Hashrate RWA: A New Economy of Bitcoin Mining Integration with Internet Computer Technology

The article explores the use of RWA in hashrate to tackle challenges in PoW mining, specifically Bitcoin mining, and how the Internet Computer Protocol can support development and industry growth.

Introduction

This article provides a brief overview of how real-world assets (RWA) in hashrate address key challenges faced by the Proof-of-Work (PoW) mining industry, particularly in Bitcoin mining. It investigates how the Internet Computer Protocol (ICP) network may assist and promote the development of projects in the hashrate RWA sector, ultimately fostering growth in the mining industry, by studying the ICP technology employed in the Loka project along with other ICP technologies not mentioned.

It's crucial to take into account that after Bitcoin's fourth halving in 2024, services like Hashrate Index predict that miners' yearly earnings will stabilize at roughly $10 billion, accounting for a sizable portion of the worldwide hashrate market. As such, the main focus of this article is the research of bitcoin mining.

Daily PoW coin output ranking https://www.f2pool.com/coins

Individual miners have less benefits than large-scale miners when it comes to hashrate, income, expenses, technical management, and funding. As a result, their home-based Bitcoin mining yields inconsistent earnings and inferior investment returns. What challenges do private miners and investors face in order to mine bitcoins, and is home mining still profitable?

When Bitcoin mining first started in 2009, miners used standard CPUs for their mining. But as the difficulty of networks rose, GPUs and eventually specialized ASIC miners were used, which significantly enhanced mining productivity. Large-scale mining operations are now significantly more efficient than individual miners because to these professional-grade hardware systems, which is pushing the industry toward industrialization. Large mining farms now control the majority of the world's Bitcoin hash rate, dominating the market. Due to their major drawbacks, individual miners find it challenging to compete with large-scale miners:

• Low Block Probability and Unstable Income: Due to their limited hashrate, the probability of an individual miner finding a block is extremely low.  In a highly competitive mining environment, solo mining a block becomes almost impossible for individual miners as mining difficulty increases. For instance, it might take a single machine 120 years to mine a block using an Antminer S19 Pro with 110 TH/s and the peak overall hashrate of the Bitcoin network, which is 693 EH/s. Because of this, the income of individual miners is extremely erratic and unpredictable.

• High Hardware and Electricity Costs, Lack of Economies of Scale: The high cost of hardware and electricity puts a lot of strain on individual miners, as they are unable to reduce expenses by buying in bulk or taking advantage of electricity discounts. Large miners can purchase devices at lower prices through bulk purchases because of financial advantages, but the initial setup expenses for mining rigs and facilities are substantial. Long-term running expenses, such as those for maintenance and power, might also differ significantly. Depending on the price of power, the effectiveness of the mining device, and the difficulty of the mining process, electricity costs usually account for 50% to 80% of all mining operational expenses (OpEx). Large miners frequently obtain cheaper power at rates between $0.03 and $0.10 per kWh, whereas household miners typically pay between $0.10 and $0.30 per kWh for electricity. As an example, an Antminer S19 with a 3,250W power usage uses roughly 28,470 kWh a year. Because of this, residential miners' electricity expenses range from $2,800 to $8,500, while large miners' expenses range from $850 to $2,800. As a result, individual miners may have to pay electricity bills that are up to 90% more than those of large miners, often by several times.

• Heavy Technical and Operational Burdens: Maintaining and debugging mining hardware can be difficult and frequently call for expert technical assistance. While individual miners frequently lack the knowledge and resources to undertake maintenance on their own, large mining farms frequently use technical teams to manage daily operations and maintenance.

• Insufficient Financing Capacity: Individual miners lack the scale and creditworthiness to acquire financing, and they struggle to draw in outside investment. Due to their economies of scale and steady revenue streams, large mining farms are able to secure funding from venture capital and loans, which enables them to grow and relieve financial strain.

In conclusion, there is growing pressure on individual miners to compete in the Bitcoin mining market. They find it challenging to compete with large-scale miners in terms of hardware costs, operating expenses, technical assistance, or funding.

What strategies do individual miners employ to avoid or reduce the difficulties of solo mining

The following strategies are currently being used by individual miners to avoid or offset the challenges of solo mining:

• Joining a Mining Pool

• Cloud Mining and Hashrate Marketplaces

• Hashrate Derivatives Trading

Joining a Mining Pool

In addition to setting up their mining devices at specialized facilities, individual miners have the option to participate remotely in mining pools such as Antpool, F2Pool, and Poolin. One way for miners to increase their chances of successfully mining a block is by pooling their hashrate with other miners'. With approaches like Pay Per Share (PPS) or Pay Per Last N Shares (PPLNS), they earn more consistent payments. This lessens the problems that individual miners have, like as low block packing rates and irregular revenue.

However, while joining a pool allows for resource concentration and higher mining efficiency, leading to more stable returns, it also introduces several new challenges:

• Centralization Risk: Large pools concentrate significant amounts of Bitcoin’s hashrate, raising concerns about potential 51% attacks. If a single pool controls more than 51% of the hashrate, it could threaten the security of the Bitcoin network.

• Lack of Control: Miners depend on the pool operator for honest payouts and transparency. They have no way to verify how their hashrate is allocated or influence how rewards are distributed.

• Operational Risk: Mining pools can face outages or fraud, leading to losses for miners. 

• Limited Autonomy: Miners in centralized pools have little say in transaction prioritization decisions, as pool operators decide which transactions to prioritize.

Cloud Mining and Hashrate Marketplaces

Cloud mining and hashrate marketplaces provide an alternative for investors who do not want to maintain mining hardware or bear the hefty operating costsThrough these services, consumers can lease mining hashrate from a distant location, saving them the trouble of handling hardware management. This sector is dominated by centralized systems like HashNest, BitDeer, Genesis Mining, and NiceHash.

Cloud mining reduces entry barriers, but because it's centralized, trust concerns are raised. Users must have faith in the platform's openness, particularly when it comes to revenue sharing and equipment upkeep. The possibility of a platform collapsing or having opaque financial operations also exists. Historical occurrences, like the breakdown of HashFlare and fraudulent cases concerning MiningMax and BitClub Network, have revealed this model's weaknesses.

Hashrate Derivatives Trading

Along with their hashrate services, major mining farms and pools including F2Pool, BitFuFu, AntPool, and NiceHash have started offering hashrate derivatives. By acting as alternatives to futures or options in conventional financial markets, these derivatives enable investors to hedge risk, speculate, or raise capital through hashrate trading without engaging in mining activities themselves.

Hashrate derivative trading does, however, involve risks related to centralized platforms. The safety of investors' and miners' assets depends on the platform's operational integrity and regulatory compliance, and users must have faith in the platform's security and transparency. Derivative markets' complexity can further raise the risks associated with investing.

Reasons why traditional mining pools can't realize the full chain transformation

Despite individual hashrate hosting, cloud mining, and hashrate markets relying on conventional pools, these pools haven’t fully transitioned to on-chain operations due to several factors:

1. Limitations of Smart Contract Platforms

In order to completely transition conventional mining pools to a decentralized on-chain framework, pool managers' centralized control must give way to decentralized procedures integrated into smart contracts. Miners that use conventional pools must have faith in the pool's fairness since it oversees hashrate, reward distribution, and financial management off-chain. A decentralized model would require a system in which these tasks are autonomously carried out by smart contracts, doing away with the necessity for operators.

Nevertheless, the majority of smart contract platforms available today have trouble handling intricate real-time coordinating requirements. Conventional mining pools, for instance, need to dynamically compute payouts based on hashrate contributions and track miners' contributions in real time. Because of its intricacy, a smart contract infrastructure that is directly integrated with the Bitcoin network is necessary to enable real-time incentive distribution and monitoring.

Such on-chain logic is not supported by Bitcoin itself. The majority of smart contract systems, such as Ethereum, are not equipped to manage the necessary real-time, high-frequency data processing. Frequent modifications to miner data handled on-chain may result in an overuse of processing power. Furthermore, during periods of heavy activity, network congestion on platforms such as Ethereum might lead to a spike in fees for transactions, rendering these processes unfeasible and excessively expensive.

2. Lack of Direct Interaction with Bitcoin

Conventional pools use off-chain mechanisms for block reward distribution and validation. To move this process onto the blockchain, a system must communicate directly with the Bitcoin network in order to track miner contributions and instantly award rewards. Nevertheless, it is challenging to track Bitcoin network data or validate blocks because the majority of smart contract platforms do not natively support Bitcoin. The implementation of a decentralized mining pool system becomes much more hard due to the challenge of cross-chain interaction between distinct blockchains.

3. Storage and Scalability Challenges

Large volumes of data, including block rewards and miners' hashrates, must be processed and stored by mining pools. Because large-scale data storage was not intended for blockchains like Bitcoin and Ethereum, storing dynamic mining data on-chain is both inefficient and costly. Data storage would be a problem that would need to be resolved for a fully on-chain mining pool to avoid excessive costs and inefficiencies. This has made mining pools more dependent on off-chain storage options, which makes the adoption of a completely decentralized architecture more challenging.

4. Performance and Latency Issues

Blockchain platforms typically have higher latency than centralized systems, which might severely impact mining pools' real-time requirements. Conventional pools must often disburse awards and react fast to hashrate volatility. But blockchain platforms' transaction confirmation periods and finality add further latency, making it challenging to match centralized systems' timeliness. Even high-performance blockchains like Solana have problems with downtime and scalability.

5. Governance and Upgradability

Mining pools have to quickly adjust to modifications in the Bitcoin network, like changes in block rewards or difficulty levels. Smart contract-managed decentralized on-chain systems require governance mechanisms for updates and maintenance, which frequently make these procedures more laborious and time-consuming than centralized management. The flexibility and adaptability of decentralized mining pools may be limited by the requirement for community consensus to upgrade on-chain infrastructure, which could result in delays in reacting to changes in the Bitcoin network.

Solutions to the Platform Centralization Dilemma

Since 2021, the emergence of hashrate RWA and the growth of Bitcoin mining have brought about a novel solution to some of the major market difficulties facing the sector. Tokenizing the computing power (hashrate) of cryptocurrencies like Bitcoin is the main goal of hashrate RWA. This allows the valuable asset to be traded, lent, or collateralized on DeFi platforms just like other real-world assets.

As previously indicated, the majority of BTC hashrate is now collected by means of cloud mining platforms and controlled mining pools, with off-chain trading and distribution taking place through the sale of mining equipment or hashrate contracts.There is a lack of decentralized mining pools and a platform where PoW hashrate can be tokenized as RWA and traded or distributed on-chain.

To unlock the financial value of these tokenized hashrate resources (as tokens or NFTs), DeFi mechanisms must be integrated. However, the specialized DeFi projects combining hashrate RWA with established business models are still in their early stages. After receiving mining revenue, most miners either store BTC in wallets or sell it on secondary markets. A few choose centralized financial tools for yield or convert their BTC into tokens like WBTC or ckBTC, which are issued by centralized institutions and pegged to BTC’s value, to engage in DeFi operations. There is a growing need for DeFi protocols focused on PoW tokens (such as BTC and pegged tokens).

From these requirements, we can conclude that hashrate RWA products need to include, at minimum, an on-chain market for hashrate distribution and trading, along with various DeFi protocols built around hashrate RWA tokens and PoW tokens.

In this emerging sector of hashrate RWA within the mining industry, we see that Loka Mining, a project in the ICP ecosystem, is developing a hashrate RWA initiative. Loka is creating a trustless, non-custodial Bitcoin mining platform by tokenizing the Bitcoin mining hashrate provided by miners and enabling staking, lending, and trading through integrated DeFi facilities.

Loka supports its operations with three core modules: the Decentralized Mining Pool (DMP), the Loka Bitcoin Liquidity Pool (LBLP), and the Hashrate Marketplace (FHM) Protocol. The platform features three main participant roles: miners, hashrate investors, and liquidity providers.

The key business flow is illustrated in the diagram below:

1. Decentralized Mining Pool (DMP): Miners connect to the pool to receive upfront rewards. They contribute hashrate to the pool and are rewarded from the liquidity pool, which provides upfront Bitcoin rewards and pool fees.

2. BTC Liquidity Pool (LBLP): Liquidity providers (LPs) supply liquidity to the BTC liquidity pool, earning interest through lending. 

   1. LPs deposit liquidity into the BTC liquid pool and receive lokBTC on a 1:1 basis. lokBTC can be staked to generate yield.

   2. Hashrate contract holders can collateralize their contracts to receive lokBTC. LPs can lend lokBTC to earn interest.

   3. LBLP provides daily miner incentives to the DMP. 

   4. The circulation of lokBTC rebases every 24 hours, ensuring its supply remains consistent with the amount of BTC in the LBLP.

3. Hashrate Trading Marketplace (FHM) Protocol: Investors purchase tokenized hashrate contracts to lock in future mining rewards at a discount. By purchasing these contracts, investors effectively buy future mining rewards from Bitcoin miners at a current discounted rate. Miners collateralize a corresponding amount of BTC in the contract, which is unlocked linearly.

The Loka protocol generates revenue from three primary sources:

1. Pool management fees, derived from the difference between Bitcoin mining revenue on the BTC mainnet and the daily miner incentives paid out;

2. Fees from hashrate collateralized loans;

3. Transaction fees for token transfers.

All of this revenue flows into the LBLP. The Loka protocol's annual percentage yield (APY) fluctuates based on:

1. The total hashrate connected to the pool;

2. The total loan amount collateralized by hashrate contracts;

3. The total transaction volume on lokBTC;

4. The ratio of the above revenue streams to the total value locked (TVL) in BTC within the LBLP.

The Loka project mentioned in the ICP tech forum that they plan to develop a decentralized, community-owned Bitcoin mining pool and hashrate trading platform. So, why is the IC network capable of decentralizing mining projects while remaining competitive in the development of value-added services?

Direct Connection to the Bitcoin Network

In December 2022, the ICP achieved direct integration with the Bitcoin network. ICP nodes are directly connected to the Bitcoin mainnet, allowing them to retrieve blocks and process transactions locally. This capability enables ICP to maintain the entire Bitcoin unspent transaction output (UTXO) set on-chain, and its canister smart contracts can query this set to identify and create new Bitcoin addresses.

ICP not only maintains the Bitcoin UTXO set on-chain but also allows canister smart contracts to interact with it, create Bitcoin addresses, and perform other related operations. Some ICP nodes connect directly to the Bitcoin network, synchronizing the Bitcoin blockchain state and transmitting transactions from ICP to Bitcoin nodes. These features enable canister smart contracts to interact directly with Bitcoin addresses and validate transactions without relying on third-party verifiers, bridges, or wrapped assets.

ICP ensures security through the threshold ECDSA signature algorithm, which relies on distributed private key management and signature generation. Specifically, each smart contract on ICP holds a unique ECDSA key, but the private portion of these keys is fragmented and distributed across multiple subnet nodes, ensuring no single node has access to the full private key.

In practice, more than two-thirds of the subnet nodes must collaborate to generate a complete ECDSA signature. This mechanism allows ICP smart contracts to securely initiate and sign Bitcoin transactions. Moreover, since the public ECDSA key can be directly encoded into a Bitcoin address, dApps built on smart contracts can securely own and manage Bitcoin addresses, allowing them to hold and operate Bitcoin funds safely. This system not only ensures decentralization and security but also significantly reduces potential attack risks by avoiding single-point private key exposure.

By hosting Bitcoin nodes on the ICP, Loka can interact directly with the Bitcoin blockchain, tracking and verifying Bitcoin mining activities. This on-chain interaction removes the need for intermediaries, ensuring that all mining operations occur transparently and securely on-chain, enabling Loka to build a truly decentralized mining pool.

Using ckBTC

Loka has chosen to use ckBTC, the wrapped Bitcoin token on the ICP, instead of native BTC in its project to streamline the settlement process for Bitcoin mining rewards and hashrate investments while effectively reducing transaction fees and confirmation times. On the Bitcoin mainnet, blocks are produced approximately every 10 minutes, and it typically takes six or more block confirmations to achieve transaction finality, making direct use of native Bitcoin inefficient in fast-paced environments like DeFi.

ICP solves this issue by offering ckBTC, a wrapped token that is pegged 1:1 to Bitcoin's value. ckBTC is minted, managed, and burned by smart contracts on the ICP, ensuring that Bitcoin is securely stored in these decentralized contracts and transactions are executed automatically without relying on any centralized entities. The transfer speed of ckBTC is incredibly fast, typically completed within 1-2 seconds, far surpassing the speed of the native Bitcoin blockchain. Transaction fees are as low as 0.0000001 ckBTC, significantly lower than those on the Bitcoin network.

By using ckBTC, Loka has greatly reduced transaction costs and settlement times when handling mining rewards and hashrate investments, simplifying the entire process. For liquidity providers, ckBTC lowers transaction costs and reduces transfer friction, while developers can more efficiently build contracts without dealing with the complexities of interacting with the Bitcoin mainnet. This ensures that Loka operates smoothly and efficiently.

Replacing Oracles with HTTP Outcalls

For hashrate RWA projects like Loka, mapping real-world hashrate asset data onto the blockchain is critical. Specifically, there is a need to obtain real-time hashrate data from Bitcoin mining pools or other external services, ensuring the authenticity of Web2 data sources while minimizing latency. DeFi protocols typically rely on decentralized oracles, such as Chainlink, to relay off-chain data. However, there is currently no specialized oracle providing reliable and accurate hashrate data for RWA projects.

The Internet Computer’s HTTP outcall feature offers a solution. This capability allows smart contracts (i.e., canister smart contracts) to communicate directly with off-chain systems by sending HTTP GET or POST requests to retrieve external data, which can then be integrated into the contract's logic. This direct communication means that canister smart contracts can access real-time external data without relying on intermediaries like oracles.

In Loka’s case, the platform can use HTTP outcalls to obtain real-time hashrate data directly from Bitcoin mining pools or other external services. This data can then be used to update the status of mining hashrates or calculate miners’ earnings. By leveraging this approach, Loka eliminates the need for centralized oracles and third-party services in the absence of a reliable decentralized hashrate RWA oracle. It ensures decentralized data transmission while reducing latency and associated costs.

Full Stack On-Chain

The Loka platform leverages the following technologies from the ICP to enable full stack on-chain deployment. By integrating with the Bitcoin network, Loka further enhances its capabilities, allowing for the construction of fully decentralized Bitcoin mining pools and hashrate trading platforms on-chain. This supports decentralized hashrate trading and the distribution of miner rewards.

Full Stack On-Chain and Low Latency Computing

One of ICP's unique advantages is its full stack on-chain capability, meaning that application hosting can occur entirely on-chain from front-end to back-end. By utilizing Canister smart contracts, the Loka platform can host both front-end and back-end code on-chain, supporting distributed storage and the execution of complex logic. This seamless full stack development environment not only improves development efficiency but also reduces external dependencies, ensuring genuine decentralization of applications.

As a core technology of ICP, Canister smart contracts allow the execution of WebAssembly (WASM) bytecode, providing efficient contract execution capabilities. ICP can process complex back-end logic directly on-chain, ensuring low latency and efficient execution. This capability is particularly crucial for platforms like Loka, which require frequent updates of miner contribution data and dynamic reward calculations. The on-chain computing latency for ICP typically ranges between 100-200 milliseconds, closely matching the user experience of traditional web applications, while the cost per contract operation can be as low as $0.0001, significantly reducing the platform's operational costs.

Moreover, Canister smart contracts not only support the execution of on-chain logic but can also host complete web applications, including front-end files like HTML, CSS, and JavaScript. Each Canister has its own memory, similar to processes in a computer, allowing the application's state and logic to be fully encapsulated on-chain without relying on external storage or services, thereby achieving true decentralized application development.

Distributed Storage and Scalability

ICP employs containerization technology through a distributed architecture of multiple Canister containers and subnets, enabling large-scale parallel computation and scalability. Each subnet functions as an independent blockchain, efficiently managing data and operations within the containers. The underlying hardware is hosted by independent data centers, with nodes responsible for processing data and state changes within the subnet. This architecture not only enhances ICP's scalability but also meets the development needs of DApps of various sizes.

Through its native distributed storage capabilities, ICP allows the Loka platform to store miner data, contribution records, and reward distributions directly on-chain. This approach significantly reduces reliance on off-chain storage and enables large-scale expansion of decentralized mining pools with low-cost storage solutions (approximately $5 per GB of data per year).

Through these technological advantages, ICP not only enables Loka to achieve full chain deployment and decentralization but also provides a comprehensive development solution that supports the platform's sustainable growth. The Loka platform can rely on ICP’s smart contracts to host the entire DApp, from the mining pool management interface to back-end computational logic, all functioning on-chain. Canisters manage not only the on-chain logic but also user interfaces and state data, ensuring the seamless operation of the entire decentralized mining pool. By utilizing smart contracts, Loka has achieved transparent reward distribution and hashrate trading, eliminating the risks of centralized operators' intervention and empowering users with greater participation and trust.

In addition to the ICP technologies planned by the Loka project, what other ICP-specific technologies may hashrate RWAs adopt to gain a competitive advantage?

When building a hashrate RWA platform on the ICP network, decentralized governance and decentralized identity authentication provide significant advantages.

Decentralized Governance:

The Service Nervous System (SNS) is one of the core components of decentralized governance on the ICP. It allows developers to create token-based decentralized governance systems for their DApps. This design ensures that DApps are not only controlled by users but also owned by them, enabling community-driven governance through collective decision-making by token holders.

The SNS operates as a blockchain-based governance system that manages DApp operations through decentralized autonomous organizations (DAOs). Its governance logic relies entirely on smart contracts, allowing users to make important decisions and proposals without relying on centralized operators. All significant decisions and proposals are determined by user votes.

Similar to ICP’s Network Nervous System (NNS), SNS allocates governance weight to users based on token staking. The more ICP tokens a user stakes or the longer they stake them, the greater their voting weight in the governance process. This design not only encourages more users to participate in governance but also ensures that those who invest more have a larger voice in the project.

SNS has three main components—Governance Container, Ledger Container, and Root Container—that work together to manage the decentralized operation of DApps:

• Governance Container: This container is responsible for managing governance proposals and voting for the DApp. Users can submit proposals within the governance container, which typically relate to functional improvements, rule changes, or fund allocations for the DApp. All proposals and voting results are recorded on-chain and are traceable.

• Ledger Container: This part of the SNS is responsible for managing tokens and tracking transactions and balances between accounts. Each DApp can have its own independent governance tokens, which users can use to participate in governance and earn incentives.

• Root Container: The root container manages the upgrade process for the entire SNS system. As DApps may require continuous code or feature upgrades, the root container coordinates the operations of stopping, updating, and restarting, ensuring that the system remains operational during upgrades.

  

Through these features of SNS, DApps can truly achieve decentralized management controlled collectively by users. Community members participate in governance by staking tokens and influencing the future development of the DApp based on voting outcomes. This governance model of SNS not only empowers users with control over the DApp but also promotes decentralized ownership through tokenization.

For platforms dealing with hashrate RWAs, the decentralized governance system of SNS offers significant advantages. Hashrate RWA projects can leverage the structure of SNS, allowing miners, investors, and other community members to participate in key project decisions through token staking. This decentralized governance approach not only enhances the transparency and openness of pool management but also ensures that the project's direction aligns with community needs. For example, a hashrate RWA platform can guide community members to vote on the following aspects through SNS:

• Launch of New Hashrate Assets: The platform can empower community members to decide which new hashrate assets should be listed, ensuring that miners' interests and user needs are adequately considered.

• Optimization of Reward Distribution Mechanisms: The community can propose and vote on improvements to the reward distribution mechanism, enhancing the fairness and efficiency of the hashrate RWA project.

• Platform Upgrades and Feature Improvements: The dynamic governance structure of SNS allows the platform to flexibly adjust rules based on market feedback and technological advancements, ensuring that the project keeps pace with rapid market changes.

With the support of SNS, hashrate RWA projects can achieve fully decentralized pool management. Pools can replace central operators with smart contracts, allowing miners to participate directly and receive rewards through on-chain contracts, thus eliminating reliance on centralized entities. Additionally, the transparent proposal and voting mechanisms of SNS enable the community to effectively supervise and engage in platform operations, ensuring that the platform's development aligns with the interests of the entire community.

Through SNS, hashrate RWA platforms realize decentralized autonomy, empowering users with greater control and engagement, and promoting the fairness and sustainable development of the entire project.

Decentralized Identity Authentication

Through the Internet Identity (II) technology of ICP, hashrate RWA platforms can provide users with enhanced privacy protection and security guarantees. As a decentralized identity authentication system, II empowers users to authenticate without relying on traditional centralized identity verification methods, thereby mitigating the risk of privacy breaches.

II is the core technology for decentralized identity authentication within the ICP network. It allows users to access and verify dApps without needing traditional passwords or personal information. This mechanism generates authentication credentials via encrypted hardware or software, enabling users to create their unique identity identifiers (principals) using secure devices such as security keys, Face ID, or fingerprint recognition. Each principal is unique within each dApp and isolated from others, ensuring that user identities remain unlinked across applications.

Advantages of Using II

• No Registration or Passwords: II eliminates the need for traditional usernames and passwords by employing hardware authentication methods (such as YubiKey or biometric technology on smartphones) or public-private key pairs generated by the browser. Every time a user logs into a dApp, II generates a specific identity identifier without requiring any sensitive personal information.

• Decentralized Identity Management: With II, identity authentication does not depend on central identity providers (like Google or Facebook). Users retain full control over their identity information, alleviating concerns about data leakage or misuse by third-party providers.

• Dynamic Privacy Protection: A key feature of II is that the principals used across different dApps are unique and independent. This means that even if users log in to multiple applications using the same II, each dApp cannot see the identities or activities from other applications. This significantly enhances privacy protection and prevents asset tracking across applications.

• Multi-Device Support: II supports synchronization across multiple devices, allowing users to access dApps from any supported device without needing to reconfigure or import information each time. This flexibility greatly improves the user experience.

• Public-Private Key Encryption Mechanism: II utilizes a public-private key encryption mechanism based on the WebAuthn protocol, generating different public keys for logging into applications through each WebAuthn-supported device or browser, while the private key is stored only on the local device, further enhancing security.

On hashrate RWA platforms, users can log in directly through II without going through cumbersome registration processes, easily accessing and operating within other dApps in the ICP ecosystem. This streamlined login method not only enhances transaction convenience for users in DeFi applications but also leverages the principal mechanism of II to ensure that each user's displayed address across different dApps is independent and non-repeating, keeping their identity concealed and unlinked, effectively preventing asset tracking. This functionality provides additional privacy guarantees for users, ensuring that their identity and asset information cannot be easily associated or exposed. II ensures that all login and transaction processes are secure and trustworthy through its public-private key mechanism. This technology mitigates the risks associated with leaks during traditional identity verification processes due to central operators, making it especially suitable for decentralized hashrate trading platforms that require high security and trustless environments.

In summary, II technology provides efficient, secure, and user-friendly infrastructure support for hashrate RWA trading through its decentralized identity authentication, privacy protection, and convenient verification features. This decentralized identity authentication system helps to enhance user trust in the platform while ensuring that the allocation of hashrate resources and rewards occurs in a privacy-protected and secure environment.

Close

As blockchain technology continues to deepen its application across various asset domains, the integration of hashrate as a part of RWA is gradually accelerating. By combining mining hashrate with blockchain, not only has the barrier to entry for the traditional mining industry been lowered, but more users are also provided with opportunities to participate in the blockchain economy. In the future, we anticipate seeing more projects like Loka driving the development of the hashrate RWA sector, further maturing this field in terms of decentralization, transparency, and revenue management. The ongoing evolution of this sector will not only transform the mining industry but also introduce more innovative scenarios within the broader blockchain ecosystem.

Loka exemplifies the synergy of technology and innovation through its decentralized, non-custodial model. Leveraging the underlying technology of the Internet Computer, Loka achieves hashrate tokenization, BTC trading integration, and automated settlement through smart contracts, enhancing the platform's security and efficiency. Furthermore, with the integration of ckBTC, Loka enables users to participate in mining without the need to trust intermediaries, ensuring transparency in earnings and real-time on-chain distribution. These features are likely to attract significant market attention for Loka.

As an innovative and promising Bitcoin mining platform, Loka showcases significant advantages in both its technology and business model. With the continuous evolution of the blockchain ecosystem, the future development of Loka is equally promising. As the project progresses, we hope to see more related information released, particularly regarding the establishment of platform governance, which will enhance user participation. This would allow users not only to be participants in the platform but also to play a more critical role in governance and decision-making. Moreover, if user management and oversight rights can be further strengthened in key areas such as revenue distribution and data transparency, it will greatly enhance the platform's trustworthiness and fairness.

We will continue to monitor its technological iterations and market expansion, looking forward to Loka becoming one of the representative projects in this field.

Follow Us on Twitter