What does a bitcoin mining pool do? It lets people aggregate their hardware and share the payout in order to smooth out the income stream and increase their chances of getting something, instead of nothing.

If one person runs Bitcoin's Proof of Work (PoW) algorithm alone, they might never get to validate a block, and even if they do, the payouts are few and far between. So, people combine resources and agree to share payouts and pay some sort of a fee to the pool provider. This provides steady, predictable payouts, and it nearly eliminates the risk of getting skunked. Importantly, though, pool participants are all running Bitcoin's PoW algorithm. Over the years, there has been substantial innovation in the mining pool technologies, but to collect rewards each miner must still run PoW.

Even though Bitcoin wasn't designed for mining pools, it turns out that they provide useful services by distributing the tokens and by reducing risk for miners.

However, If someone figured out a technique where they could participate in mining pool payouts without running PoW, that would be considered to be a cheat.

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let's look at Steem voting services through the same lens.

We can think of Steem as a multi-method "mining" (for lack of a better word) platform.

• Method 1 is the block validation by witnesses. Witnesses take turns validating blocks and they get SP rewards in exchange. (10% of all standard rewards)
• Method 2 is the fixed distribution that goes to interest for SP holders. (15% of all standard rewards)
• Method 3 is the fixed distribution that goes to the SPS and then gets "mined" by Steem participants through a process of stakeholder voting. (10% of all standard rewards)
• Method 4 is the distribution of interest to SBD holders that is over and above standard rewards. That interest rate has been set to 0 for most of Steem's lifetime, but the capability exists.
• Method 5 is the 65% of standard rewards that goes to authors and curators.

This fifth method is where the voting services come into play. In past marketing literature, this mining method has been called "Proof of Brain" (PoB) . An author posts something that shows their creative ability, and they get rewarded in proportion to the creative value. We can think of the voting services as a mining pool that's operating in this (PoB) ecosystem.

As with Bitcoin mining pools, these PoB mining pools are providing useful services by distributing tokens.

However, unlike Bitcoin's mining pools, with current generations it is possible and common for Steem's PoB mining pools to make an end-run around the PoB mechanism, and distribute rewards for posts that demonstrate little or no actual thoughtfulness.

This would be like having participants in a Bitcoin mining pool somehow forging the PoW results and collecting payouts without actually doing the work. It would undermine trust in the protocol, and it would destroy Bitcoin's value.

To be fair, in the Steem ecosystem, these mining pools may actually provide another useful service, too. If the voting service clients wanted to get the same rewards without participating in the mining pool, they'd have to post and self-vote 10 times per day. By participating in the mining pool, that number is reduced to a single post per day. So, even if the mining pool participants are posting spam, it's possible that the mining pools are reducing the overall spam level. OTOH, by making the process easier, maybe they actually increase the spam level, or maybe it doesn't change at all... there's probably no way to know.

What we can know, however, is that people who collect PoB rewards without actually demonstrating PoB are shifting rewards from authors and curators to investors in a way that undermines trust in the PoB mechanism - trust from authors, trust from curators, and even trust from other investors (and potential investors). This is almost certainly destroying value in the PoB ecosystem.

Which would be ironic, because the mining pool participants would be actively participating in the destruction of their own investments.

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let's assume that we actually want these mining pools to exist for the useful things that they do, but we want to reduce the harm that they do. What would that look like?

Of course, it will come as no surprise to readers that I think it looks something like Thoth and the Gen-5 voting service that I've already outlined. But, for purposes of this article, I'll pick 3 key characteristics:

1. PoB is honored: Rewards are distributed (within technical limits) to authors in proportion to the PoB value that they bring to the blockchain.
2. Passive investment: Investors are not required to make daily posts in order to collect rewards.
3. Continuous improvement: It can be assumed that the technology will never be perfect, so the mining pools should be demonstrating technology improvements on a regular basis.

If PoB mining pools are not actively pursuing aspirations like these, IMO, it should be a major red-flag to delegators and investors. Delegators and investors don't need to demand perfection, but in order to protect the value of their stake, they need to demand steady visible progress towards these goals.

(FWIW, Thoth is still just a prototype, but I think it already shows that substantial process towards these goals is possible.)

What do you think is needed to align Steem's PoB mining pools in a way that builds trust in the PoB mechanism instead of undermining it?

Thanks for reading!

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