As Bitcoin mining pools grow, concerns are rising about increasing network centralization. Larger pools wield significant power by controlling block creation and payouts, sparking fears of potential censorship and manipulation. OCEAN Pool, however, seeks to shift this balance with the DATUM Protocol, a decentralized solution designed to empower miners and promote transparency. In today’s article, we’ll explore the DATUM Protocol and the motivation behind its development.
What is the DATUM Protocol?
How Miners Became Merely Hashers
The Threats of Centralization
Restoring Decentralization
How it Works
3 Key Features of the DATUM Protocol
The Future of Bitcoin Mining with DATUM
OCEAN is redefining what it means to be a miner. As the most transparent pool, we offer full visibility into block templates, pay-outs, and miner stats, so you can see exactly what your hashrate is mining. Plus, we’re the only non-custodial pool, allowing you to receive new block rewards directly from Bitcoin. Take control of your mining at OCEAN.
What is the DATUM Protocol?
DATUM, which stands for Decentralized Alternative Templates for Universal Mining, is central to OCEAN Pool’s vision for a more decentralized future in Bitcoin mining. Similar to Stratum V2 (Sv2), DATUM is designed to decentralize block construction, returning control to individual miners. This protocol allows miners to independently manage block template creation, enhancing their autonomy in the mining process.
How Miners Became Merely Hashers
Bitcoin was initially designed to be decentralized, with nodes acting as both miners and transaction validators. In its early days, individual miners created their own block templates, preserving the blockchain’s decentralized nature. However, as hashrate demands grew, mining hardware became more specialized and expensive, leading to the emergence of mining pools. These pools aggregate the computational power of individual miners, providing them with more predictable pay-outs in exchange for control over block creation.
When attempting to find a new block, a mining pool generates a block template that contains all the necessary data to comply with Bitcoin’s consensus rules. The pool selects transactions from its node’s mempool and assembles them into a block template. This template is then broadcast to the pool’s miners, who contribute their hashrate—referred to as “shares”—by working on that template via the Stratum protocol. If a miner within the pool successfully finds a valid block, the pool collects the block reward and distributes pay-outs based on each miner’s contribution to the pool’s overall hashrate.
It has become standard practice for pools to exclude individual miners from having input into which transactions are included in the block, creating a potential chokepoint that could weaken Bitcoin’s censorship resistance. Effectively, mining pools have turned miners into “hashers” who only supply computational power without control over block composition.
The Threats of Centralization
Bitcoin mining pools are centralized businesses that serve as third-party providers for miners seeking more predictable revenue. Currently, the top two pools, Foundry USA and Antpool, together account for over 50% of the global hashrate.
Looking closer, it’s evident that several other mining pools operate as proxies for Antpool, the primary pool managing block template creation. This means Antpool’s actual dominance is even greater than what the hashrate distribution chart suggests. The centralization of pools has raised concerns about their potential ability to censor or prioritize transactions. In a previous article, we took a deep dive into the centralization risks for the Bitcoin network.
Restoring Decentralization
In addition to centralizing hashrate, the centralization of block template construction is a major concern for those worried about Bitcoin mining centralization. DATUM aims to counter this trend by giving miners the autonomy to construct their own block templates, decentralizing a crucial part of the mining process. Through this protocol, miners gain the ability to choose which transactions to include in the blocks they mine, ensuring that miners—not pool operators—control transaction prioritization.
This shift places the responsibility, and the future incentives of block-space control, back into the hands of miners. It also adds a decentralization benefit by making regulatory oversight more challenging; it’s far easier to oversee a few large mining pools concentrated in specific jurisdictions than to regulate numerous smaller entities and individual miners dispersed globally. With DATUM, miners retain the flexibility to tailor block templates to their own goals, while still enjoying the reliable pay-outs of being part of a larger pool.
How it Works
Using DATUM requires setting up a DATUM gateway, a simple server that communicates directly with the miner’s hardware and a Bitcoin full node to manage block submissions. The gateway and full node can operate on the same device, returning nearly all traditional roles of a mining pool back to the miner, except for determining payout distribution. This setup enables miners to choose the specific work they perform, while OCEAN’s pool tracks contributions and allocates rewards accordingly. Additionally, DATUM ensures that pay-outs go directly to miners, removing custodial oversight.
3 Key Features of the DATUM Protocol
Transparency and Miner Control: The DATUM Protocol provides transparency, allowing miners to verify essential information in real time. This includes visibility into block templates, pay-outs, and mining statistics, enabling miners to independently confirm their contributions and earnings.
Decentralized Block Template Creation: DATUM empowers individual miners by decentralizing block template creation. Miners can now build their own templates and select which transactions to include, reducing the central authority traditionally held by pool operators. This decentralization is vital to keeping Bitcoin censorship-resistant and aligned with its core principles of decentralization and transparency.
Non-Custodial Payouts: DATUM’s non-custodial payout system is another essential feature. While traditional pools hold custody of miners’ rewards and distribute them at set intervals, DATUM ensures that payouts go directly to miners without intermediaries, minimizing risks of mismanagement or fraud. This approach empowers miners to maintain full ownership of their rewards from the moment they’re earned.
The Future of Bitcoin Mining with DATUM
The DATUM Protocol represents a giant leap forward for decentralization in the Bitcoin mining industry. By enabling miners to construct their own block templates and eliminating custodial control over payouts, DATUM reduces the influence of large mining pools and returns control to individual miners. This shift realigns with Bitcoin’s original ethos—designed to resist centralization and promote financial autonomy.
