Lyra2REv2 is a hashing algorithm used on certain Proof of Work blockchains. It was first introduced after Vertcoin’s fork away from Lyra2RE on August 10, 2015.
Since then, Lyra2REv2 has been adopted by a number of different blockchain projects. Among the top three Lyra2REv2-blockchains by market capitalization, the Lyra2REv2 mining algorithm secures over $230 million in digital currencies as of the time of this writing.
In this article, we explore why Lyra2REv2 was invented and how the algorithm has been used by prominent blockchain projects. We will then assess its current effectiveness compared to other Proof of Work consensus algorithms.
Vertcoin was the first blockchain project to use the Lyra2REv2 hashing algorithm. It was developed specifically to resist the emergence of application-specific integrated circuit (ASIC) miners.
ASIC mining rigs were first introduced in January 2013. These machines are designed specifically for cryptocurrency mining, which means they are able to outperform GPU and CPU miners if all other factors are equal. Because ASICs are far more expensive, this has led to the rise of enterprise-level mining farms. In turn, many Proof of Work blockchain networks have become dominated by a small handful of massive mining operations, raising questions about the centralization of hash rate and, in some cases, coin supply.
To create a more fair system for all miners, many blockchain projects have taken measures to increase ASIC resistance. In addition to Lyra2REv2, other prominent Proof of Work mining algorithms, such as Equihash and CryptoNight, have also implemented modifications to improve ASIC resistance.
The general goal behind the development of Lyra2REv2 is to support GPU cryptocurrency mining and deter ASICs. In the specific case of Vertcoin, the switch to Lyra2REv2 was implemented after developers concluded that a single CPU-based botnet was controlling the majority of the hash power on the Vertcoin peer to peer network.
Forking From Lyra2RE To Lyra2REv2
As you can probably tell from its name, Lyra2REv2 is actually the second version of this mining algorithm. Lyra2RE (first version) was used from December 13, 2014 to August 10, 2015. Because it was used for a shorter period of time, Lyra2RE didn’t gain as much adoption from other Proof of Work blockchain networks.
Generally, both versions are supposed to have increased ASIC resistance due to their architecture, which includes a sequence of individual cryptographic hash functions, including Blake, Keccak, CubeHash, LYRA2, Skein and BMW (Blue Midnight Wish).
In contrast to the original algorithm, Lyra2REv2 adds an additional round of the CubeHash cryptographic hash function to make CPUs less effective at mining. This was added to mitigate bot-net mining and cryptojacking. It also includes improvements that reduce the necessary energy consumption for mining rigs. Lyra2REv2 is designed to be more memory intensive than its predecessor. At the time of implementation, this made ASIC rigs impractical for mining Vertcoin (VTC).
Lyra2v2 and Lyra2REv2: What’s The Difference?
When researching Lyra2REv2, it’s common to see the term “Lyra2v2.” Some people choose to reference one or the other when talking about this specific mining algorithm. Lyra2v2 is actually just a shortened name for Lyra2REv2. The main difference is that Lyra2v2 is typically used as the standard naming format on the command line for various mining software programs. In contrast, mining pools typically use Lyra2REv2 as the standard naming format.
Prominent Projects Using Lyra2REv2
While Vertcoin was the first project to implement Lyra2REv2, it is no longer the largest by market capitalization to use this mining algorithm. MonaCoin (MONA) and Verge (XVG) are two prominent projects currently using Lyra2REv2.
Vertcoin was able to achieve some notable accomplishments while using Lyra2REv2. On May 7, 2017, Vertcoin was one of the first projects to implement SegWit. The network was also involved in some early on-chain atomic swaps on September 20, 2017.
Still, the issue of ASIC resistance continued to plague the network as mining hardware specifically targeting Lyra2REv2 began to emerge. In October 2018, the network’s hash rate increased by more than double. The network suffered several 51% attacks through December 2018.
In light of the devastating attacks, Vertcoin developers successfully implemented Lyra2REv3 on February 1, 2019, as an attempt to dissuade further security threats. Of course, this means that Vertcoin is no longer using Lyra2REv2.
MonaCoin was originally created when developers forked the Litecoin source code in December 2013. Its network originally implemented the Scrypt mining algorithm— the same algorithm that Litecoin uses— but later changed to Lyra2REv2 in an effort to deter ASIC miners.
On May 15, 2018, MonaCoin suffered from a major 51% attack. Some exchanges temporarily disabled MONA deposits, and the project’s developers recommended that exchanges establish a 100 confirmation minimum to reduce the likelihood of double spend attacks. Bugs also led to faulty payment confirmations and stolen block rewards. According to one Reddit post, exchanges lost an estimated $90,000 as a result.
As of March 2020, MonaCoin still uses Lyra2REv2. Although the bugs that caused the issue in 2018 were eventually fixed, it currently costs less than $3,000 per hour to execute a 51% attack on the network. This amount is relatively low considering the high market capitalization of MONA.
Verge’s security vulnerabilities, particularly its history of 51% attacks, have been highly publicized within the blockchain space.
Verge is unique from most blockchain networks in that it supports five different Proof of Work mining algorithms: Scrypt, X17, Lyra2REv2, Myr-Groestl, and Blake2s. The network originally used Scrypt until a 51% attack occurred in 2016. Developers added the multi-algorithm system with the goal of boosting network security, but this wasn’t effective.
In the span of less than two months in 2018, the network suffered two major security breaches. In April 2018, a hacker stole around 250,000 XVG (equivalent of around $170,000 at the time). The hacker was able to add false timestamps to Verge blocks, and this only required the use of the Scrypt mining algorithm.
Then, in May 2018, another hacker stole 35,000,000 XVG (equivalent of around $1,400,000 at the time). Because the previous bug wasn’t properly fixed, the execution of the second attack was quite similar to the first. The only difference was that the hacker used two mining algorithms interchangeably this time around. In this case, the hacker chose Scrypt and Lyra2REv2 due to their relatively low difficulty levels.
The Verge network still uses this multi-algorithm system today, with Lyra2REv2 remaining a popular option among XVG mining pools. This raises many questions about the security of the project.
How Effective Has Lyra2REv2 Been At ASIC Resistance?
As shown in the examples above, Lyra2REv2 has been rather ineffective at maintaining ASIC resistance. Manufacturers have been able to design ASIC rigs to get over the algorithm’s two barriers, which are its use of multiple cryptographic hash functions and its memory-intensive design.
Currently, the most profitable Lyra2REv2 mining rigs for both MonaCoin (MONA) and Verge (XVG) are all ASICs. While some CryptoNight networks have gone so far as to take a pro-ASIC stance, it seems that most Lyra2REv2 projects hold a neutral opinion. By sticking with Lyra2REv2 over other algorithms, MonaCoin as well as other projects (e.g. Rupee, Straks, Shield, and Galactrum) have decided to accept higher mining centralization as inevitable.
Vertcoin Forks To Lyra2REv3
Vertcoin’s switch to Lyra2REv3 was intended to increase ASIC resistance. According to WhatToMine, a Lyra2REv3 miner was released in April 2019 (only around two months after the new mining algorithm implementation).
The good news for proponents of ASIC resistance is that this specific rig’s profitability is negative as of the time of writing. The bad news is that the network suffered another 51% attack in December 2019. Just like Vertcoin’s 2018 security breach, developers cited evidence that showed NiceHash as the source of the attack.
Will Other Projects Switch To Lyra2REv3?
While Lyra2REv3 is presumably more ASIC-resistant than Lyra2REv2, new ASICs will likely become more profitable over time, as is common with other Proof of Work hashing algorithms.
Additionally, the December 2019 attack on Vertcoin showed that Lyra2REv3 isn’t necessarily better prepared to thwart attacks moving forward. After being available for more than one year, Lyra2REv3 hasn’t gained adoption from any major projects apart from Vertcoin. Only two small projects, Hana (HANA) and GlobalToken (GLT), have implemented the mining algorithm. Likewise, Lyra2REv2 hasn’t gained new adoption in recent years.
Improving Consensus With Komodo
Lyra2REv2 and Lyra2REv3 have both been challenged by the rise of ASICs and 51% attacks. These are common issues among all Proof of Work blockchains. That’s why Komodo offers Bitcoin-level security to all projects that launch a Smart Chain with Komodo's technology.
With Komodo’s technology, you can launch an independent Smart Chain and choose your blockchain consensus protocol. Options include Proof of Work, Proof of Stake, or any combination of the two. If you choose PoW, you can choose between five different variations of the Equihash algorithm or the VerusHash algorithm. The Proof of Stake implementation Komodo offers can be used in combination with Proof of Work consensus rules.
Komodo’s Delayed Proof of Work (DPoW) serves as a secondary consensus mechanism to bolster security for both Proof of Work and Proof of Stake blockchains. Komodo’s DPoW blockchain security service stops potential attackers from re-organizing notarized blocks, which prevents double spending. Notarizations occur every 10 minutes, making 51% attacks both infeasible and unprofitable.
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