Bitcoin Mining Companies Put Their Weight Behind Standard Hashrate For Its Peg Mechanism
Bitcoin Mining Companies Put Their Weight Behind Standard Hashrate For Its Peg Mechanism
March 22, 2021
Bitcoin Mining Companies Put Their Weight Behind Standard Hashrate For Its Peg Mechanism
Bitcoin Mining Companies Put Their Weight Behind Standard Hashrate For Its Peg Mechanism
March 22, 2021

Report said that a group of Bitcoin (BTC) mining companies have put their weight behind Standard Hashrate and its recently launched TAU Protocol, a synthetic asset platform using hash rate derivatives for its peg mechanism.

It has been reported that the TAU project aims to create algorithmic versions of Bitcoin and other proof-of-work assets through a revisited rebase mechanism. The basic concept is similar to simple rebase coins, including the synthetic Bitcoin offered by Badger.

However, the TAU protocol adds a backstop to the value of its synthetic assets through Bitcoin derived from the mining hash rate.

The report said that the TAU mechanism relies on Bitcoin Standard Hashrate Token (BTCST), Standard Hashrate’s mining power token that is designed to represent 0.1 terahashes of mining power.

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BTCST can be staked to receive an amount of Bitcoin equivalent to the mining hash rate it represents. The TAU protocol takes in BTCST tokens, rewarding stakers with synthetic Bitcoin while pocketing the Bitcoin reward associated with the hash rate token.

Likewise, the Bitcoin collected from BTCST is then used in a collateral pool that is activated whenever the synthetic asset is trading below its peg. The mechanism reduces the number of synthetic tokens in every wallet, while at the same time using its pool of BTC to purchase tokens on the open market and burn them. When the TAU algorithmic token trades above its intended peg, the protocol adjusts the synthetic difficulty parameter to create more tokens from BTCST staking, a somewhat similar mechanism to Empty Set Dollar and other coupon-based coins, which only distribute new supply to special classes of tokenholders.

According to Standard Hashrate’s white paper, the project sees itself as a more transparent, more composable spin on cloud mining, with the goal of creating a two-sided market for hash rate derivatives.

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Thus, Tony Ma, the CEO of Atlas Mining, said:

“We believe BTCST has connected Bitcoin mining to the DeFi world. With BTCST, we can first earn real BTC via DeFi-native staking. Now, we can stake BTCST to earn synthetic proof-of-work assets. This is a logical step for BTCST as the bridge for Bitcoin to enter DeFi.”

Source: Cointelegraph | Image: Free Vector


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Ishita Bora

Ishita Bora is a Senior Content Creator at Digital Notice Media Labs with an experience of 1 year. She has completed her Master's Degree in Language and Linguistics in 2019 from Gauhati University, India. Her interest lies in blockchain technology and cryptocurrency space. She loves writing about blockchain and other blockchain-related articles.