How do mining pools distribute rewards? PPS vs FPPS and PPLNS

In this guide, we will look at various payment methods (or reward systems), provided by mining pools and how they can affect your bottom line.

There are many different payment methods, but we'll cover the most common ones:

  • PPS - Pay Per Share
  • FPPS - Full Pay Per Share
  • PPLNS - Pay Per Last (N) umber of Shares (fee last N ball)

Pay-Per-Share (PPS)

This payment method is pretty straightforward. You get paid for every valid share sent... Each ball is worth a certain amount of BTC or any other mined cryptocurrency.

The cost of balls is calculated based on the probable number of balls needed by the pool to find the block. If the pool statistically needs to send 1000 valid shares to find 1 block or 12,5 BTC (at the time of writing), then each share costs 0,0125 BTC. As the network complexity changes, so does the price of each ball.

It is worth noting that you will always get paid by PPS method, whether the pool finds a block or not. This means that the pool may lose money if the pool's luck is low, or make money if the pool's luck is high. According to statistics, the pool's luck should be around 100% (the higher the percentage, the higher the pool's luck).

PERFECT ORDER FOR THE PPS METHOD: an order at a low price for a longer period, which may not work constantly, but only when the price falls and attracts miners.

Full Pay-Per-Share (FPPS)

Full Pay-Per-Share or Pay-Per-Share Plus (PPS +) - These two methods are similar and very similar to the conventional method of Pay-Per-Share, with the only difference that the pool will also pay a commission of the transaction, which is included if the unit is found.

Usually, when the pool finds a block, the reward is distributed among the miners, but with the block reward comes the transaction commission as well. This reward is obtained from every transaction performed on the blockchain (the fee you have to pay when making a transaction). When using the Full Pay-Per-Share method, the pool will also pay the miners commissions from the transaction. For example, a Bitcoin block at depth 603308 had a commission
0.18254177 BTC + 12,5 BTC block reward (source: https://www.blockchain.com/btc/block/603308).

PERFECT ORDER FOR FPPS METHOD: an order at a low price, which may not work all the time, but only when the price falls and attracts miners (lower price).

Pay-Per-Last N Shares (PPLNS)

The Pay-Per-Last N Share system only rewards miners after the pool finds a block. This means that you will only receive payment after the block is found. Then the pool "goes back in time" and checks the valid balls sent before the winning block. This is called a "time window". Miners get paid based on the valid shares they sent in this "time window".

How do mining pools distribute rewards? PPS vs FPPS and PPLNS

This method is convenient for miners who do not move from pool to pool and have a permanent connection. Please note that your work (balls) may be lost if you disconnect from the pool before the block is found.

PERFECT ORDER FOR PPLNS METHOD: a fixed order on a large pool, which has a high chance of finding a block within the time limit of the order. Or a standard order, in which miners will be connected for a longer period of time (higher price).

Conclusion

With PPS and FPPS payment methods, you will receive payment regardless of whether the pool finds a block or not. This is the biggest advantage over PPLNS. On the other hand, PPLNS allows you to "gamble" to some extent. If your order is sending power to a pool that has a large block at the time, you are likely to earn a lot more than a PPS or FPPS pool.

How do mining pools distribute rewards? PPS vs FPPS and PPLNS
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