Scaling Noncustodial Mining Payouts with CTV

The discussion explores the challenges and potential solutions in scaling non-custodial mining payouts, specifically addressing the limitations and economic feasibility of using Layer 2 (L2) solutions due to the costs associated with unilateral exits. The introduction of Ark as a payout method presents an alternative that could potentially enhance scalability by reducing custodial reliance, albeit with additional assumptions and uncertainties regarding the cost-effectiveness of such unilateral exits from Ark. This approach is considered against the backdrop of current practices where pool operators act as custodians until payouts are processed, highlighting the search for more efficient and decentralized methods.

Furthermore, the conversation delves into the dynamics of block space usage and fee revenues under what has been termed "normal circumstances," which recently have included periods during weekends when the mempool is empty. This situation raises concerns about the blockchain's ability to progress without significant fees to incentivize miners, especially as the industry anticipates the reduction and eventual elimination of block subsidies. The concept of miners engaging in reorganizations to capture fees from one another is mentioned as a problematic scenario that could undermine the stability and security of the chain.

The email also discusses the broader implications for bitcoin and similar cryptocurrencies as they navigate the transition away from block subsidies, emphasizing the need for innovative solutions to ensure sustainable and decentralized mining practices. The idea of incorporating new tools and strategies, such as fee smoothing and congestion control, is presented as essential for addressing these challenges and supporting the long-term viability of decentralized mining operations. The critique of hostility towards new solutions underscores the importance of openness to exploring diverse approaches that can offer unique benefits, particularly in decentralizing mining and mitigating the impacts of diminishing block rewards on network security and miner incentives.