Monero, an open-source cryptocurrency, is currently getting troubled by mining pools. Monero developers have put in a lot of effort to prevent the development of viable Application Specific Integrated Circuit (ASIC) mining hardware in the past, but it has not contributed significantly to the cause.
Monero’s RandomX got activated in early December 2019, and since then there have been major controversies surrounding the upgrade. Firstly, questions were raised regarding the level of security Monero is offering after its RandomX upgrade, despite more hash rate now. The hash rate of the XMR network took a massive leap right after activation, but the security enhancements after RandomX were picayune.
The general view which goes around is the more the hash rate, the more the network security. However, it couldn’t be applied here by virtue of the difference in algorithms. Each miner’s hash rate had to be calculated. The discussion finally met its end when Monero’s lead developer came out and clarified stating that to attack the network at 51%, 4 of the current top 5 supercomputers together are required at least.
Monero’s Centralization Issue
When a plethora of miners, in their quest for higher payments, join the main pools, centralization occurs. Bigger pools equate to more hash rates, which enhances the likelihood of them discovering new blocks. Ergo, those two pools end up with the majority of miners and the same goes for ASIC miners.
The antithesis of it occurs in the small pools, less payment, less hash rate, etc. The small pool gets tasked with protecting the integrity of the network in case the large pool turns out to be a bad player.
Here’s where Monero’s RandomX fails to contribute as it does not increase pool centralization. It is entirely down to miners. The only way to dodge this problem is to encourage minors to turn to small pools instead of the big ones. But truth be told, the stakeholders are tilted towards the large pools too, as it offers more security and reliability.