Scott Roberts via bitcoin-dev
2017-10-09 22:57:32 UTC
Sorry, my previous email did not have the plain text I intended.
Background:
The bitcoin difficulty algorithm does not seem to be a good one. If there
is a fork due to miners seeking maximum profit without due regard to
security, users, and nodes, the "better" coin could end up being the
minority chain. If 90% of hashrate is really going to at least initially go
towards using SegWit2x, BTC would face 10x delays in confirmations
until the next difficulty adjustment, negatively affecting its price relative
to BTC1, causing further delays from even more miner abandonment
(until the next adjustment). The 10% miners remaining on BTC do not
inevitably lose by staying to endure 10x delays because they have 10x
less competition, and the same situation applies to BTC1 miners. If the
prices are the same and stable, all seems well for everyone, other things
aside. But if the BTC price does not fall to reflect the decreased hashrate,
he situation seems to be a big problem for both coins: BTC1 miners will
jump back to BTC when the difficulty adjustment occurs, initiating a
potentially never-ending oscillation between the two coins, potentially
worse than what BCH is experiencing. They will not issue coins too fast
like BCH because that is a side effect of the asymmetry in BCH's rise and
fall algorithm.
Solution:
Hard fork to implement a new difficulty algorithm that uses a simple rolling
average with a much smaller window. Many small coins have done this as
a way to stop big miners from coming on and then suddenly leaving, leaving
constant miners stuck with a high difficulty for the rest of a (long) averaging
window. Even better, adjust the reward based on recent solvetimes to
motivate more mining (or less) if the solvetimes are too slow (or too fast).
This will keep keep coin issuance rate perfectly on schedule with real time.
I recommend the following for Bitcoin, as fast, simple, and better than any
other difficulty algorithm I'm aware of. This is the result of a lot of work the
past year.
=== Begin difficulty algorithm ===
# Zawy v6 difficulty algorithm (modified for bitcoin)
# Unmodified Zawy v6 for alt coins:
# http://zawy1.blogspot.com/2017/07/best-difficulty-algorithm-zawy-v1b.html
# All my failed attempts at something better:
# https://github.com/seredat/karbowanec/commit/231db5270acb2e673a641a1800be910ce345668a
#
# Keep negative solvetimes to correct bad timestamps.
# Do not be tempted to use:
# next_D = sum(last N Ds) * T / [max(last N TSs) - min(last N TSs];
# ST= Solvetime, TS = timestamp
# set constants until next hard fork:
T=600; # coin's TargetSolvetime
N=30; # Averaging window. Smoother than N=15, faster response than N=60.
X=5;
limit = X^(2/N); # limit rise and fall in case of timestamp manipulation
adjust = 1/(1+0.67/N); # keeps avg solvetime on track
# begin difficulty algorithm
avg_ST=0; avg_D=0;
for ( i=height; i > height-N; i--) { # go through N most recent blocks
avg_ST += (TS[i] - TS[i-1]) / N;
avg_D += D[i]/N;
}
avg_ST = T*limit if avg_ST > T*limit;
avg_ST = T/limit if avg_ST < T/limit;
next_D = avg_D * T / avg_ST * adjust;
# Tim Olsen suggested changing reward to protect against hash attacks.
# Karbowanek coin suggested something similar.
# I could not find anything better than the simplest idea below.
# It was a great surprise that coin issuance rate came out perfect.
# BaseReward = coins per block
next_reward = BaseReward * avg_ST / T;
======= end algo ====
Due to the limit and keeping negative solvetimes in a true average,
timestamp errors resulting in negative solvetimes are corrected in the next
block. Otherwise, one would need to do like Zcash and cause a 5-block
delay in the response by resorting to the median of past 11 blocks (MPT)
as the most recent timestamp, offsetting the timestamps from their
corresponding difficulties by 5 blocks. (it does not cause an averaging
problem, but it does cause a 5-block delay in the response.)
Background:
The bitcoin difficulty algorithm does not seem to be a good one. If there
is a fork due to miners seeking maximum profit without due regard to
security, users, and nodes, the "better" coin could end up being the
minority chain. If 90% of hashrate is really going to at least initially go
towards using SegWit2x, BTC would face 10x delays in confirmations
until the next difficulty adjustment, negatively affecting its price relative
to BTC1, causing further delays from even more miner abandonment
(until the next adjustment). The 10% miners remaining on BTC do not
inevitably lose by staying to endure 10x delays because they have 10x
less competition, and the same situation applies to BTC1 miners. If the
prices are the same and stable, all seems well for everyone, other things
aside. But if the BTC price does not fall to reflect the decreased hashrate,
he situation seems to be a big problem for both coins: BTC1 miners will
jump back to BTC when the difficulty adjustment occurs, initiating a
potentially never-ending oscillation between the two coins, potentially
worse than what BCH is experiencing. They will not issue coins too fast
like BCH because that is a side effect of the asymmetry in BCH's rise and
fall algorithm.
Solution:
Hard fork to implement a new difficulty algorithm that uses a simple rolling
average with a much smaller window. Many small coins have done this as
a way to stop big miners from coming on and then suddenly leaving, leaving
constant miners stuck with a high difficulty for the rest of a (long) averaging
window. Even better, adjust the reward based on recent solvetimes to
motivate more mining (or less) if the solvetimes are too slow (or too fast).
This will keep keep coin issuance rate perfectly on schedule with real time.
I recommend the following for Bitcoin, as fast, simple, and better than any
other difficulty algorithm I'm aware of. This is the result of a lot of work the
past year.
=== Begin difficulty algorithm ===
# Zawy v6 difficulty algorithm (modified for bitcoin)
# Unmodified Zawy v6 for alt coins:
# http://zawy1.blogspot.com/2017/07/best-difficulty-algorithm-zawy-v1b.html
# All my failed attempts at something better:
# https://github.com/seredat/karbowanec/commit/231db5270acb2e673a641a1800be910ce345668a
#
# Keep negative solvetimes to correct bad timestamps.
# Do not be tempted to use:
# next_D = sum(last N Ds) * T / [max(last N TSs) - min(last N TSs];
# ST= Solvetime, TS = timestamp
# set constants until next hard fork:
T=600; # coin's TargetSolvetime
N=30; # Averaging window. Smoother than N=15, faster response than N=60.
X=5;
limit = X^(2/N); # limit rise and fall in case of timestamp manipulation
adjust = 1/(1+0.67/N); # keeps avg solvetime on track
# begin difficulty algorithm
avg_ST=0; avg_D=0;
for ( i=height; i > height-N; i--) { # go through N most recent blocks
avg_ST += (TS[i] - TS[i-1]) / N;
avg_D += D[i]/N;
}
avg_ST = T*limit if avg_ST > T*limit;
avg_ST = T/limit if avg_ST < T/limit;
next_D = avg_D * T / avg_ST * adjust;
# Tim Olsen suggested changing reward to protect against hash attacks.
# Karbowanek coin suggested something similar.
# I could not find anything better than the simplest idea below.
# It was a great surprise that coin issuance rate came out perfect.
# BaseReward = coins per block
next_reward = BaseReward * avg_ST / T;
======= end algo ====
Due to the limit and keeping negative solvetimes in a true average,
timestamp errors resulting in negative solvetimes are corrected in the next
block. Otherwise, one would need to do like Zcash and cause a 5-block
delay in the response by resorting to the median of past 11 blocks (MPT)
as the most recent timestamp, offsetting the timestamps from their
corresponding difficulties by 5 blocks. (it does not cause an averaging
problem, but it does cause a 5-block delay in the response.)