The Litecoin network recently underwent a halving event. Miners’ block reward was slashed by 50% to 6.25 BTC. The halving failed to impact LTC’s price. Nevertheless, this was a significant milestone for Litecoin from a fundamental perspective. The Litecoin equation also involved Dogecoin. In this article, we will delve into the relationship that these two networks share.
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Litecoin-Dogecoin’s Merged Mining Setup
The Dogecoin project was created as a joke in 2014 by Billy Markus and Jackson Palmer. During its early days, the network was on the cusp of exhausting all block rewards, owing to the pace of its issuance and money supply model. This increased the odds of the project being attacked.
During Dogecoin’s infancy, blocks on the network were generated every minute. Parallelly, rewards were being cut by half every 69 days. Consequentially, block subsidies rapidly reduced the network’s fixed supply of 100 billion DOGE. That led to the security of the network being compromised.
So, with no subsidies and transaction fees far from miners’ appeal, the project was on the verge of being abandoned. That is when Litecoin came into the picture. The creator of Litecoin, Charlie Lee, put forth a merged mining arrangement proposal on the table that allowed Dogecoin to borrow Litecoin’s security.
Merged mining is basically a setup where miners secure two or more networks in conjunction. They receive rewards from both networks. This process is also referred to as Auxiliary PoW because one less secure auxiliary blockchain borrows security from a parent network with better security. Thus, Dogecoin eventually underwent a hard fork to allow this change. Since then, the Litecoin blockchain has been providing security to the Dogecoin network.
To date, blocks continue to be generated every minute on the Dogecoin network. Nevertheless, no more Dogecoin halvings take place. However, the 100 billion DOGE cap was removed to pave the path for a 10,000 DOGE reward per block for miners.
Dogecoin Miner Holdings
The miner reserve noted a substantial incline after the merge mining set-up was adopted. It attained an ATH of 36.6 billion in H2 2017. After that, the reserve started depleting and dropped to lows. Of late, this metric has been stagnant, indicating that for the most part of 2023, miners did not transfer a lot of DOGE. At press time, the cumulative miner balance stood at 4.38 billion DOGE.
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