jamespierog commented 4 months ago

Description

What is this talk about?

Variance of winning the block reward has caused miners to aggregate hashrate into pools. Now the top 4 pools control over 75% of the network hashrate. Dominant pools with FPPS payouts are not incentivized to adopt StratumV2, and miners have no economic incentive to switch to small non-FPPS StratumV2 pools with high variance of payouts. Bitcoin mining is broken due to the winner-take-all nature of the mining contest, and something needs to be done to alter the economic incentives for miners to decentralize their hashrate and adopt StratumV2.

This talk will cover the Bitcoin Prediction Market whitepaper, which proposes a solution to miner payout variance that does not incentivize further centralization of hashrate. It will introduce the piecewise parimutuel market design, and justify how miners and pools can hedge payout risk by betting against themselves or on dominant pools. It will also introduce and de-risk betting strategies for speculators to provide liquidity in the market, and prove under what conditions those strategies have positive expected value.

What would an attendee learn from this talk?

How the broken incentives embedded in Bitcoin mining cause the network imbalances we see today
Why variance is such a big problem for both miners and pool operators
Why FPPS is not a sustainable pool payout scheme as block rewards diminish with future halving events
How hedging hashrate can incentivize miners to direct hashrate to smaller StratumV2 pools
How speculators can benefit by providing liquidity through optimal betting in the market

Is there anything folks should read up on before they attend this talk?

Attendees should have a basic understanding of Bitcoin mining and pool payout schemes. Familiarly in elementary probability theory and statistics will also be helpful.

Relevant Links

About the Speaker

James Pierog is Co-Founder and CEO of Bitcoin Prediction Market, a Wolf-backed company. He graduated with a degree in Mathematics and Computer Science from Yale-NUS. He studied philosophy under Andrew Bailey, co-author of Resistance Money, and his undergraduate thesis was on applying infinite groups to post-quantum cryptographic protocols.

Social Links

Github https://github.com/jamespierog Twitter https://x.com/BillyHongBeats https://x.com/BTCPredMrkt Nostr npub1u8r69esh5r7jt29nj9ufmz4yvuwp6cwl5xqp4e3d46vl8wla5smsexjcky Website https://bitcoinprediction.info/

Talk Details

Length of Talk

30 minutes talk 10 minutes Q&A 40 minutes total

Preferred Day/Time Slot

Day one of talks early afternoon

miketwenty1 commented 3 months ago

@jamespierog would you also be live demoing your market website as part of the talk?

jamespierog commented 3 months ago

@jamespierog would you also be live demoing your market website as part of the talk?

Yeah sure. Demoing the prediction market is as simple as sending a lightning payment. I can do it at the beginning of the talk, and most likely by the end of the talk I should receive a reward in my lightning wallet (if I placed a bet correctly).

iglesiasbrandon commented 2 weeks ago

thank you for conducting this talk!

TABConf / 6.tabconf.com

Hedging Hashrate: A Market Solution to Miner Variance #46