An article to understand: the revenue sharing model of mining pools

There are four main revenue sharing models for mining pools: PPS, PPLNS, PPS+, FPPS, with the most significant difference being whether it is a fixed income or not, followed by the difference in fee distribution.

PPS (Pay Per Share)

This distribution model is based on the miner’s arithmetic share in the mining pool, and receives a fixed income every day.

Suppose the computing power of the mining pool you are in is 4EH/s, the computing power you access to the pool is 0.4EH/s, the computing power of the whole Bitcoin network is 40EH/s, the computing power of the mining pool is 10% of the computing power of the whole network, and your computing power is 1% of the computing power of the whole network.

At present, the theoretical daily mining of bitcoins is 1800, accounting for 10% of the whole network arithmetic of the mining pool, the theoretical return is 180BTC, your theoretical return is 18BTC, the mining pool will hit you every day a fixed return: 18BTC.

Bitcoin’s out-of-block reward consists of two parts: system reward (Coinbase reward) and transaction fee reward. In addition to the system reward, the PPS model also allocates a fixed amount of transaction fee revenue to miners, which varies from pool to pool; for example, the amount of system reward allocated to miners is multiplied by 2%, which is distributed to miners as transaction fee revenue.

PPLNS (Pay Per Last N Shares)

This distribution model is based on the actual revenue of the day of the mining pool, according to the arithmetic share, the revenue is distributed to the miners.

Or the above example, the arithmetic power of the mining pool is 4EH/s, your arithmetic power is 0.4EH/s, if the luck value of the mining pool is high on a certain day, and 200BTC are mined, and your arithmetic power is 10% of the luck value of the mining pool, then the mining pool will share 20BTC with you, and if the luck value of the mining pool is low on a certain day, and only 100BTC are mined, then you can share only 10BTC.

Unlike the fixed payouts of the PPS model, the payouts of the PPLNS model change dynamically based on the actual bitcoins mined.

For example, let’s say there is a lottery with a total of 100 tickets, 10 of which have prizes of $100 each, for a total prize pool of $1,000. You and some friends have teamed up and bought 50 of these tickets, of which you have 20% (10 tickets) in proportion to your contribution.

If you choose the PPS distribution model, your share is fixed at $100, regardless of whether the 50 tickets you bought end up with a prize of $1,000 or $0.

If you choose PPLNS, then your earnings are based on the outcome of the draw, if these 50 tickets open $800, then you will get $160, if they open only $100, you can only get $20.

PPS+ (Pay Per Share+)

This payout model is a combination of PPS and PPLNS.

Specifically, PPS+ distribution model assumes that mining one block, the system reward is 12.5BTC, while the transaction fee income is 0.5BTC, where the system reward is distributed according to the PPS model, and the transaction fee income is distributed according to the PPLNS.

The specific algorithm is that the ratio of the miner’s computing power in the mining pool’s computing power, multiplied by the same period (usually 24 hours for the settlement cycle) mining pool transaction fee income.

FPPS (Full Pay Per Share)

Unlike the PPS model, an additional portion of mining revenue is added.FPPS model, taking the meaning of Full PPS, that is, full PPS.

This revenue mode, also based on PPS, increased the allocation of miner’s fees, but it allocates the miner’s fees, in accordance with the average miner’s fee ratio of the whole network on the day to perform, and not to take the actual miner’s fee revenue of the mining pool to be allocated.

The specific approach is: according to the ratio of miner arithmetic in the whole network arithmetic multiplied by the same period (usually 24 hours for the settlement cycle) all the transaction fees of the whole network.

FPPS and PPS + mode, due to the inconsistency of the allocation rules of the miner fee, the daily mining revenue, due to the mining pool of the miner fee revenue varies from high to low and deviation, but in the long run, excluding the influence of luck, the two mining mode of mining revenue is basically the same.