Just like P2Pool, Braidpool uses peer to peer communication between miners to track PoW shares. The question then is, can we extend P2Pool to achieve the goals of Braidpool? In this post we present how Braidpool is different from P2Pool and why Braidpool is not building on the P2Pool codebase.

There are a few components that come together to provide the goals of Braidpool. Before we go into those components, a quick reminder of the goals of Braidpool:

  1. Reward miners for all their PoW shares.
  2. Scale to tens of thousands of miners.
  3. Provide infrastructure for building financial tools to help miners manage risk.

To achieve these goals, braidpool needs the following components to work together:

  1. A peer to peer network of miners to disseminate shares.
  2. A rewards calculation algorithm that incentivizes miners to disseminate them at the earliest.
  3. Payment channels to make payouts to miners so that a constant amount of blockspace is required, independent of the number of participating miners.
  4. An anonymous hub that can’t deny rewards payouts to miners.

We believe all of these components are fundamentally different from P2Pool’s implementation. The rest of the blog post elaborates on this.

Peer to Peer Network and Finding Shares

Just like P2Pool, miners participating in Braidpool broadcast their PoW shares to other miners over a p2p network.

In P2Pool the network difficulty is adjusted so that the pool finds one share every 30 seconds. This results in smaller miners struggling to find enough share and makes P2Pool economically nonviable for them.

In Braidpool, this is not the case. Each miner participating in Braidpool can choose the difficulty they mine at so that they generate a share at an interval of their choosing. Small miners will mine at low difficulty to generate a share every 10 seconds, while large miners will mine at a much larger difficulty to find a share every 10 seconds. Both the difficulty and the share period can be configured by the miner.

Since small miners are able to find shares at their chosen difficultly, they can claim rewards for all their PoW shares.

Rewards Calculation

With miners choosing their own difficulty, the rewards calculation algorithm in Braidpool takes into account the difficulty used by the miners when they find their shares.

This rewards calculation algorithm incentivizes miners to broadcast shares as soon as they discover them. The details of the rewards calculation algorithm are described in detail in the proposal under review.

This is in contrast to how in P2Pool each miner has to generate shares using the same difficulty. As the network grows, the difficulty increases and smaller miners are forced out of the network. This dynamic that limits the growth of P2Pool is absent in Braidpool. As more miners join Braidpool, each miner is still rewarded for all their PoW shares, and in fact, each miner is rewarded more frequently since the pool can find blocks more frequently.

Miner Payouts with Payment Channels

In P2Pool, all miners that find a share for are rewarded in the coinbase of the next bitcoin block the pool finds. The rewards are paid out through the coinbase of the next block. The problem is that as more miners find shares, the size of the coinbase transaction keeps growing. The increasing size of the coinbase reduces the profitability of P2Pool as the same blockspace could be used by other fee paying transactions. Added to that, miners now have to aggregate their UTXOs for each reward which further increases the costs for the miners.

Chris Belcher first proposed the idea of using Payment Channels in a BitcoinTalk post to make payments to miners for their PoW shares, and Braidpool uses the constructs descirbed by Chris to use payment channels for distributing payouts to miners.

This means that Braidpool’s coinbase transaction are of a constant size and do not need more blockspace as more miners join the pool. The use of payment channels also amortises the costs for miners to spend their rewards earned for PoW shares from multiple blocks.

A Hub For Miner Payouts

Unlike P2Pool, Braidpool requires a hub to open channels for miner payouts and then to make payouts to the miners. However, the payment channels are constructed in a way that neither the miner nor the hub can cheat. The proposal and the bitcointalk post by Belcher describe the channel construction in detail and show how neither the miners, nor the hub can cheat or without payouts.

Since the hub can be attacked, it uses Tor v3’s hidden services to protect its anonymity. Being a Tor hidden service, the hub’s location is hard to detect and the hub can resist DDoS attacks.


As we see, Braidpool uses completely different mechanisms to manage shares, calculate miner rewards and distributing the payouts. The changes are across the entire ‘stack’ and this motivates the need to rethink an implementation from the ground up.