In the research titled ‘Case Study: Merged Mining in Dogecoin and Litecoin’, the organization talked about whether the merged mining technique followed by Dogecoin and Litecoin actually provided increased security for smaller Proof of Work [PoW] blockchains. Binance stated:
“Given that block mining rewards are halved every four years for both Litecoin and Bitcoin, merge-mining could potentially become a solution to maintain network security in the long-run as newer cryptoassets, with higher block rewards, could be merge-mined within the same pools.”
Merged mining is the process of using the work done for one blockchain on smaller child blockchains using a different variant of PoW called Auxiliary PoW. Dogecoin, the meme-inspired cryptocurrency adopted the merged mining model way back in August 2014 and within a month the digital asset’s hashrate increased by a whopping 1500 percent.
The surprising factor was that since the spike, Dogecoin’s hashrate has had a correlation of 0.9 with the Charlie Lee-led Litecoin. The research added:
“As of July 2019, nearly 90% of Dogecoin’s total hashrate comes from large Litecoin mining pools, with its blockchain processing around 30,000 transactions per day.”
Dogecoin, despite not being used as a mainstream cryptocurrency, holds strong mining pools with almost evenly distributed network hashrate. Binance report claimed that even thought DOGE was merged mined, the cryptocurrency was still a favorite among miners, sometimes even surpassing Litecoin’s figures.
Binance’s research opined that due to direct correlations within the merged mining club, the technique could potentially become a solution to maintain network security after halvings. Cryptocurrencies like Dogecoin undergo block mining reward halvings every four years and with the implementation of merged mining, new assets with a higher reward “could be merge mined within the same mining pools”. According to block halving data, Dogecoin will undergo its halving at the same time as that of Litecoin: August 2019.
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