on the right block template, and then just count up the zeros at the beginning of the share hash. That's fully verifiable. so by combining this eCash proof of liabilities and the fully verifiable mining shares, we put those two proofs together and we've got a fully audit-able mining pool, which is amazing and something that doesn't exist today. there is, it is a little bit trickier when the miners themselves are producing the block templates, because you have to go back and verify that their block is correct. And what really that, what that boils down to is, you need to look at the Coinbase and make sure that they're doing all the payouts correctly in the Coinbase, because the pool itself- controls the Coinbase, it needs to make sure that everyone gets paid fairly. And, there's a secondary concern where you wanna make sure that the transactions that the miners are including in the block, that they're not doing anything dumb. If they're mining empty blocks, for example, you don't want to give them, an equal share to someone who's mining a full block, because the full block is gonna have more fees. So you have to do some, calculations there to make sure if you don't want to, maybe a mining pool wants to not include some transactions They consider spam, or maybe a different mining pool, you know, wants to take out of band transactions. You gotta make sure that you verify all that stuff at the pool level as well. So it gets a little more complex. the other thing you mentioned was that, SV2, yeah, the, the-- I think it was the Demand Pool guys or the SRI team put out a report" }, { "speaker": "stephan", "time": "45:02", "start": 2702.32, "text": "about that. Right. Yeah, sorry, yeah, I think you're right. I think it was the SRI, Stratum Reference Implementation team who put that out." }, { "speaker": "evan", "time": "45:08", "start": 2707.9, "text": "Yeah, Stratum, yeah, SRI is the project, it's the so-- the open source, project that is the reference implementation of the Stratum v2 spec, and my project currently is a fork of SRI, although I wanna Invention instead of a fork, but we don't-- That's kind of-- Gotcha, but that's a, that's" }, { "speaker": "stephan", "time": "45:28", "start": 2727.75, "text": "another conversation, but go on." }, { "speaker": "evan", "time": "45:30", "start": 2729.93, "text": "So the, what, what, the Stratum v2 protocol has a lot of big improvements. I've only touched on the ability of miners to mine their own block templates, and that's the most important thing from a big picture, Bitcoin protocol, perspective. But from a sort of a smaller miner-centric perspective, the SV2 protocol has a ton of security and efficiency upgrades over SV1. And, that's what that report was talking about. So if you, if you, w-we talked about how, latency can cost a miner money? Stratum v1 has higher latency because everything goes back to the pool. If you find a block, you actually send that share back to the pool, which is a network trip across the network, and then the pool is gonna broadcast the block template. With Stratum v2, you could be building your own blocks locally. You don't have to, a-and your, your local mining setup is plugged into a Bitcoin node. That's how you construct block templates on your own hardware, on your own side of the network. You don't need to send that block back to the pool, although actually Stratum v2 is pretty clever, it does both. You're gonna broadcast the block to the Bitcoin network locally and send the share upstream to the pool, and the pool is gonna broadcast it also from their Bitcoin node. a lot of other improvements there's, because you're building the block template locally, you, don't have to wait for a network round trip to get new, it's called, submit work. It's when the pool sort of changes, the Coinbase or changes something in the block template and sends it back downstream to the miner. You don't, again, you can take, remove that network round trip there. there's also a lot of, privacy improvements. There's something called, hash rate hijacking. So in, in, network, in network terms, there's, a man in the middle attack. A man in the middle attack is when someone, position-- when an attacker positions themselves in your network connection and they just look at all the packets flowing through your network switch or router or whatever. You can use a man-in-the-middle attack to actually steal hash rate from a mining operation if they're using the Stratum v1 protocol because it's unencrypted, it's plain text." }, { "speaker": "stephan", "time": "47:48", "start": 2867.7, "text": "Yeah, and as I understand, this isn't just theoretical, it's actually happened, so-" }, { "speaker": "evan", "time": "47:52", "start": 2871.8, "text": "I think it has. I, I think mining pools themselves or miner, mining operations themselves are reluctant to talk about it for, for obvious reasons, it's kind of embarrassing. so they wanna keep it quiet and solve the, right. And I've heard" }, { "speaker": "stephan", "time": "48:06", "start": 2886.11, "text": "like even the ones who are doing this steal the ha-hash rate hijacking or pirating or whatever, they might even intentionally, quote unquote, hide their power level and not steal everything to sort of r-stay under the radar and not get detected. But again, yeah, anyway, these are kind of industry rumors and things going around." }, { "speaker": "evan", "time": "48:23", "start": 2902.92, "text": "Precisely, it's a long term attack. If you just siphon off one percent of the hash rate Then to the miner, it just looks like they're a little bit less lucky than they should be. It all comes down to, to bad luck," }, { "speaker": "stephan", "time": "48:35", "start": 2915.01, "text": "right? And luck in the Bitcoin mining sense is kind of like, are you getting paid out what you should based on your proportional hash rate contribution, let's say?" }, { "speaker": "evan", "time": "48:44", "start": 2923.6, "text": "Right, right, exactly. So Stratum v2, it uses smaller messages, it, it, it, encodes the, mining shares. It doesn't use plain text, it uses a very small and efficient binary encoding format. Custom, coding format. That was one of the more difficult things for me to wrap my head around when I started working on this project. but for good reason, because you want to keep these packets small, and it also encrypts the connection. It uses a handshake to authenticate with the mining pool. Say, \"Hey, I'm a miner, I'm gonna mine on this connection, and I'm gonna encrypt everything using this key. \" So you can essentially like eliminate this hash rate hijacking risk on SV2, and you get higher rewards for large mining operations, it's gonna be a lot more profitable for smaller miners for bitex's Maybe you'll notice, but there's no reason we should be using like old tech for small miners. It puts, it puts small miners at a disadvantage." }, { "speaker": "stephan", "time": "49:42", "start": 2982.16, "text": "As, as I understand, there's kind of, you know, there's been a big industry push on this to try to get mining pools to support it, and ideally the hardware manufacturer, the mining hardware manufacturers, to also support it at the firmware level, 'cause that would be, you know, much, more improved for everybody. now, just so I'm understanding, and also for the listeners. I guess the, the probably the two vectors that a lot of people are talking about in terms of decentralization, they're saying, okay, block template construction is a bit centralized right now because of these concerns we said at the pool level, but there's also the payout model of it, right? So people are saying, you know, FPBS, which is this Kind of like a, in finance terms, it's almost like an insurance product or product or insurance service that some of these pools are providing versus, let's say, what the ocean guys are doing with, tides and what the demand pool guys are doing with what, what they call slice, and the idea is to sort of- Pay out actuals per se, like, but the thing is, it means you, the individual hasher, have to ride the volatility a bit more. So as I'm understanding, it's like Yeah, when we put all this together in terms of the hashpool concept, it's like SV2 is relating to the, or at least one of the things it's, quote unquote, fixing is the block template construction or centralized part, and then the hashpool part of it is, let's say, trying to attack the payout Aspect of this, right? Is that, have I understood you correctly?" }, { "speaker": "evan", "time": "51:11", "start": 3070.59, "text": "Yeah. and it's not, Hashpool itself, I, I'm, I'm like a cypherpunk, I want Bitcoin to win in the long run, I want to, to separate state and money. So, but the hashpool project itself, doesn't necessarily have to, have to, force the pool operator to use one or one payout mechanism or another but you did strike on a very, important topic. the, the reason people use FPPS mining, so again, you can look at it in terms of shifting the risk. So in FPPS, which stands for first paper share, again, it's the \"trust me, bro\" model. You send your share upstream to the miner, they've got an equation they run on their, on their account system on the backend, and they calculate your payout. what they're doing though, is they pay you a flat rate per share. So when I send them a share, they look at the difficulty of the share and they say, \"Okay, that's worth this many Sats,\" and they pay you immediately before the mining reward has been found. So what they're doing in terms of risk is they assume all of the luck risk. I call it the luck risk of the pool. they're counting on finding blocks at a regular cadence so that they can make these payouts work, economically, financially. that's the FPPS model or PPS. The other kind of way to do pooled mining is called p p l n s and it stands for pay per last n shares. And what we're essentially doing is we're pushing the luck risk down from the pool to the miners themselves. So now, the way, the way PPLNS works is when a miner sends a share to the pool, the pool is gonna verify that it's valid, and then that share will have-- will get a piece of all of the block rewards that the pool finds within a certain time window. Ocean has, a, a tweak on it, they call Tides. It's another backronym, I couldn't, I couldn't tell you what Tides stands for, but you can look it up. and Slice is an, another one that takes into account the-- it's, it's, again, it's built on pPLNS and it takes into account the, variability of the fees on the block template. So like I mentioned earlier, if you mine an empty block template, that share should be worth less than an identical share that mines a full block template that gets more Bitcoin fees in the block reward. And that's what Slice is doing. these are, these are, sort of more-- these are more decentralized methods of mining Bitcoin, and it's kind of an indirect method. It's, it's kind of in, in an indirect way. the problem with FPPS mining is that it requires the pool to have a big bank account. They have to have a large capital account to fund all these payouts before any block rewards arrive. So this is just a centralizing vector at the economic level, at the business level of running a mining pool. What happens is these large pools and pool foundry, they get big and they stay big, and they can use their fpp's as, as leverage to sort of punish smaller miners who may not have the capital account to back these fpp payouts to sort of fund their insurance pool. And this is the direction the entire industry has gone in over the past, decade or, or, or five years at least. Everybody has moved to fpps mining because that's what these large scale mining farms demand. They wanna be dumb hashers, they don't wanna have to produce their own block templates, they don't wanna have to assume any risk. They just wanna focus on their business, which is to plug up as many of these ASICs as possible, run them as screaming hot as possible, produce as much hash rate as possible, and maximize their payoff." }, { "speaker": "evan", "time": "54:55", "start": 3294.89, "text": "so, again, when I've- when I started thinking about this problem, I'm thinking about small scale miners, more decentralized, more distributed, more Bitcoin-y. and the way to do that, I think, is to get away from this, this large scale, insurance model. my thesis is that people running, hash rate heaters or bitexes for ideological reasons aren't gonna be concerned about the variability of their payout, and they would be willing to assume that risk to have a more decentralized model. and I also, we, we haven't gotten into it yet, but I want to enable small scale, small scale mining enthusiasts to run their own pool. And this PPLNS, payout mechanism allows, allows for small pool operators to mine what I call a proxy pool that hangs off of a larger mining pool. So the way that would work is, I would have a pool, when I receive a share, I would have a pool for me and my, Bitcoin Club friends, my six buddies who have ASICs and are, and are tuned into this world. They can point their ASICs at my self-hosted pool, and when it receives a share, it will send that share upstream to a larger pool. And that larger pool, when it finds a block, it's gonna pay a, a, a reward payout to my pool, which is an account at their pool, and then I will take this, payout and divvy it up to my six friends who have an ASIC in their garage pointed to me. This model, kind of doesn't make economic sense on an FPSS mining pool. And the reason for that is that we are already paying the top level pool, the most upstream pool, we're paying them a fee to assume all of the luck risk. So then, if, if we then, distribute payouts again, or, or sell eHash shares, w-we've got this instrument that is designed to allow people to trade the luck risk, but we've already paid a fee upstream to a larger mining pool to take the luck risk off the table. Right." }, { "speaker": "stephan", "time": "56:58", "start": 3418.31, "text": "You've already kind of paid for the insurance, and it's not worth it. So you- Yeah." }, { "speaker": "evan", "time": "57:04", "start": 3423.77, "text": "It's like buying, it's like double-insuring yourself. It doesn't, it just doesn't make economic- make sense. I think you could do this. It might be like a short term bootstrapping phase. the truth is there just aren't that many options of upstream pools to mine to. I'm really excited, And, and on everything Ocean is doing, they're crushing it. That's my favorite mining pool. I'm also very excited about, DemandPool. they're launching soon, I think they're testing with large scale customers now. But right now, today, the only, possible pool that I could build on top of With a PPLNS payout structure and a proxy pool model would be Ocean, and I'm intending to build that. When demand launches, it's gonna be amazing, there will be two options now, so I'm, I'm really looking forward to that as well." }, { "speaker": "stephan", "time": "57:51", "start": 3471.29, "text": "Gotcha. okay, so you've spoken about, I guess the likely operator of such a hash pool might be a, an ideological, kind of like an Uncle Jim of the mining world, let's say? Exactly. Yeah. In loose, very loose terms, and him and his mates might go in on this hash pool together, and there might be a bunch of these hash pools out there contributing hash to Ocean or to Demand Pool, or maybe in the future other SV2 pools. It sounds like it would make more sense to go with an SV2 pool, like at the top level." }, { "speaker": "evan", "time": "58:28", "start": 3508.05, "text": "Yeah. Yeah, but like I said, there's no option, like, there are no options today, so it's kind of a waiting game to see if they launch. It would make more sense because I think in this model with lots of small scale pools, it's gonna get, it's gonna get ugly. You're gonna have to see to your own security if someone is hash rate hijacking your start nine server or your Umbrel or your Linux box at home. How much resources can you, like, you're just a guy in the boonies who runs a Bitcoin club who likes to nerd out on this stuff, how much resources can you really contribute to your network security?" }, { "speaker": "stephan", "time": "59:03", "start": 3542.6, "text": "Right, compared to like a professional level mining pool who's gonna hire prof-prof staff to manage and secure these things, right? They're gonna have" }, { "speaker": "evan", "time": "59:10", "start": 3549.99, "text": "experts on staff, so it really makes sense to have The most secure, protocol and like sort of eliminate those risks right out the gate." }, { "speaker": "stephan", "time": "59:19", "start": 3559.48, "text": "I see, yeah. Okay, now a few other things that kind of come in, maybe some of this is just broader SV2-SRI kind of concerns that people might raise. because doesn't the top level pool still have to run certain checks on those, on the submitted blocks per se? because there could still be like malicious, maliciously crafted transactions or some of these other things that they need to check on their side before saying, \"Yeah, go for it,\" like this is, an okay, Template block to put out?" }, { "speaker": "evan", "time": "59:54", "start": 3594.45, "text": "well, I mean, they have a Bitcoin node, and their Bitcoin node is," }, { "speaker": "stephan", "time": "59:59", "start": 3598.82, "text": "and I guess they're already running some of those checks anyway because they just have to, right?" }, { "speaker": "evan", "time": "01:00:02", "start": 3602.04, "text": "Yeah, the really, the really like dangerous stuff your Bitcoin node is gonna, toss out blocks That fail those validations. I don't, I mean, there's, there's something called a, a quadratic hashing block, you probably wanna put-- Right. And" }, { "speaker": "stephan", "time": "01:00:17", "start": 3617.03, "text": "I think this was like a concern that was solved in earlier years, but then maybe there's some elements of things that still exist today that, that like the great consensus cleanup is trying to fix those problems." }, { "speaker": "evan", "time": "01:00:26", "start": 3626.25, "text": "Segwit solved it. If you would have to mine a pre-segwit block, which is not really economically-- So maybe the easy solution Is to just have your pool only mine SegWit blocks, or you just kick out anybody who mines one without-- I don't know, I'm not an expert, but I'll probably have some Bitcoin core developers, jump, jump down my throat and say, \"Hey, you're getting this" }, { "speaker": "stephan", "time": "01:00:47", "start": 3647.96, "text": "part technically wrong. Okay, yeah, fine, fair enough.\" I," }, { "speaker": "evan", "time": "01:00:51", "start": 3651.02, "text": "I do, I, I fully intend to, to, to, to run all the checks I need to check to make sure that the Bitcoin network itself isn't at risk. and I'll, and I'll run this by the experts too." }, { "speaker": "stephan", "time": "01:01:01", "start": 3661.48, "text": "Yeah. And so, just kind of looking at some of the different components, I was looking in the GitHub, so you kind of have the, you know, the SV2, you've got the core SV2 shor's fork, this SV2 translator proxy, job declarator, the cashew mint component, and then CLN. So I, I presume that's the, yeah, Core Lightning, and so that's what you're using for the payouts, right? Like for the Lightning side of the payouts?" }, { "speaker": "evan", "time": "01:01:27", "start": 3687.0, "text": "Yeah, the Cashu protocol today only operates on Lightning. that's why a lot of people compare it to a layer three. I don't actually like the layer definition, I don't think it's the best way to think about things, but, but it is correct in this term. there's on-chain Bitcoin, and then there's Lightning, and then the cashew protocol sits on top of Lightning, so it's kind of two steps removed from on-chain Bitcoin. the way, the way the network architecture of Hashpool works today is you've got a, a ton of processes, as you mentioned, a bunch of them are Stratum v2 processes. These enable your, Well, okay, let's start, let's start from the, from the, the most zoomed out, perspective. So when you run a, a hash pool instance, if you're mining to a pool, you still need, somewhere to put your cashew wallet. This is the thing that generates the secrets that get sent to the mint along with each mining share. So, what I've got there is a process called, translator proxy. It talks SV1 downstream to your mining devices and SV2 upstream to the mining pool. and this is necessary, like BitX is like almost all miners today, I think all miners today talk Stratum v1 on their firmware. So this is just kind of necessary to, to, to plug in your miners a-and get the mining on SV2. That's gonna be something that you have to run, locally. it's not a heavyweight process. It literally just takes the network message, translates the format, and sends it upstream, and it's doing a little bit of, eCash stuff there too. there, you're also gonna have a Bitcoin node, and then something called the Job Declarator, client. The Job Declarator is, the thing that translates, Bitcoin node blocks into Stratum v2 block templates. So your node proposes a block, the job declared a client, translates that into the SV2 protocol, and then that's how you, how you, build your own block templates locally. Your shares come in from your mining devices. I've got a CPU miner in my project as well, so it just uses my, computer's processor to mine up very low value shares. This is all, it's a development environment, so not, not economical to run this. But, that, all of that stuff is gonna be packaged up into a binary that runs on your local, machine, on your Start9 Umbrel or Linux box at home. And then the pool operator has a bunch of processes that they need to run as well. obviously the pool itself is a process, it receives the Stratum v2 messages, validates them. It has a job declarator server, so it has its own Bitcoin node, and the job declarator server again translates block templates from the Bitcoin node to the Stratum v2 protocol and interacts with the pool server and with the, miners' job declarator client as well. There's also a, you need to run a cashu mint. So there's a mint d process, I'm running on cdk, Cashu Dev Kit, which is a Rust library. You also need a lightning node. Right now in the project, the lightning node doesn't do anything. I haven't, I haven't built payouts yet. I'm still iterating on the protocol to, generate the e-hash shares. but I'll get there. The way that's gonna work is when you receive a payout, either, either your hash pool finds a block directly, or if your hash pool, if you've got it plugged in as a proxy configuration, it'll receive a mining payout from the upstream pool. either way, it works the same. When you receive a, a, a block reward or a payout for mining, your lightning node is going to, when someone comes up, then, then the miner, so you've got a block reward. Now, your miners have some eHash, those eHash are now worth something in Sats. They've, they've gone from a speculative asset to they're, they're backed by real Bitcoin now. So the way that works is that the user is going to, swap those eHash tokens for-- the first thing I'm gonna build is eCash tokens. So they'll take this eHash, which is backed by proof of work, and trade it in for eCash, which is backed by Satoshi's. And then if you wanna redeem those eCash tokens, that- you just send those, to the mint and you get a lightning payout from the lightning node that the pool runs." }, { "speaker": "stephan", "time": "01:05:57", "start": 3957.41, "text": "Got it. Yeah. And now, in terms of the project itself, I actually see you got a fair few contributors on this project, so that, that's actually pretty interesting. but can you tell us a little bit about the sustainability of this, right? Like, because is this, is the hashpool project itself gonna be a for-profit thing or is it just like a cypherpunk kind of not-for-profit thing done? You know, ideologically or, you know, do you need to get paid or do other contributors need to get paid to keep this running?" }, { "speaker": "evan", "time": "01:06:28", "start": 3988.17, "text": "yeah, I'll answer your question. I'll, I'll, I'll start from the beginning. Yeah. there are a lot of contributors on the GitHub for the project, that's because I forked the SRI repo. So everyone who contributed to SRI- Oh, I see. It's like taking" }, { "speaker": "stephan", "time": "01:06:38", "start": 3998.86, "text": "the same contributors from the SRI, gotcha. Yeah." }, { "speaker": "evan", "time": "01:06:41", "start": 4001.14, "text": "I, I have had, a few contributors, I've had Which I'm very excited about, because as you mentioned, that's, that's how an open source project, becomes sustainable. If people don't start jumping in and running it and building on top of it, then the project lives and dies with the creator. When I stop contributing, it, it will stop advancing. So I'm very excited to get new contributors on board. And as you mentioned, they do need to get paid. I, I have just recently received a grant from, OpenSats, so I'm now a paid developer, which is awesome. I got a grant, back in April from HRF, which is awesome, that was super validating. Someone, someone sees enough value in this project to pay me to work on it, which is my goal from the beginning. But you're right, I, I'm building it for ideological cypherpunk reasons. I want Bitcoin to win in the long term, I want it to be decentralized, I want it to be freedom money for the most people, and separate, money from state, which is the whole Bitcoin project. That's my goal as well. but, you know, I, I, there's a lot of things I could work on, I could get a job in the industry and make double what I get for grants, so there is a pay cut there, that's fine. I've stacked long and hard, I'm in an okay financial place, and that was the decision I made when I started working on this. That was all according to plan. I, if, if anyone out there is excited about this project and wants to start contributing, I want you to contribute as well. So please get in contact with me. I wanna bring you up to speed and help build this thing and help decentralize the future of Bitcoin. I'm very excited about that. I'm, I'm very willing and able, and eager to help, help new contributors, be onboarded. Did I answer your questions?" }, { "speaker": "stephan", "time": "01:08:32", "start": 4112.79, "text": "Yeah, no, I think that's it. let's, yeah, let's leave Over there. So in terms of if people wanna find you online, and find out more about the project, where can they go?" }, { "speaker": "evan", "time": "01:08:43", "start": 4123.9, "text": "the project website is hashpool dot dev. I've got a, an explainer article up there on the front page, and I've got a lot of engineering diagrams. I'm an engineer. This is a development site, and this project is heavily under development. You can't run it yet. It's probably gonna be a while before we have a production release. but if you wanna check it out, read the article Here, how, how eCash works, mints, eHash, all of that. personally, I'm on Noster, I won't read out my xPub to you." }, { "speaker": "evan", "time": "01:09:19", "start": 4159.56, "text": "I should put it, I, I'll, I'll add a Nostr link to the website. I'll do that right after this, so that if you wanna connect with me on social media, first of all, get on Nostr. It's the free internet. It's where social media should have been. All this time, and we're bringing it back there. So, yeah, that's how you can reach me on, there's a, there's a Cashu Dev, matrix group. Check out the Cashu project. contact me, DM me, I can get you plugged into all of the resources you need to s-to start contributing, to start building." }, { "speaker": "stephan", "time": "01:09:50", "start": 4190.81, "text": "Excellent. Alright, well, we'll leave it there as, as you said, hashpool.dev is the website for listeners to go and check it out and, get in touch with, v n p r c. Thanks for joining me today." }, { "speaker": "evan", "time": "01:10:03", "start": 4203.74, "text": "Thank you, Stephan. It's been a pleasure." } ] }