What is Lumerin Protocol (LMR) and How Does it Work? | KuCoin Crypto Gem Observer
Since its launch in 2008, the Bitcoin (BTC) network has grown tremendously. The network’s miners have already mined 18,991,675 BTC out of the 21 million coins. With a little over 2 million BTC left to mine, mining difficulty will increase significantly. As such, miners will need more hashing power to remain competitive.
Consequently, miners will have to purchase more powerful rigs to earn reasonable mining rewards. However, such mining equipment is expensive and consumes a lot of energy.
With environmentalists increasingly voicing concerns over the massive carbon footprint of PoW mining, miners have been shifting to regions with cheap renewable energy and crypto-friendly regulations. This migration has seen crypto mining become centralized, allowing a few geographical locations to control the hashpower of Bitcoin and other PoW networks.
Mining pools emerged over a decade ago, hoping to solve the centralization problem. However, they quickly became plagued with trust issues, seeing as it is difficult to prove the source, stability, and probability of hashpower.
Looking to address the above issues, Lumerin Protocol plans to offer a unique solution that involves tokenizing hashpower and providing a path to a decentralized peer-to-peer protocol for trading it.
How Does Lumerin Protocol Work?
Lumerin is a routing protocol that makes it simple and easy to control how, when, and why data and communications are routed via smart contracts. Our first use case of the Lumerin Protocol is turning Bitcoin hashpower into a commodity and creating a global, decentralized hashpower marketplace. This marketplace gives miners better access to larger markets for their hashpower and allows others to invest and buy/sell hashpower at reduced risk. This first use case converts Bitcoin hashrate into a marketable, liquid financial commodity, increasing mining profitability and capital availability.
Our vision is to make it simple and easy to control how, when, and why data and communications are routed via smart contracts.
· Use Lumerin DEXs to buy, sell, and trade data as a commodity.
· Use NFTs to establish VOIP communications rules for your Lumerin node on your phone.
· Monetize encrypted peer-to-peer video and music streams through smart contracts.
· The Lumerin Hashpower Marketplace, allowing users to transfer hashrate ownership and control it like any other commodity.
In this, the first implementation of the protocol, the Lumerin Hashpower Marketplace will offer provable and complete control over a device’s hashpower without necessarily owning the device. This situation is similar to a landlord owning a piece of land with condos and a homeowner owning one of the units. Similarly, miners will be able to rent hashpower from devices in a provable way.
However, for such a setup to work, market participants must believe that the hashpower they are buying or selling is authentic. To address this concern, Lumerin provides mathematical proof of the existence of the hashpower in a decentralized and trustless way.
This process involves three levels of increasing decentralization. These stages are Hashrate Oracles, Staked Hashrate Validators, and Staked TCP Proxy Nodes.
In the first stage, oracles prove the existence of the hashrate. These oracles host Transmission Control Protocol (TCP) nodes and serve as intermediaries between the seller and buyer. The proxy will receive all work that miners do, authenticate it, and broadcast it to the network.
Stage two involves transferring the job of validating the hashrate from a centralized oracle to a designated group of validators. Their job will be proving hashing difficulty for each accepted pool share and submitting proof of the work done to the smart contract. To encourage good behavior among validators, Lumerin will require them to stake a bounty as collateral.
Validators will get a small fee from each hashing contract they monitor as payment for their services. Those that fail to complete tasks or those that decide to become bad actors will lose their staked bounty. Lumerin will then distribute this bounty among contract participants.
The third stage involves each node broadcasting its hashing work to the rest of the Lumerin network. This step allows nodes to verify shares submitted by one another. To verify shares, nodes will need information like a hashing algorithm, a pool’s difficulty target, the work a pool assigns, the share a miner submits, and a signed message from the pool validating acceptance.
The Lumerin token will be the transactional token of the Lumerin Protocol – initially we will have a hashpower marketplace which will have hashrate contracts that are sold and purchased, denominated in LMR. Gas and transaction fees on the protocol will also be denominated in the Lumerin token.
What Makes Lumerin Protocol Unique?
The Lumerin protocol’s simple architecture pairs a messaging layer that allows transmission and routing of information between nodes with an EVM smart contract engine. As a result, we can now route any data streams based on immutable rules written on an open, public ledger. Lumerin is building a decentralized protocol that enables people to exchange, reroute, and redirect hashrate effectively. A protocol where users can transfer hashrate ownership and control like any other commodity.
Who Created the Lumerin Protocol?
The Lumerin Protocol and its first implementation in the Hashpower Marketplace, are the brainchild of Titan, an organization that offers powerful software and services for crypto mining at scale. The firm is based in Chicago, Illinois, USA. Ryan Condron, Jeff Garzik, and Matthew Roszak co-founded the company in 2018.
By creating a decentralized peer-to-peer marketplace for buying, selling, distributing, and monitoring hashpower, Lumerin addresses the centralization and transparency issues in the mining industry. This helps improve the efficiency of PoW networks while offering people across the globe greater access to capital and investments.
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