How DMND and RootstockLabs Are Revolutionizing Bitcoin Merge-Mining with Stratum V2

In a move aimed at enhancing the decentralization of Bitcoin mining, DMND and RootstockLabs have joined forces to integrate Stratum V2 into merge-mining operations. This collaboration enables miners to independently construct block templates while seamlessly incorporating merge-mined block commitments from the Rootstock (RSK) sidechain. By doing so, miners gain greater control over the process and can claim their rewards directly as rBTC on the sidechain, bypassing traditional revenue-sharing models. Below, we explore this development through key questions and answers.

What is merge-mining and how does it work?

Merge-mining allows multiple blockchains to share the same proof-of-work (PoW) from a single set of miners. In this setup, one blockchain (the parent chain) and at least one other (the child chain, like Rootstock) operate together. The child chain structures its block headers to include the parent chain's headers. Specifically, the child chain's block header hash is embedded within a parent chain block, typically in the coinbase transaction. Miners on the parent chain can then mine multiple blockchains simultaneously by adding block header commitments to their coinbase transaction. When a new block is found for the parent chain, it also confirms the child chain blocks. This process boosts efficiency without requiring extra computational effort, as the same PoW secures both networks.

What is Stratum V2 and why is it important for this partnership?

Stratum V2 is an upgraded mining protocol that gives individual miners more autonomy over block template construction. Unlike earlier versions, where mining pools dictated the block contents, Stratum V2 allows miners to choose which transactions to include and how to structure blocks. This shift reduces the power of pool operators and promotes decentralization. In this partnership, DMND and RootstockLabs leverage Stratum V2 to extend these capabilities to merge-mining. Now, miners can not only construct their own block templates for Bitcoin but also independently decide whether and how to include merge-mined block commitments from the Rootstock sidechain. This ensures that miners retain full control over their rewards and contributions, moving away from centralized pool-controlled merge-mining.

How does DMND's integration change the way miners participate in merge-mining?

Previously, miners participating in merge-mining often had to rely on pools or intermediaries to handle the inclusion of sidechain commitments. DMND's integration flips this model by placing control directly in the hands of miners. Using Stratum V2, miners can now craft their own block templates and, within that process, select and include Rootstock's merge-mined block commitments. This means miners no longer need to share revenue with a pool or trust a third party to manage the sidechain rewards. Instead, they can claim rBTC (Rootstock's bitcoin-backed token) directly on the sidechain. This change streamlines the reward process and empowers miners to optimize their operations according to their preferences, potentially increasing the overall efficiency and fairness of merge-mining.

What are the benefits for miners using this new feature?

Miners gain several significant advantages from this integration. First, they can capture merge-mining rewards without any revenue sharing or custodial oversight from pools, meaning they keep 100% of the sidechain fees and block subsidies. Second, the direct claiming of rBTC on the Rootstock sidechain eliminates delays and complexities associated with intermediary handling. Third, by having control over block template construction, miners can prioritize their own strategies, such as selecting which sidechain commitments to include based on profitability or network conditions. This autonomy also reduces the risk of pool centralization, as individual miners can make independent decisions. Finally, the use of Stratum V2 enhances communication security and efficiency between miners and the network, potentially improving hash rate stability and reducing orphan rates.

How does this partnership aim to further decentralization?

The core goal of this partnership is to push more decision-making power to individual miners, a key step toward decentralization. By allowing miners to construct their own block templates and handle merge-mining commitments independently, reliance on pool operators is reduced. Alejandro De La Torre, CEO and Co-Founder of DMND, stated: “The miner controls the merge mining and the miner gets paid for the merge mining. More delegation of control to miners is our key support for further decentralisation of the Bitcoin ecosystem.” This statement underscores the philosophy behind the integration. However, the article notes that there is potential for such dynamics to have the opposite effect on decentralization if not implemented carefully. Nonetheless, real-world testing will reveal whether this approach strengthens or weakens the distribution of mining power.

What potential risks or concerns exist regarding this development?

While the integration promotes miner autonomy, it also carries risks. If not widely adopted, the system could lead to fragmentation, where only sophisticated miners benefit, potentially concentrating power among those with technical expertise. Additionally, the complexity of managing merge-mining commitments might deter smaller miners, who may still prefer pool-based solutions. There is also the concern that giving miners too much control over block templates could be exploited for selfish mining or other strategic behaviors that harm network stability. Despite these risks, the partnership represents a necessary experiment in real-world decentralization. As more miners test the feature, the community will gather data to assess whether these fears materialize or if the benefits of direct control outweigh the drawbacks.

What does the CEO of DMND say about this partnership?

Alejandro De La Torre, CEO and Co-Founder of DMND, offered a clear perspective on the initiative. He emphasized that the miner retains full control over the merge-mining process and receives payment directly for that activity. “The miner controls the merge mining and the miner gets paid for the merge mining,” he explained. This quote highlights the philosophy underlying the partnership: empowering the individual miner is essential for further decentralizing the Bitcoin ecosystem. By shifting power away from large pools and toward the people who actually run the hardware, DMND and RootstockLabs aim to create a more balanced mining landscape. De La Torre's statement reinforces the idea that true decentralization comes from giving participants more agency, not just in hashing power but in economic and operational decisions.

How do miners claim rewards through Rootstock's sidechain?

With the new integration, miners can claim their sidechain rewards directly as rBTC on the Rootstock network. Previously, rewards often went through a pool or intermediary, which would then distribute them minus fees. Now, using the DMND integration, the miner's software includes the merge-mined block commitment in their coinbase transaction. When a block is found on the Bitcoin chain, the corresponding Rootstock block is also confirmed. The miner then submits proof of work to the Rootstock network and receives rBTC directly into their wallet on the sidechain. This direct claiming eliminates revenue sharing and custody risks. The rewards are backed by a federation that manages the bitcoin reserves, ensuring that rBTC maintains a 1:1 peg to Bitcoin. This streamlined process incentivizes more miners to participate in merge-mining without relying on third parties.