Understanding Stratum V2
Bitcoin mining just took a massive step in pool development.
For years, mining pools have been consolidating.
Today, the top three pools “control” over 70% of Bitcoin's total hashrate.
The main issue here is not necessarily the percentages but rather the centralization of block template creation.
If you're a freedom maximalist and believe in everything Bitcoin stands for, this should cause you to raise an eyebrow.
Stratum V2 is set to change some things:
- It lets miners propose their own block templates.
- It secures miners from hashrate hijacking with built-in encryption.
- It introduces transparency into mining pool fee structures, benefiting miners directly.
This week, the DMND mining pool became the first-ever Stratum V2 pool to launch.
If you're mining Bitcoin, investing in mining, or a passionate open source nerd, you need to know about this:
Resource List:
- Bitcoin Magazine on DMND and Stratum V2 Bitcoin Magazine (6 min read) Details on why Stratum V2 matters and how DMND pool secured VC backing.
- Galaxy Research on Stratum V2 Galaxy Insights (10 min read) Deep dive into the technical improvements and the decentralization impact of Stratum V2.
- Stratum V2 Explained Braiins (8 min read) A clear breakdown of how Stratum V2 improves security, decentralization, and efficiency.
- Hashrate Robbery Braiins (5 min read) A quick primer on what hashrate hijacking is and why miners should care about securing against it.
3 Things To Understand About Stratum V2 And Why It’s a Game Changer (Even if You’re Not a Mining Nerd)
If you care about decentralization and miner profitability, you're going to need a clear grasp of Stratum V2.
Here's what you need to know:
1. Miners Gain Block Template Control (This is huge)
Right now, mining pools dictate block templates, centralizing decision-making. Stratum V2 flips this upside down, allowing miners to propose their own block templates. This is similar to what we see with Ocean’s DATUM.
This effectively reduces the risk of censorship or manipulation.
What does this mean for you?
More security, more optionality, and less chance for powerful pools to dictate terms. It shifts power back into the hands of individuals.
2. Built-In Security Against Hashrate Hijacking
Hashrate hijacking is real—and it's costing miners money. Attackers can intercept your mining shares and claim your rewards.
Stratum V2 addresses this directly with end-to-end encryption between miners and pools. Your hashrate stays protected, ensuring every sat you mine ends up in your wallet.
3. Transparent Fees = Bigger Profits for Miners
Pools today have murky fee structures. You often have little idea if you're truly getting your fair share of transaction fees. DMND is solving this by implementing SLICE, a way to transparently share fee data with miners.
With Bitcoin’s block reward increasingly shifting toward transaction fees, clear and fair fee structures mean more predictable profits. The SLICE payout system ensures miners capture every bit of the contribution to the subsidy AND fees.
Instead of having all shares be part of one huge lookback window(PPLNS), SLICE divides the lookback window into smaller slices of time.
In each slice, all of the shares submitted will be compared and scored to the highest revenue-generating share.
That's it.
Here's what you learned today:
- Stratum V2 decentralizes mining by empowering miners to propose block templates.
- It secures miners against costly hashrate hijacking attacks.
- Transparent fee structures increase profitability and fairness for miners.
You can check out the DMND waitlist here. You can get 0% pool fees for the first two months, allowing you to test these benefits firsthand.
We allow our clients to point their hashrate wherever they choose.