P2share: how to turn any network (or testnet!) into a bitcoin miner

The discussion revolves around the development and conceptual framework of a new model for p2poolv2, which is being designed to ensure that it remains non-custodial. This model significantly differs from traditional custodial approaches, such as those involving a FROST federation, by allowing the top 20 miners in any Pay-Per-Last-N-Shares (PPLNS) window to receive rewards directly within the bitcoin coinbase. In contrast, smaller miners are allocated shares on the sharechain, which they can then sell to larger miners or market makers through atomic swaps. This mechanism is supported by the inclusion of Script-based transactions in the sharechain, facilitating a variety of future constructions using Ark/Spark or similar technologies.

A key feature of this system is its incentivization scheme for large miners and market makers to purchase shares from smaller miners. The primary motivations include the opportunity for large miners to buy shares at a discount—a price set by the market—and the advantage of remaining in the top 20 to secure direct payouts from the coinbase. However, these benefits come with the risk associated with the possibility that p2pool may not find a block within a given PPLNS window, potentially rendering the purchased shares worthless.

Furthermore, the design introduces a temporal limitation on the shares, where they expire after the PPLNS window elapses. This expiration is critical as it ensures shares are only valid for their respective PPLNS window, thereby delineating a clear risk for market makers who must speculate on the pool's hashrate and calculate discounts for shares based on the likelihood of finding a block within the window. The discussion mentions considering an extension of the PPLNS window from the original three days used by the first iteration of p2pool to potentially a week, although this adjustment is still under analysis and has not been finalized.