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How $Ore Could Herald A New Wave Of POW Mining I Hardhat Chad (Ore Supply)

By Unlayered

Published on 2024-06-28

Discover how Ore Supply is bringing proof-of-work mining to Solana, potentially onboarding millions to crypto through accessible mobile mining.

The notes below are AI generated and may not be 100% accurate. Watch the video to be sure!

The Genesis of Ore Supply

Ore Supply represents a revolutionary approach to cryptocurrency mining, bringing proof-of-work (POW) to the Solana blockchain. In this episode of Unlayered, hosts Sal and Dave sit down with Hardhat Chad, the pseudonymous creator of the Ore project, to discuss how this innovative concept could potentially usher in a new era of cryptocurrency mining and user onboarding.

Hardhat Chad explains that Ore is designed to fulfill Satoshi Nakamoto's original vision of a peer-to-peer electronic cash system. The project's unique insight lies in decoupling consensus from the POW token's distribution to miners, leaving the consensus mechanism to Solana's high-performance engine. This approach opens up an entirely new design space for a modern Bitcoin-like currency, potentially heralding a new wave of POW mining tokens on highly scalable, contemporary blockchains.

The Motivation Behind Bringing POW to Solana

The decision to bring proof-of-work mining to Solana stems from a desire to address some of the limitations and debates that have plagued Bitcoin over the years. Hardhat Chad reflects on the block size debate within the Bitcoin community, which saw two opposing camps emerge:

  1. The "big blockers" who advocated for increasing Bitcoin's block size to support lower fees and more transactions.
  2. The "small blockers" who argued for maintaining smaller blocks to keep Bitcoin decentralized and preserve its store of value properties.

Hardhat Chad believes that both sides had valid points. The big blockers were correct in asserting that blockchain networks need to scale to support high transaction volumes at low fees to remain competitive with traditional financial rails. On the other hand, the small blockers' emphasis on decentralization and allowing individuals to run nodes resonated with the core ethos of cryptocurrency.

Combining the Best of Both Worlds

Ore Supply aims to combine the best aspects of both arguments by leveraging Solana's high-performance proof-of-stake consensus layer while implementing a proof-of-work mechanism for token distribution. This hybrid approach allows for a highly scalable payments system while still providing a tangible connection to the network for users through mining.

As Hardhat Chad explains, "You can have the underlying consensus layer run on a proof-of-stake algorithm. And it runs on these very overpowered nodes and sort of edge data centers and is very fast. But you can build a currency on top of that with proof of work. And it supports an algorithm where people can run mining nodes out of their homes if they so want to."

The Vision for Ore

Unlike Bitcoin, which has evolved primarily into a store of value or "digital gold," Ore aims to return to the original vision of cryptocurrency as a peer-to-peer electronic cash system. Hardhat Chad notes that Bitcoin adoption in terms of businesses accepting it as payment has actually decreased since 2018, largely due to the shift towards a "hodl" mentality and emphasis on price appreciation.

The goal for Ore is to create a cryptocurrency that people actually use for payments and transactions, leveraging Solana's speed and low fees to make it competitive with traditional financial rails. By focusing on usability and accessibility, Ore hopes to drive wider adoption of cryptocurrency as a medium of exchange.

Advantages of Removing Consensus from POW

One of the most innovative aspects of Ore is the decoupling of consensus from the proof-of-work mechanism. In traditional POW cryptocurrencies like Bitcoin, mining serves two purposes:

  1. Providing consensus for the network
  2. Distributing new tokens

By building Ore as a smart contract on Solana, the project can focus solely on token distribution, as Solana's consensus mechanism handles the first aspect. This separation opens up new possibilities for designing the mining and distribution process.

Hardhat Chad elaborates on this point: "When we kind of set out with this idea of like, oh, we could rewrite Bitcoin as a smart contract and launch that on Solana, as we were writing it, to realize that, well, actually, Solana is providing consensus. And so we don't need to worry about that. And that actually opens up a lot of flexibility in terms of what we're able to do, focusing only on the token distribution side of things."

The Importance of Proof-of-Work for Token Distribution

Despite removing the consensus aspect, Hardhat Chad argues that proof-of-work still makes sense as a token distribution mechanism. The intuitive nature of mining – where users perform computations, consume energy, and receive tokens in return – is easily understood by the general public.

Moreover, proof-of-work ties token production to the physical world through energy consumption. This creates a tangible economic opportunity cost for producing new tokens, as the energy used for mining could be allocated to other purposes. While this doesn't set a floor price for the token, it does signal the value that people are willing to give up to acquire it.

Designing Crypto Mining with the Little Guy in Mind

One of the key goals of Ore Supply is to make cryptocurrency mining accessible to a wider audience. Bitcoin mining has become increasingly centralized over time, with large mining operations and specialized hardware dominating the network. This has made it difficult for individual users to participate meaningfully in the mining process.

Ore aims to address this issue by designing its mining algorithm to be more resistant to centralization. Hardhat Chad explains that this is a challenging technical problem, but one that the team is committed to solving. The project is exploring various approaches to ensure that mining remains accessible to individual users, even as the network grows.

The V1 Launch and Lessons Learned

The initial launch of Ore, known as V1, encountered significant challenges that led to its eventual pause. Hardhat Chad candidly discusses the issues that arose during this launch and the valuable lessons learned from the experience.

One of the main problems with V1 was the creation of a two-tiered mining system:

  1. Most users were using the open-source clients provided by the Ore team. These miners would find a hash of sufficient difficulty every 10-20 seconds but often failed to submit their transactions due to network congestion.

  2. A smaller group of technically sophisticated miners realized they could mine in parallel across multiple key pairs and bundle multiple hashes into a single transaction. These miners were able to submit dozens of hashes every few seconds.

This disparity led to a lopsided outcome where a small number of miners were able to dominate the network, contrary to the project's goal of widespread accessibility.

Addressing Spam and Network Congestion

The V1 launch of Ore also highlighted the challenges of managing spam and network congestion on the Solana blockchain. The high volume of mining transactions led to significant congestion issues, which Hardhat Chad acknowledges was not the intent of the project.

To address these issues in V2, the team is implementing changes to the mining incentives. The new system will encourage miners to submit their most difficult hash every minute, rather than spamming the network with multiple transactions. This approach aims to reduce network congestion while still allowing for fair participation.

Why Build on Solana?

The decision to build Ore on Solana was driven by several factors, primarily the blockchain's high performance and low transaction costs. Hardhat Chad emphasizes that Solana's ability to process transactions quickly and cheaply makes it competitive with traditional banking rails, which is crucial for creating a usable cryptocurrency for everyday transactions.

Additionally, Solana's proof-of-stake consensus mechanism allows Ore to focus solely on token distribution through proof-of-work, without having to worry about network consensus. This separation of concerns enables the project to experiment with new approaches to mining and distribution that wouldn't be possible on a traditional proof-of-work blockchain.

Designing Ore's Supply Schedule

One of the key aspects of Ore's design is its token supply schedule. Unlike Bitcoin, which has a relatively short period of high inflation followed by sharp reductions in block rewards (known as "halvings"), Ore aims for a more gradual and extended distribution period.

Hardhat Chad explains that Ore will issue one token per minute, reaching the 50% mark of total supply after 20 years, compared to Bitcoin's 5 years. This extended distribution schedule is designed to give late adopters a better chance of acquiring a meaningful amount of tokens, addressing one of the criticisms of Bitcoin's distribution model.

The Problem with Halvings

The discussion touches on the potential issues with Bitcoin's halving events, where the block reward is cut in half approximately every four years. Hardhat Chad argues that these sudden reductions in miner rewards can lead to network instability and potentially compromise security if they occur too rapidly.

By opting for a more gradual reduction in mining rewards, Ore aims to provide a more stable and predictable environment for miners and users alike. This approach may help to avoid some of the economic shocks associated with halvings and create a more sustainable long-term model for the cryptocurrency.

Scaling Up the Operational Side

As Ore moves towards its V2 launch, the team is focusing on scaling up the operational side of the project. Hardhat Chad reveals that the team has grown to two members and has formed a registered entity with the mission of onboarding 100 million people to cryptocurrency through mining.

The project is currently participating in the Colosseum accelerator program, which has provided valuable connections and mentorship from industry leaders. This support is helping the team refine their strategy and prepare for the challenges of scaling a major cryptocurrency project.

Introducing Native Staking to POW

One of the most innovative features planned for Ore's V2 is the introduction of native staking alongside proof-of-work mining. This hybrid approach aims to create additional incentives for users to hold and engage with the token beyond just mining.

Under this system, miners who stake their Ore tokens will receive up to a 2x multiplier on their mining rewards. This multiplier only applies to active miners, encouraging users to both hold the token and contribute to the network through mining. Hardhat Chad explains that this mechanism is designed to create a "structural incentive to hold the token" and reward miners who demonstrate long-term commitment to the project.

The Importance of Mobile Mining

Recognizing the dominance of mobile devices in today's digital landscape, Ore is placing a strong emphasis on enabling mining through smartphones and tablets. Hardhat Chad states that mobile support is "absolutely key to reaching the masses" and confirms that a mobile app is in development for the V2 launch.

The mobile mining experience will allow users to allocate a portion of their device's computing power to mining Ore. Users will have the flexibility to adjust how much of their device's resources they want to dedicate to mining, balancing potential rewards with battery life and overall device performance.

Ore to Lead Crypto's Next Meta?

The hosts and Hardhat Chad discuss the potential for Ore to spark a new trend or "meta" in the cryptocurrency space. By making mining accessible to a wider audience and leveraging the speed and efficiency of the Solana blockchain, Ore could potentially drive significant adoption and innovation in the crypto ecosystem.

Hardhat Chad hints at additional projects in the works that aim to further lower the barriers to entry for cryptocurrency mining and usage. These initiatives could help to onboard millions of new users to the crypto space, potentially catalyzing a new wave of growth and development in the industry.

Governance and Immutability

The discussion touches on the challenges of governance in cryptocurrency projects, with Hardhat Chad reflecting on lessons learned from the V1 launch. The team is considering minimizing or eliminating admin functions in the V2 contract, potentially making Ore more immutable than even Bitcoin in some respects.

The current plan is to leave the contract mutable for a few months after launch to address any unforeseen issues, then freeze it for long-term stability. This approach aims to strike a balance between flexibility during the critical launch period and the long-term security and predictability that users expect from a cryptocurrency.

The Future of Cryptocurrency Adoption

Throughout the discussion, a recurring theme is the potential for projects like Ore to drive widespread adoption of cryptocurrency. By lowering barriers to entry, making mining accessible on everyday devices, and focusing on usability as a medium of exchange, Ore aims to bring cryptocurrency to a much broader audience than has been possible with previous generations of digital assets.

The vision of onboarding hundreds of millions of users through accessible mining represents a novel approach to growing the cryptocurrency ecosystem. If successful, it could help to realize the original promise of cryptocurrency as a truly decentralized and widely-used form of digital cash.

As the crypto industry continues to evolve, projects like Ore that combine innovative technology with a focus on user accessibility may well play a crucial role in shaping the future of digital finance and bringing the benefits of cryptocurrency to a global audience.

Facts + Figures

  • Ore is a proof-of-work (POW) coin being mined on Solana, aiming to fulfill Satoshi's original vision of a peer-to-peer electronic cash system.
  • The project decouples consensus from the POW token's distribution, leaving consensus to Solana's engine.
  • Ore's V1 launch caused significant congestion issues on the Solana network, leading to a pause and redesign.
  • The team is now two people, with a registered entity formed to onboard 100 million people to crypto through mining.
  • Ore plans to issue one token per minute, reaching 50% of total supply after 20 years, compared to Bitcoin's 5 years.
  • The project aims to hit the 90% supply mark after 37-38 years, versus Bitcoin's 11-13 years.
  • V2 will introduce native staking, offering up to a 2x multiplier on mining rewards for staked tokens.
  • Mobile mining will be a key focus, with an app planned for launch with V2, starting with Solana Saga and Android devices.
  • The new mining algorithm, EquiX, is designed to be more resistant to ASIC dominance, aiming for a performance gap of 10-100x between high-end and low-end hardware.
  • The V2 token will have 11 additional decimals to ensure rewards can be fairly distributed across a wide range of mining hardware.
  • Bitcoin adoption for payments has decreased since 2018, despite price appreciation.
  • Over 90% of Bitcoin's supply has been mined, yet less than 5% of the world's population are holders.
  • Approximately 70-80% of Bitcoin's supply is held by 1% of wallets.

Questions Answered

What is Ore Supply?

Ore Supply is a cryptocurrency project that brings proof-of-work mining to the Solana blockchain. It aims to create a peer-to-peer electronic cash system that combines the scalability of Solana with the accessibility and fairness of proof-of-work token distribution. The project decouples consensus (handled by Solana) from token distribution (managed through proof-of-work mining), allowing for a new approach to cryptocurrency design and user onboarding.

How does Ore differ from Bitcoin?

Ore differs from Bitcoin in several key ways. Firstly, it uses Solana's consensus mechanism, focusing solely on proof-of-work for token distribution. Secondly, Ore aims for a more gradual and extended token distribution schedule, reaching 50% supply after 20 years compared to Bitcoin's 5 years. Additionally, Ore introduces features like native staking and is designed to be more resistant to mining centralization, with a focus on accessibility for individual miners using consumer devices like smartphones.

Why is Ore being built on Solana?

Ore is being built on Solana to leverage the blockchain's high performance and low transaction costs. Solana's ability to process transactions quickly and cheaply makes it competitive with traditional banking rails, which is crucial for creating a usable cryptocurrency for everyday transactions. By using Solana's consensus mechanism, Ore can focus solely on innovative approaches to token distribution and mining, without the need to manage network consensus.

What lessons were learned from Ore's V1 launch?

The V1 launch of Ore revealed several issues that the team is addressing in V2. These include the need for a more equitable mining system to prevent a two-tiered structure where sophisticated miners dominated, better spam prevention mechanisms to avoid network congestion, and a more carefully designed governance structure. The team also learned the importance of thorough testing and gradual scaling to ensure network stability.

How will Ore make mining more accessible to average users?

Ore plans to make mining more accessible through several strategies. It will use a mining algorithm (EquiX) designed to be more resistant to ASIC dominance, reducing the performance gap between high-end and consumer hardware. The project will also focus heavily on mobile mining, allowing users to mine using their smartphones. Additionally, the extended token distribution schedule gives late adopters a better chance to acquire meaningful amounts of the currency.

What is the significance of introducing staking to a proof-of-work system?

Introducing staking to a proof-of-work system creates additional incentives for users to hold and engage with the token. In Ore's case, staked tokens will provide up to a 2x multiplier on mining rewards, encouraging users to both mine and hold the currency. This hybrid approach aims to create a more stable and engaged user base, potentially reducing sell pressure and fostering long-term commitment to the network.

How does Ore plan to address the issue of network spam?

To address network spam, Ore's V2 will implement a system where miners are incentivized to submit their most difficult hash every minute, rather than constantly spamming transactions. This approach aims to reduce network congestion while still allowing for fair participation. The project is also exploring other mechanisms to discourage spam and ensure efficient use of network resources.

What is the long-term vision for Ore?

The long-term vision for Ore is to onboard 100 million people to cryptocurrency through accessible mining. The project aims to create a widely used digital cash system that combines the best aspects of proof-of-work distribution with the scalability and efficiency of modern blockchains. By focusing on usability, accessibility, and fair distribution, Ore hopes to drive widespread adoption of cryptocurrency and realize the original promise of a decentralized, peer-to-peer electronic cash system.

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