Decentralized Coinbase Payout Protocol (DCPP)

A decentralized coinbase payout protocol (DCPP) is the part of a decentralized mining pool that decides how a block's reward reaches the miners who earned it. In an ordinary pool this is simple, because the operator receives the reward and pays miners from its own wallet on whatever schedule it likes. A pool with no operator has no wallet. It has the coinbase transaction of each block it finds, and whatever rules its nodes agree to follow when they build that transaction.

The name comes from a post on the Delving Bitcoin forum in November 2026, by an author writing as 7d5x9. The post gives three constraints that any such protocol has to live with. Paying each miner with their own output in the coinbase does not scale, since every output takes block space that could have held a fee-paying transaction and mining machines' firmware limits how large a coinbase can be. Payouts are something an attacker can aim at, which the post calls payout settlement griefing. And Bitcoin's scripting language is limited, so the payout rules have to be built from a small set of parts.

The simplest protocol is the one the original P2Pool used from 2011: one output per miner, in every block. Nobody has to be trusted, because the block itself pays everyone. Its ceiling can be read off the chain. The most P2Pool ever paid in a single block was 553 addresses, in May 2013, and that coinbase transaction was 19,033 bytes long.

The post reviews three later designs, each of which moves the payouts out of the coinbase:

• A payment hub. In a 2017 proposal by Chris Belcher, the coinbase pays a hub, and the hub pays each miner over a payment channel. The output is locked so that a hub that stalls loses it to the miner who found the block after six months.
• One shared output. In Braidpool, every coinbase pays a single output controlled by the pool, and the rewards are rolled together as blocks mature. A transaction paying every miner is signed and held back, then broadcast about every two weeks. The signers are a two-thirds group of the miners who found the pool's recent blocks.
• A market. In P2Poolv2 the largest miners are paid in the coinbase. Smaller miners sell their shares to market makers for a Lightning payment in an atomic swap, and a market maker that collects enough shares earns a coinbase output of its own.

Each can be griefed. A miner posing as thousands of small ones forces the hub to open a channel for each. Miners holding enough of Braidpool's signing group could redirect the shared output. And in a market, a large miner that splits into many accounts can take every payout place in the block, which is the rich list attack.

Behind all three is one obstacle. Miners change a few bytes inside the coinbase transaction as they search for a block, so its id is not known until the block is found. Schemes that let each participant leave with their coins unaided depend on transactions signed ahead of time, and those have to name the transaction they spend. Here that cannot be done until the block exists. The post concludes that, on Bitcoin as it is, every design comes down to an output controlled by one key or a group of keys, with time-locked fallbacks at best. A signature that does not name the transaction it spends would remove the obstacle (ANYPREVOUT is one proposal for that), and the post treats such signatures as not yet available.

That leaves the question of who holds the keys and which small miners get a place in the block. The post's author sees two workable answers: draw the places at random, weighted by value, or reserve them for a few named payout operators. The author expects both to end with a small number of market makers handling most small miners' payouts, and suggests that the simplest structure may be the best one for now: no shared output at all, with miners swapping their shares for Lightning payments and market makers carrying the risk.

As of November 2026 none of this is settled, and the term itself is days old. See Mining rabbit hole section 8 for where mining pools stand today.