Improve mining decentralization – enforce p2pool on a protocol-level

If you haven't yet heard of it, research p2pool before reading this.

I think that a change to the mining protocol would be beneficial to Monero. This could be implemented without a hard fork, and is essentially a "layer 1.5". Aside from more decentralized mining, this might also enable safer 0-conf transactions.

The idea is to require a reference to the last p2pool block within the block currently being mined, and reject/penalize blocks which fail to include this. P2pool, in effect, fragments the block reward into smaller pieces which makes solo mining more accessible to lower-end hardware. I think the current winner-takes-all nature of the block reward is a fundamental issue and forces most users into pools.

Currently, the block reward on a p2pool-mined block can theoretically be divvied up into 2160 shares. The blocktime is 10 seconds and all shares within the last ~6 hours will receive a payment when a block is found. Correct me if I'm wrong, but I assume that this system is in place to account for variations in time between blocks found by the pool. Again, correct me if I'm wrong, but it seems that this could be simplified if all blocks are consistently mined by p2pool. Ideally the blocktime on p2pool could be decreased significantly, possibly to less than 1 second. At this speed it's probably more reasonable to use a DAG than a blockchain for p2pool.

P2pool shares could also be utilized to improve 0-conf safety. Something similar, designed for Bitcoin Cash, is described here. Essentially the idea is to use the "weak" PoW in the small share as a short-term confirmation before the transaction makes it into an official block. Essentially this would allow safe, instant transactions.

Any feedback is welcome. Also, I have intentionally left out some details here to keep this post reasonably short, so if something needs clarification, then tell me and I'll try to clarify.

TDLR: In theory this could allow "solo" miners to receive payouts hundreds of times more often, making it a viable alternative to centralized pool mining. Also note that technically pools would still be able to exist, but likely would face challenges due to increased overhead and latency issues. This system could also probably allow for effectively instant confirmation of transactions. This could be implemented via a soft fork.

Even if this specifically is not a viable change, I think we still need to look into ways that can promote mining decentralization on a protocol-level.

submitted by /u/SomeAncap2020
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