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Decentralization-Boosting Mining Protocol Stratum V2: Overview & Progress Update

Decentralization-Boosting Mining Protocol Stratum V2: Overview & Progress Update

Over the past year, we've explained many benefits of the Stratum V2 mining protocol for miners, pools, and the Bitcoin network as a whole. Now it's time for a recap & update on development + adoption 👇


For those not familiar with the features of Stratum V2 or how it compares to Stratum V1 & BetterHash, we have an overview for you (check the Compare tab for more). It also includes a Q&A with protocol authors Matt Corallo, Jan Capek and Pavel Moravec.



While all of the features are relevant to miners & mining pools, the aspect of Stratum V2 that most non-miner Bitcoiners care about is Job Negotiation. This is a sub-protocol that enables miners to construct their own blocks, a task currently only being done by pools.

We recommend the following piece from Karim Helmy (R&D at Coinmetrics) which includes an explanation of out-of-band payments, a potential economic incentive for miners to adopt Job Negotiation.

Deribit Insights: "Stratum V2: Migration and Decentralization"

We also have a deeper explanation of how Stratum V2 can impact Bitcoin's decentralization and how the Job Negotiation process works. Approximately 94% of Bitcoin's hashrate currently goes through Chinese mining pools, while some ~65% is physically produced in China during the rainy season. Safe to say, Bitcoin decentralization isn't perfect. TL;DR: Stratum V2 can help ⬇️

"Bitcoin’s Decentralization with Stratum V2"



So, what is the state of Stratum V2 adoption today? Well, it's still very early days. We have an implementation on r/slushpool and in our Braiins OS+ firmware, so there are already many miners using V2. However, this doesn't include Job Negotiation yet…

The reason is that there are changes necessary in Bitcoin Core in order to make Job Negotiation possible. So there can't be a full implementation of Stratum V2 until those changes are made. Good news: the development is in progress with a help from Square Crypto!


Until then, mining pools will remain the sole entities constructing blocks to add to the Bitcoin blockchain. However, miners can still benefit from partial V2 implementations which improve efficiency, privacy, and security (e.g. man-in-the-middle attack prevention).

We believe Stratum V2 will have a significant long-term impact on the mining industry, particularly as transaction fees account for an increasing proportion of mining revenue.

We'll be sure to update the community again as the development progresses.

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