jungly on Nostr: There is also an economic limitation. More block space you take for making miner ...
There is also an economic limitation. More block space you take for making miner payouts, the less you can earn fees for that same space. Plus, it hurts smaller miners. They want to pay fees aggregating small payouts.
Belcher did an excellent job explaining it all in this post: https://bitcointalk.org/index.php?topic=2135429.0
"Here is an example of a p2pool coinbase transaction: https://blockchain.info/tx/d1a1e125ed332483b6e8e2f128581efc397582fe4c950dc48fadbc0ea4008022
It is 5803 bytes in size, which at a fee rate of 350 sat/b is worth 0.02031050 btc of block space that p2pool cannot sell to any other transaction. As bitcoin inflation goes down and miners are funded more by fees, this puts p2pool at more and more of a disadvantage compared to trusted-third-party mining pools.
As each hasher is paid to their own bitcoin address, this limits the number of hashers taking part as adding more individual people to the payout transaction increases its size. Also small payouts cost a disproportionate amount in miner fees to actually spend, which hurts small miners who are essential to a decentralized mining ecosystem.
This could maybe be solved by keeping a separate balance state for each user that is independent from the payouts, and make payouts only when that balance state exceeds some reasonable threshold. But this increases the variance which goes against the aim of pooled mining."
Belcher did an excellent job explaining it all in this post: https://bitcointalk.org/index.php?topic=2135429.0
"Here is an example of a p2pool coinbase transaction: https://blockchain.info/tx/d1a1e125ed332483b6e8e2f128581efc397582fe4c950dc48fadbc0ea4008022
It is 5803 bytes in size, which at a fee rate of 350 sat/b is worth 0.02031050 btc of block space that p2pool cannot sell to any other transaction. As bitcoin inflation goes down and miners are funded more by fees, this puts p2pool at more and more of a disadvantage compared to trusted-third-party mining pools.
As each hasher is paid to their own bitcoin address, this limits the number of hashers taking part as adding more individual people to the payout transaction increases its size. Also small payouts cost a disproportionate amount in miner fees to actually spend, which hurts small miners who are essential to a decentralized mining ecosystem.
This could maybe be solved by keeping a separate balance state for each user that is independent from the payouts, and make payouts only when that balance state exceeds some reasonable threshold. But this increases the variance which goes against the aim of pooled mining."