Decentralizing Bitcoin Mining: DMND and RootstockLabs Introduce Stratum V2 for Merge-Mining

Bitcoin mining has taken a significant step toward greater decentralization with the new partnership between DMND and RootstockLabs. By integrating Stratum V2 into merge-mining, miners gain more control over block template construction and sidechain reward management. This collaboration promises to reshape how mining pools and individual miners interact with merged blockchains, putting the power back where it belongs—in the hands of miners. Below, we explore the key aspects of this development through a series of questions and answers.

What is merge-mining and how does it work?

Merge-mining is a technique that allows multiple blockchains to share the same proof-of-work (PoW) from the same set of miners. In this process, one blockchain—called the child chain—structures its block headers to include the headers of the parent chain (typically Bitcoin). The child chain's block header is embedded inside a parent chain block, often within the coinbase transaction. Miners on the parent chain can then simultaneously mine multiple blockchains by simply including block header commitments in their coinbase transaction. When a valid block is found for the parent chain, it simultaneously signifies that a block is also found for all child chains. This allows miners to earn additional rewards without extra energy expenditure.

How does the DMND and RootstockLabs partnership change merge-mining?

The partnership integrates Stratum V2 into the merge-mining process, specifically for the Rootstock (RSK) sidechain. Historically, when merge-mining, miners often had little control over which sidechain commitments were included—those decisions were made by the pool. DMND’s new feature allows miners to construct their own block templates while also selecting and including merge-mined block commitments from RSK. This gives miners direct authority over the entire process, from block content to sidechain reward claims. It’s a shift from pool-centric control to miner-centric control, aligning with the broader goal of decentralization.

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

Stratum V2 is an updated mining protocol that improves upon previous versions by enhancing security, efficiency, and decentralization. A key feature of Stratum V2 is job negotiation, which enables miners to create their own block templates instead of relying solely on the pool. In the context of this partnership, Stratum V2 allows miners to not only build custom block templates for Bitcoin but also to independently manage the inclusion of merge-mined block headers from the Rootstock sidechain. This eliminates the need for pool intermediaries to decide which sidechain commitments are included, reducing centralization risks and giving miners full transparency and control over their mining work.

How does this feature allow miners to claim sidechain rewards directly?

DMND’s integration enables miners to receive rewards from the Rootstock sidechain in rBTC—a Bitcoin-backed token managed by a federation operating the sidechain—without any revenue sharing or pool custody. Previously, miners often had to rely on the mining pool to distribute sidechain rewards, which introduced trust and latency issues. Now, with the new system, miners can claim their rewards directly on the sidechain itself. They earn the full value of the merge-mined block rewards without intermediaries taking a cut. This direct payout model is a significant improvement in efficiency and trust, as miners are compensated instantly and autonomously for their contributions to the RSK network.

What are the potential implications for Bitcoin mining decentralization?

While empowering miners with greater control usually promotes decentralization, there are concerns to consider. Some argue that giving miners more autonomy could lead to fragmentation, where large miners gain disproportionate influence over sidechain decisions. However, Alejandro De La Torre, CEO and Co-Founder of DMND, sees it differently: “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 development puts theoretical decentralization arguments to a real-world test. By reducing the pool's role, it encourages a more distributed mining landscape, but only time will tell if negative side effects emerge.

What did Alejandro De La Torre say about miner control?

Alejandro De La Torre, CEO and Co-Founder of DMND, emphasized that the miner should control the entire merge-mining process and be directly compensated for it. He 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 philosophy drives DMND’s integration, which aims to remove intermediaries and empower individual miners. By giving miners the tools to manage block templates and sidechain commitments autonomously, De La Torre believes the Bitcoin ecosystem becomes more resilient and distributed.

How does this feature benefit miners compared to previous methods?

Previously, merge-mining typically required miners to trust the pool to include sidechain commitments and distribute rewards. This meant revenue sharing, potential delays, and a lack of transparency. With DMND’s Stratum V2 integration, miners gain full autonomy: they decide which RSK block headers to include, receive rBTC rewards directly on the sidechain, and avoid pool custody. Additionally, miners can create their own Bitcoin block templates, optimizing transaction selection and fee collection. The result is a more efficient, trustless, and profitable mining experience. Miners are no longer passive participants—they become active decision-makers, which aligns with the core principles of Bitcoin’s decentralized ethos.