11 February, 2020 | AtoZ Markets – Monero, an open-source cryptocurrency, is currently showing a high level of domination by mining pools. In the past, Monero developers have worked hard to prevent the development of viable Application Specific Integrated Circuit (ASIC) mining hardware. But it hasn't stopped large mining pools from forming.
Is Monero Vulnerable to Attack?
Since the activation of Monero's RandomX in early December 2019, there have been several controversial discussions and misunderstandings about the upgrade. First, a debate over the question of whether the Monero network is sufficiently secure after RandomX, despite the increase in hashrate. The hash rate of the XMR network increased massively immediately after activation of the upgrade. But a comparison of the value before and after RandomX was not meaningful.
The basic rule that network security also increases with the increasing hashrate could not be applied due to the different algorithms. An average hash rate for each miner had to be calculated. The argument finally ended when a lead developer from Monero clarified that. The developer said, at least 4 of the current top 5 supercomputers together are required to attack the network at 51%.
Monero is currently facing a centralized mining problem, like all things crypto, is more nuanced than it seems. The two mining pools currently control 60% of the network hashrate. But the pools made up of individual miners who can change pools at any time.
Read More: FCA Flags Another Clone Firm Goldmans Banc
The Pool Centralization Issue
Pool centralization occurs when a majority of miners join the main pools due to higher payments. Bigger pools equal higher hash rates, which means that they are more likely to discover new blocks. Therefore, those two pools end up having the majority of the hash rate. ASIC miners can also theoretically continue to mine in a large pool.
With a smaller mining pool, the miner gets lower payments because smaller pools find fewer rewards for the blocks due to a lower hash rate. If a large pool becomes a bad player, miners will likely encourage to leave the large pool. They may exploit in a smaller pool to protect the integrity of the network.
RandomX does not increase pool centralization. It has practically nothing to do with it. Only minors and the selection of their pool do so. The best way to approach the centralization of pools is, therefore, to encourage minors not to use large pools. There are many small pools.
The problem of "centralizing pools" has demonstrated recently in the case of the incited Shelley test network in Cardano. In early January, 33% of all ADAs stacked in the Shelley test network assigned to the 20 largest pools. It means that the 13 largest pools were "oversaturated". Again, stakeholders have tended to "trust" large pools because they are synonymous with security and reliability.
So, Monero's centralized mining problem is multifaceted and perhaps not as serious as it seems.
Think we missed something? Let us know in the comments section below.
