1/3 of the hash rate is swallowing 90% of the rewards on DERO Stargate

[007ive]

Greetings DERO fam,

I am a long-term DERO enthusiast / holder / dreamer and a solo miner here like many of you, mining since 2018. When I first heard about the Stargate update, I thought that DERO will be a true unstoppable private protocol and the team have managed to foolproof it’s path, a few months later it seems that started to crack like a sheet of thin ice.

Gradually and naturally the network hash rate has increased over the last 6 months at a scale of 600% (back from ~50mh to 300+mh)

The solo miner rewards decreased at a far much faster phase, for each shrimp miner (3kh/s) the rate decreased from ~2.3h to find a block to ~47h to find a block, that’s a 2000% difficulty increase for only a 600% network hash rate increase you might find interesting.

What happened in the meantime?

I saw a large number of miners complaining about the rewards distribution and pools tapped in what was supposed to be the best decentralized network, undoubtfully compromising it.

In the last 30 days of observing the rewards distribution, things really got out of hand. Right now, there are 3 pools tapping in the DERO:

whalesburg.com, mysrv.cloud and rabidmining.com, all of them combined make about 1/3 of the network hashrate. The surprise kicks in when looking at the miner rewards distribution:

Less than 10% of the rewards are ever distributed to the solo miners, which are responsible for 2/3 of the hashing power on which the DERO runs.

That might tempt a solo miner to dial down on decentralization and to choose to mine through a mining pool, but the reality is that mining pools are actually rewarding less than what you can get trough solo mining. I throwed a shrimp miner at each of the pools (3kh/s miners) and the pools rewarded 1.3 / 1.2 / 1.1 DERO whereas a solo shrimp miner produced 1.44 DERO for the last 30 days. Just to clarify. at the current hash rate a fair reward for a 3kh shrimp would be at around 5 dero/30 days.

So, pools are eating away 90% of the rewards and they distribute to their users 10 to 15% of what they get. Sadly, this is the reality we live in and the once bright, fair, decentralized dream we shared is compromised.

Upon concluding, there is no point to waste energy to enrich a few pockets, my miners are plugged out until the project gets fair again to the hard-working miners that are running the network.

[007ive]

Picture 1

[007ive]

[007ive]

[ChaseG]

I’ve seen a recent decline in rewards as a solo miner as well. I’m at 20 KH/s and see one or two miniblocks in 24 hours over the past five days on my own node. According to the calculator I should be seeing 3-4 miniblocks a day.

[kox55rus]

3 workers 41 kh/s 2-3 mb 24 hours (solo)

[007ive]

Update:
Whalesburg was offline in the past 12 hours. 90% of the hash rate is composed of solo miners at the moment and the mysrv.cloud pool witch is pulling less than 10% of the hash rate while receiving 60% of the rewards.

[Riddler]

Mm this is indeed a serious issue. Appreciate ur deep analysis.

[mmarcel]

Hi,
thank you @007ive for digging into.

With a hashrate of 3 KH/s you don’t get 5 Dero but 1.24601 Dero. You picked the USD value.
The stats provided by miningpoolstats are wrong.
Dero splits the blocks into 10 miniblocks. Miningpoolstats treats the block as block. They don’t care about the miniblocks. So you have to divide the numbers by 10 to get the real results.

[007ive]

Thanks for the obvious breakdown, mmarcel. Since you are more familiar with the hansen modded pool can you explain to the community how does it pull 75% of the rewards with 15% of the hashrate and why the amount that the pool is distributing doesn’t match? Here are some fresh snips of the block distribution:

PS: the red part represents the solo miners - 85% of the network hashrate atm.

[mmarcel]

As I already mentioned, miningpoolstats handles the data in a wrong way.
This chart of the last 100 (or 1,000) blocks is wrong.
mysrv.cloud found ~75 miniblocks in the last 100 blocks, NOT blocks.
But there are 1,000 miniblocks per 100 blocks.
The correct distribution is 7.5%.
Their system is not prepared for the miniblock system.

[007ive]

I understand your argument that the MPS is looking at just 10% of the data but how can you explain that there are never fluctuations larger than 5% in the output?

If I take any system and analyze 10% of the output the chances of finding constant results is 10% right?
At any given moment the output is the same on MPS, for example just taking a look right now, mysrv is still getting over 75% of the blocks.

Also, by running a simple calculation based on the returns from the pool for a 3k worker (0.026 dero/24h) the pool had to take in a lot more than the 7.5% specified. My assumption based on the discrepancy from the reports is that the pool is downplaying at least half of the rewards that it’s generating.

[mmarcel]

Here is the calculation of the last mining round. The pool nodes pay every 4,800 blocks.

Official formula to calculate the amount of miniblocks:
Your hashrate / (Network hashrate / 48,000 miniblocks) = miniblocks per day, or better miniblocks per 4,800 blocks
Note: 86,400 seconds per day / 18 seconds block time = 4,800 blocks per day

Pool hashrate was 32.5 MH/s and the average difficulty over 4,800 blocks was 244.4 MH/s.

32.5 MH/s / (244.4 MH/s / 48,000 miniblocks) = 6,383 miniblocks per day
Note: The pool hashrate is just a snapshot of the current moment, but it was stable at that level

The pool found ~6,105 miniblocks - 324 invalid/lost results = 5,781 miniblocks
90.6% of the calculated value. 9.4% loss.

You don’t have to trust these results, but you can verify the data on the blockchain. All miniblocks are stored there, accessible for the public.
The pool addresses are not hidden. Ok, you have to wait for the payouts to look up the addresses, but I will make them public in an easier way.

There is also an API call for pool stats:
DERO.GetPoolInfo

Eg:
curl --silent http://dero-node-sg.mysrv.cloud:10102/json_rpc -H 'Content-Type: application/json' -d '{"jsonrpc":"2.0","id":"0","method":"DERO.GetPoolInfo"}' | jq .

[007ive]

Thank you, mmarcel for the calculations, I also had a talk with miningpoolstats, and they said they can easily incorporate the miniblocks rewards into the feed instead of the block rewards, but the limitation is the dero explorer witch is reporting only the block rewards (see below)

Is there anywhere to pull out the individual miniblock rewards distribution data address by address?

[mmarcel]

This page displays all 10 miners
https://explorer.derohe.com/

More stats here
https://derohist.io

[007ive]

Thank you for the resources, @mmarcel !

I manually pulled out the data from the last 1000 mini-block rewards to run a distribution calculation and here are the results:

Indeed, the biggest pool, mysrv.cloud, is receiving 9.7% of the rewards pulling 9.1% of the total hash rate (value witch is mostly fluctuating), aside from that we have a few other pools/large miners.

The correlation between hash rate and distribution is 90.65% calculated based on the first 32 addresses compounding 91.26% of the network hash rate and 91.5% of the rewards, based on this there is no large discrepancy in between the rewards and the hash rate.

Aside from the fact that ~90% of the hash rate is coming from 32 addresses a.k.a. points of failure which might be a bit concerning in regards to decentralization (Solana has 3x more points of failure and it’s mostly not considered decentralized) there is no point of concern regarding the miner rewards distribution based on this data.

I am leaving the raw data and the calculation in a shared excel file below in case anyone wants to verify or to play with it: 77.1 KB file on MEGA

Other than that, I acknowledge that the thread opening statements were proven wrong, the miner rewards is spread evenly with small points of fluctuations and the stats provided by the MPS platform are mostly looking at the node rewards instead of the miner rewards therefore the data they provide cannot be trusted.

I hope this has been a constructive discussion and brought value to the DERO fam.