Company Name: DEMAND
Founders: Alejandro De La Torre and Filippo Merli
Foundation date: 2023
Headquarters Location: Lisbon, Portugal and Florence, Italy
Amount of bitcoin in Treasury: “Currently in startup process”
Number of employees: 2
Website: https://www.dmnd.work/
Public or Private? Private
Alejandro De La Torre is deeply concerned that bitcoin mining is too centralized and is on a mission to change that. That's why he started DEMANDa bitcoin mining pool that gives power back to independent bitcoin miners.
However, before we get into how DEMAND works, it is important to understand what De La Torre learned from his time in the bitcoin mining industry to better understand his motivation for starting DEMAND.
De La Torre's story in the bitcoin mining space
De La Torre has served as vice president of Poolone of the largest bitcoin and cryptocurrency mining pools in the world, as well as vice president of business operations at btc.com”>btc.com, which also operated its own bitcoin mining pool. What he saw during his time in these two roles made him realize that there was little time to waste in decentralizing the bitcoin mining landscape.
“The experience I had in the last few pools made me realize that we needed a change in the mining pool industry and we needed it very, very quickly,” De La Torre told bitcoin Magazine. “There is a very clear problem with centralization in mining pools today, and I was able to identify that problem while working at btc.com and Poolin.”
De La Torre went on to describe how many bitcoin mining pools are now representatives of a larger pool, which he did not mention by name (it's bitcoin-mining-pool-block-reward-antpool-hashrate/”>Anthill), and explained that such centralization has the power to seriously damage bitcoin.
“The anchor group now represents about 50% of the network. “It allows a 51% attack on the network, which would be catastrophic,” De La Torre said.
“I don't think they will ever do it, but there is a possibility, which is a big warning sign,” he added.
De La Torre also noted that such levels of centralization pose risks when it comes to network censorship, highlighting that it would not be difficult for this important group to censor half of the transactions on the bitcoin network.
The potential for censorship and a 51% attack “are a very clear and present danger we have in bitcoin right now,” according to De La Torre.
Power to the lone miners
In reaction to this, De La Torre and his business partner, Felippo Merli, launched DEMAND Pool in November 2023 with the intention of returning power to lone miners.
DEMAND is the first in the world Stratum V2 mining group. Stratum V2 is an open source messaging protocol that allows miners and pools to communicate directly with each other, reducing mining infrastructure requirements compared to its previous version and allowing individual miners to choose their own mining templates. . This latter capability is one of the main features that distinguishes Stratum V2 from other mining pool protocols.
“The pools today are the ones in charge of building the blocks and adding transactions to the blocks,” said De La Torre. “With Stratum V2 – with DEMAND – the miners themselves will be able to build the blocks and add the transactions they want.”
Most filtering in mining pools today is done at the pool level, not at the individual miner level. De La Torre understands that, especially in the wake of the introduction of protocols like Ordinals and Runes, miners want to have more control over what types of transactions they include in their blocks. And De La Torre believes miners should have this power, because it contributes to the spirit of decentralization.
“This gives me less power. That is what I want. I don't want the power. That power is gone,” De La Torre said. “I've had it before and it's too much power in the hands of too few. And that's not what bitcoin is. bitcoin is decentralization, and this promotes it.”
In an effort to help miners with filtering, DEMAND has created a series of mining templates that miners can easily use in their operations.
Incentivize lone miners
De La Torre is aware that the odds of mining a block are stacked against small-scale solo miners, but he doesn't believe they shouldn't try to find one, and he has also created other ways to incentivize solo miners to come online.
“You have to heat your house during the winter, right? Why not just use a bitcoin miner as a heater? De La Torre said.
“If you're lucky, you hit a block and make your wife very happy,” he added, laughing.
Individual miners who join DEMAND Pool will also have the option to sell the hash rate they produce on a marketplace, ensuring they receive some income for their efforts. DEMAND has reached an agreement with the hash rate market Rigly and plans to establish more partnerships.
De La Torre also referred to how DEMAND payments will be made through the PPLNS (Payment Per Last Action N) system. With PPLNS, profits are allocated based on the number of blocks a mining pool mines per day and payouts fluctuate depending on the pool's luck in mining blocks.
This system differs from the FPPS (Fee Pay Per Share) system, which is commonly used in major mining pools. With FPPS, miners charge a service fee based on theoretical profit, and are paid whether the pool finds a block or not.
De La Torre is aware that it may seem attractive to miners to receive payments consistent with FPPS, but he was quick to point out that payments through PPLNS and FPPS are comparable in the long term.
“Many people have some misunderstandings about PPLNS,” De La Torre said.
“FPPS gives you steady payments, which is nice. I understand why a miner would find FPPS. However, the average PPLNS over a long enough time is approximately the same,” he added.
“Yes, you won't have constant payments, but you will have incorrect payments depending on the hash rate DEMAND has, and we intend to have a good amount. You will continue to receive a constant payment, or the average will be about the same. Therefore, there is no real drawback.”
De La Torre also noted that solo mining as part of the DEMAND pool is one of the best ways for bitcoin enthusiasts to get their hands on non-KYC bitcoins.
He also emphasized the fact that connecting lone miners will do something else that is vital to keeping bitcoin decentralized: it will put more nodes online.
Send nodes
To use DEMAND block templates, miners must run their own nodes. This means that solo miners would not only contribute to the decentralization of bitcoin's hash rate but also to the decentralization of its governance.
“Not only do we want the individual community and the domestic mining community to flourish and make more money, but we also want the proliferation of nodes,” De La Torre said.
“Individual miners will provide a hash rate to secure the network and potentially generate some bitcoins and will also help maintain bitcoin Core or any bitcoin clients they want. The nodes are good for the health of the system,” he added.
Looking to the future
De La Torre also said that DEMAND is currently working to expand its services to co-mining, and that DEMAND will actively seek miners to join.
He has committed to making DEMAND a “stable and reliable group with transparent payments”, differentiating it from the “black box” groups that exist.
De La Torre seems to be doing everything in his power to bring more independent miners online, and as he laid out his plans for DEMAND in my conversation with him, there was a palpable sense of urgency in his voice.
“The centralization of bitcoin mining pools is becoming a very serious problem and it is up to us as a mining community to do something about it,” De La Torre said. “If we don't do it, it's not good.”
