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

In the realm of cryptocurrency and blockchain technology, the concept of incentive compatibility plays a crucial role in maintaining a fair and efficient system. A notable discussion revolves around an innovative approach to share issuance within a blockchain network, diverging from the model employed by Bitcoin. Unlike Bitcoin, which follows a diminishing schedule for issuing shares, a proposal has been put forth suggesting the issuance of a constant number of shares for each unit of work performed. This model aims to maintain incentive compatibility by adjusting the share issuance according to the collective effort rather than reducing it over time.

The base unit of work in Bitcoin’s framework is defined as 2^32 sha256d attempts, a standard that may need revising with the advent of sha256d ASICs technology in 2025. By increasing the "unit of work" threshold, the system can ensure a more accurate representation of work contributed over time, thereby creating a fairer and more balanced ledger. The proposed mechanism involves setting a constant c at the genesis of the sharechain, determining the share S issuance per block as S = c*D_sharechain. This formula allows for the adjustment of share issuance in direct proportion to the hash rate, thus ensuring that the distribution of rewards remains equitable irrespective of fluctuations in network activity.

This revised share issuance model also retains the original design's method of randomly selecting a shareholder to receive rewards, preserving the element of chance and potential for early participants to benefit significantly. In scenarios where the hash rate experiences substantial growth, followed by a decline to its original state, the proportional issuance ensures that shares distributed during periods of high difficulty vastly outnumber those issued when the difficulty is lower. Consequently, this prevents disproportionate rewards to individual miners and instead aligns rewards with the overall contribution to the network.

Such a system heralds a shift towards a more equitable model of reward distribution, potentially recuperating incentive compatibility. It offers a nuanced approach to mining, akin to "mining bitcoin with extra steps," as described by @ZmnSCPxj. Despite the additional complexity, this model promises to preserve the trustless and decentralized nature of the network while potentially offering a more attractive proposition for miners. The approach underscores a commitment to proportional fairness, ensuring that contributions are rewarded in accordance with the collective effort expended, thereby fostering a more balanced and sustainable ecosystem.