“Mining,” or the process of generating Proof-of-Work hashes to secure a blockchain, is a well-understood concept in the crypto industry. Merged-mining, in contrast, despite being nearly as old as the concept of “mining” itself, is far less commonly understood.
What is merged mining?
When a computer is mining a blockchain, it is doing mathematical operations – namely, calculating the outputs of a “one-way hash function.” These miners are looking for outputs (hashes) which satisfy a hard-to-achieve criteria; e.g. finding a hash with a certain number of leading zeros. A hash with many leading zeros can be difficult to generate, allowing the computer (miner) that proposes it to “prove” to the network that it has done “work” to build the block it is proposing.
Merged mining is the process of mining multiple blockchains at once. Similar to the traditional process of mining, computers are calculating the outputs of one-way hash functions in an attempt to find hashes with a certain number of leading zeros (the “difficulty threshold”). However, when merge-mining, miners are able to check the outputs they produce against the difficulty thresholds of multiple blockchains; if the hash meets or exceeds the difficulty threshold of one or more of these blockchains, a valid block is produced.
In Quai Network, each miner simultaneously mines at least three blockchains at a time. Each hash a miner calculates is checked against the difficulty thresholds of these three chains. The resulting block is appended to whichever chains the difficulty threshold has been met in.
When merged mining, miners receive block rewards for each of these distinct blockchains. In the case of Namecoin, the first example of merged mining, Bitcoin miners were also incentivized to mine Namecoin as they would receive extra block rewards for hashpower they were already using.
Quai Network utilizes merged mining to secure an entirely new network of Proof-of-Work blockchains, all of which are woven into a composable and interoperable “braid.” With the creation of this braid, Quai Network vastly increases available throughput in a decentralized system while retaining shared Proof-of-Work security across all blockchains. Notably, while Bitcoin and Namecoin were separate ledgers, the Quai braid all runs one common ledger. Coins in one chain are no different than coins in any other chain.
How do merged mining pools work?
In some situations, merged mining pools and traditional crypto mining pools function identically. If all miners in the pool choose to mine the same set of blockchains, the pool can function like a traditional mining pool. However, due to there being a selection of multiple sets of chains that the pool can choose to merge-mine, some mining pools may choose to dynamically switch between sets of chains (aka slice), optimizing for the highest reward to their miners.
In a pool where participants are merged mining different sets of blockchains, innovative and unique approaches can be taken to mining optimization/reward distribution, such as allowing miners to “auto-select” the set of chains that is most profitable to mine. This dynamic, managed hashpower has the potential to be significantly more profitable than static hashpower that remains mining the same set of blockchains.
Merged mining, while not a new technology, is only recently seeing innovation in the form of a unique, merged-mined network of blockchains. Quai Network is pioneering this approach to blockchain scalability, and some mechanisms and properties of mining and pool coordination will likely emerge as the protocol is developed.
What problem does merged mining solve?
Merged mining simultaneously solves two large problems with the crypto space: an inability to scale trustlessly, and an inability to bridge blockchains trustlessly.
For the purposes of this article, the word “trustlessly” is used conservatively, referring to the introduction or use of any mechanism outside of Proof-of-Work consensus to facilitate scaling/bridging. Existing solutions to both of these problems are heavily trust-reliant, creating vulnerabilities and trust centers that can be exploited or manipulated. Merged mining offers a unique and highly promising approach to both scaling and bridging, as it functions as a simple extension of Proof-of-Work consensus, and does not introduce any new trusted mechanism.
Quai Network scales trustlessly by using merged mining to create a “braid” of interoperable blockchains that share the same Proof-of-Work security. Merged mining allows miners to find blocks that are valid in multiple blockchains simultaneously, which function as decentralized and trustless bridges between Quai blockchains. These blocks, known as “coincident blocks,” ensure secure cross-chain coordination. Anytime a block is rolled back in Quai Network, it is rolled back in all contexts in which it was appended; thus, all chains in the network remain coordinated under all circumstances. This is a significant improvement over existing multi-chain solutions, which offer weak and subjective bridging guarantees.
This unique architecture facilitates vastly improved throughput and consistently-low transaction costs, alongside significantly reduced confirmation times. By enabling the parallel processing of transactions and chain interactions across many blockchains in the “braid,” Quai scales to 50,000+ TPS.
How does merged mining differ from regular crypto mining?
The fundamental difference between merged mining and regular crypto mining is the number of blockchains that each miner is securing and getting block rewards from.
In a traditional crypto mining setup, machines are set up to mine a blockchain and receive rewards from that blockchain. When merged mining, machines use the same amount of energy and computational overhead to mine multiple blockchains and receive rewards from each blockchain it is mining.
Critically, the process of merged mining requires no additional energy, hardware, or technical prowess from miners. This allows the benefits of securing multiple blockchains, including having multiple streams of block rewards, to be fully enjoyed by miners.
What type of rig do I need for merged mining?
Merged mining can be conducted with any machine used to mine cryptocurrency. Depending on which blockchain(s) the miner is mining, the process of merged mining may be more manual and require extensive configuration (mining Litecoin and Doge simultaneously) or more streamlined, with node/miner clients designed to facilitate merged mining (mining multiple Quai chains simultaneously).
Quai Network has created multiple tools for node operators and miners to use when setting up and maintaining hardware. These tools allow the process of merged mining to be as easy and straightforward as traditional single-chain mining.
Join us to build a better blockchain.
Quai Network is an open-source Proof-of-Entropy-Minima blockchain network utilizing the capabilities of merged mining to increase throughput and security. Users of Quai Network will enjoy fast transaction times without compromising decentralization and security. Miners will have competitive mining opportunities across the many blockchains within the network.
Capable of thousands of transactions per second, the Quai Network is a new solution to scalability that is soon to be ready for mainnet release.
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