There’s a quiet stir in the privacy-focused corners of the crypto world. Monero, a network known for keeping transactions private, finds itself facing an unusual challenge. It comes from a project called Qubic, led by Sergey Ivancheglo, also known as CFB. He’s a familiar name, having co-founded IOTA years ago.
- Qubic is using “useful proof-of-work” to incentivize Monero miners, potentially disrupting the network.
- The project aims to control a significant portion of Monero’s hashrate, raising concerns about decentralization.
- This situation highlights the tension between free market incentives and network security in decentralized systems.
Qubic has a unique way of doing things. It uses what it calls “useful proof-of-work” (uPoW). This system actually pays Monero CPU miners to help power Qubic’s own token economy. Think of it like a clever side hustle for miners. They earn Monero’s XMR tokens, which Qubic then converts into USDT, a stablecoin. This USDT is then used to buy and burn QUBIC tokens, aiming for a deflationary model.
This strategy has certainly made waves. Since May 18, Qubic’s share of Monero’s global mining power, or hashrate, shot up. It went from less than 2% to over 27%. For a brief time, Qubic was even the top Monero mining pool. Data from miningpoolstats showed this rapid rise, though Qubic’s rank later settled to seventh after some community discussion.
Now, Ivancheglo has been quite open about his next steps. He’s talked about plans to control 51% of Monero’s hashrate. This isn’t a secret plot. He aims to do it between August 2 and August 31, 2025. He calls it an “economic demo,” a way to show off Qubic’s uPoW technology.
He says there’s no bad intent behind this move. But he also warns it could disrupt Monero’s network. How so? By rejecting blocks mined by other pools. This could lead to what are called orphaned blocks, where valid transactions get left out. It could also cause delays in transactions for everyone using Monero.
Ivancheglo has also stated Qubic will stop reporting its Monero mining pool hashrate after August 2. He says this is to “spread awareness” about the risks of a potential 51% takeover. It’s a bold move, to say the least. He even posted on X, saying, “I, like the Monero community, am trying to find a countermeasure to Qubic’s 51% domination.”
He added, “This is very important to the cryptocurrency industry because one day we all may face a non-benevolent attack.” It’s a curious position, almost like he’s both the instigator and the concerned observer.
I, like the Monero community, am trying to find a countermeasure to Qubic’s 51% domination. This is very important to the cryptocurrency industry because one day we all may face a non-benevolent attack.
— CFB (@c___f___b) June 24, 2024
The Incentive Game
This push by Qubic to control Monero’s mining hashrate has certainly set off alarms. The Monero community worries about the network’s decentralization and security. A 51% attack is when one entity, or a group working together, controls most of a blockchain’s block production power. For a proof-of-work network, this means over half of the total mining hashrate. With that control, they could manipulate the ledger, perhaps by double-spending coins or blocking transactions.
Some in the Monero community have suggested Qubic might be renting hashrate or using bots. So far, there’s no clear proof for these claims. But Dan Dadybayo, an analyst at Unstoppable Wallet, pointed out that it might not even matter. He sees it as a game of incentives. Monero miners might just “voluntarily surrender the network” if Qubic offers them a better deal.
Dadybayo put it plainly. “Qubic says: ‘We don’t want to harm anyone.’ But intent doesn’t matter,” he wrote. He believes this situation isn’t about technical exploits anymore. It’s about capital, pure and simple. It’s about who can offer the most attractive terms to miners.
He even crunched some numbers. Monero’s security budget, which is what it costs to keep the network running safely, sits around $130,000 per day. Dadybayo estimated that a malicious actor could buy majority control for a mere $7,000 to $10,000 per day. That’s a stark difference, isn’t it?
This isn’t just a Monero story, Dadybayo argued. It serves as a warning to all proof-of-work networks. He believes strong math alone isn’t enough to secure these systems. We need infrastructure that is resilient and aligns incentives. Otherwise, he suggests, the next “attack” won’t look like one at all. It will just look like a better business deal for miners.
A Broader View
The Monero situation highlights a fundamental tension in decentralized systems. How do you ensure security when participants are free to choose where they direct their resources? If a competing network offers a more profitable mining opportunity, miners will naturally gravitate there. This is the free market at play, but it can have unintended consequences for network security.
The idea of an “economic demo” is intriguing. Ivancheglo presents it as a way to expose a vulnerability, perhaps to spur the Monero community to action. But it also puts Monero in a difficult spot. It forces a public debate about its resilience and the loyalty of its mining base. The question becomes, can a community rally its resources to counter such a large-scale, incentivized shift?
Monero’s native token, XMR, has traded flat through this whole discussion, changing hands for around $321. This suggests the market isn’t panicking, at least not yet. Perhaps investors are waiting to see how this plays out, or maybe they trust Monero’s community to find a solution.
The coming months will be telling. Will Monero find a “countermeasure” as Ivancheglo suggests? Or will this “economic demo” prove a point about the power of capital in securing, or unsecuring, a decentralized network? It’s a question that could shape how we think about proof-of-work security for years to come.
