If you can’t beat ’em, join ’em.
The age-old idiom may be particularly relevant for David Vorick, the co-founder of the Sia blockchain, whose new project aims to fight powerful crypto mining chip manufacturers by bringing competition to the sector. To do this, Vorick launched Obelisk, a new chip manufacturing business last year, an effort he later unveiled in a widely seen blog post in May.
As revealed exclusively to CoinDesk today, however, Vorick intends to begin developing proof-of-work algorithms for new cryptocurrencies. That project, called Launchpad, expects teams developing new cryptocurrencies to hire Obelisk to design a custom proof-of-work algorithm as well as the ASIC hardware that works on that algorithm – all in secret.
Shortly before the coin launches, Obelisk will turn the ASICs over to the team behind the cryptocurrency, who will distribute the hardware to the community so that no one party controls too much mining power, and so that most of the mining power is held by small players.
Launchpad comes at a time when many cryptocurrency communities are up in arms about the release of ASIC hardware – primarily manufactured by China-based Bitmain – to mine their blockchains. While a significant number of groups have gone to war with ASIC manufacturers, suggesting changes to their cryptocurrencies algorithms to render ASICs useless, others, like Vorick, believe all those attempts are doomed to fail.
“You’re going to end up with ASICs on your network,” Vorick said in an interview.
The contention is that ASICs (which are more expensive than the other hardware used in the operation of blockchain software) raise the barriers to entry to mining, and as such, can lead to a concentration of control in fewer hands. But these arguments also typically involve the vilification of Bitmain, a company that has become a boogeyman of sorts to the broader cryptocurrency community.
Speaking to that, Taariq Lewis, a tenured crypto developer and entrepreneur, and the leader of a project codenamed Lyra Protocols, which plans on using Obelisk’s Launchpad effort, told CoinDesk:
“We’ve been losing the thread of focus on decentralization. When Obelisk is first to market, our community is first to market, and that’s what’s important to us.”
Trust in Obelisk
According to Lewis, Launchpad will have a “positive influence” on many cryptocurrency communities.
That’s because, by the time a cryptocurrency goes live, more than 50 percent of the network’s mining power will be controlled by small mining operations with perhaps 100 machines, rather than operations that control warehouses full of mining hardware, accounting for a significant amount of hash power.
No entity – not even Obelisk – will control more than 20 percent of the mining power on these new networks, although ASIC distribution choices are ultimately up to the team.
That said, there is a kind of trade-off in that cryptocurrency teams will have to put a considerable amount of trust in Obelisk, or rather two people that work at Obelisk – Vorick himself and the company’s lead chip developer.
Aside from them, no one will know the full proof-of-work algorithm to be deployed or the ASIC’s design – even to the team behind the cryptocurrency itself.
While this may seem counter to the cryptocurrency community’s aversion to trust, Lewis said his project is so excited about Obelisk’s service, he expects users will be willing to pay a premium on typical mining equipment prices.
“People are signaling to us that they’re willing to put a premium on one, getting the chance to be first, and two, transparency and trust,” he said.
And according to Vorick, the trust only goes as far as the coin and accompanying algorithm’s launch. After that, Obelisk will be “stubborn about being completely transparent,” he said.
For one, Obelisk will open source the algorithm and ASIC hardware design once the network goes live. That way, community members can be first to market, beating Bitmain and other big manufacturers.
It remains to be seen whether Obelisk’s cloak-and-dagger approach to taking on the big chip makers (economics of scale are tough to beat).
But for now, Lewis remains optimistic, quipping:
“It’s gonna make bitcoin great again.”
ASICs image via Shutterstock