They say “Buy The Dips” – A market strategy investors use to buy coins after a decline in its price to increase their portfolio. The same applies to mining as well “Mine the Dips”. First of all you need understand that majority of miners who throw their hashpower are only for rewards. That is they mine either when the mining difficulty is low or when the coins value has soared. Then there are core loyal miners who trust in project, think long term and gradually accumulate coins without caring much about current profitability.
These coin jumpers come and go depending on current day profits. Only these core miners stick to the project and conduct blockchain even when the mining difficulty is high or when the coin’s value is low. However if it becomes unsustainable then even some of these core miners will leave the network. This is what happened to Ravencoin more recently.
Ravencoin mining difficulty
In order to maintain the block times the network will undergo difficulty changes and is something common with all Proof of Work coins. According to the network hashrate the mining difficulty keep increasing and decreasing from time to time. These difficulty changes are not much noticeable on coins that have difficulty regulator. It won’t affect the network or miners much as it will be somehow profitable and as a result miners will continue mining. But in the case of Ravencoin the difficulty adjustments were drastic in the recent times which caused core miners to mine at loss. Why is that and what caused these extreme difficulty swings?
First of all the difficulty adjustment factor is determined by the blockchain. Ravencoin’s blockchain network is designed to maintain 1 minute block times. If more miners join the network the hashing power will increase; as a result the time taken to solve a block will get decreased. Now to control the coin inflation and to maintain the 1 minute block time the network needs to adjust its difficulty accordingly. So when does it adjust? This is where the problem is at. Ravencoin is a fork of Bitcoin and just like Bitcoin it adjusts mining difficulty every 2016 blocks.
During the previous 2016 blocks if more than 1 block were solved per minute then over the next 2016 blocks the difficulty will increase to average the 1 minute block time. Likewise if the network hashrate solves less than a block per minute then the difficulty will drop to maintain the block time. This adjustment happens every 2016 blocks. So what is the problem with this system?
NiceHash and Ravencoin Parties
There was no problem with this method until the day when X16r algorithm became rentable on profit switching mining pool like NiceHash. NiceHash is a hashpower marketplace where users can buy hashpower to mine coins that they wish. When a coin becomes more profitable to mine a bunch of hashpower from NiceHash will get pointed to the network and once the coin becomes less profitable they stop mining it. These profit miners took advantage of the 2016 blocks difficulty re-adjustment pattern which Ravencoin uses.
Every time NiceHash jumps on to the network and takes profit the next difficulty cycle will get worse. Once those 2016 high difficulty blocks gets over then NiceHash will jump back in, mine those low difficulty blocks in a short time frame and leave off the network again. As a result the difficulty for the next 2016 block would spike sky high which will result in slower block times. Due to this the reward frequency will drop drastically and since the earnings become low mining Ravencoin will become profitless. Hence even regular miners abandon the network to mine something that is reasonable.
Initially these difficulty waves didn’t seem big. But as this cycle keeps repeating every 2016 blocks, the situation has become worse and the difficulty started fluctuating so wildly. Especially in the recent times the difficulty spikes 4x jumping from 10k to 40k which will last a couple of days. This NiceHash switching cycle also called as Raven party by the community is now coming to an end.
Ravencoin difficulty adjustment algorithm: DGW
Devs are aware of this issue and the only best solution to average out blocks and fix this extreme difficulty swings is by implementing a difficulty regulator. An algorithm that should adjust difficulty more frequently instead of every 2016 blocks. There are several difficulty re-target algorithm and out of all one of them is DGW. DGW means Dark Gravity Wave is a difficulty adjustment algorithm and do not confuse DGW with X16R which is a Proof of Work algorithm. After several discussion during testnet implementation the developers have decided to go on with DGW.
DGW will not only make the block times smoother but it will also keep the network secure. This difficulty algorithm will take place at block height
338778. By looking at the current block height this difficulty algorithm will go into effect half-way through the next low difficulty mining phase. This implementation will result in a hard-fork of the Ravencoin chain. Majority of the mining pools and exchanges have been notified and are ready for the fork. As an user make sure your wallets are updated to the latest version.
Update Ravencoin wallet: v2.0.4
Since the network is going through major update you need to update your wallets to ensure that you remain on the right fork of the chain. The latest released Ravencoin wallet is version 2.0.4 which you can find it here:
Download the wallet and unzip the file. Now before you update wallet make sure to backup your existing core wallet. If you do not know how to proceed then please go through this beginners guide on updating wallets.
Also if you are new to Ravencoin then here are few guides and articles to get started with: