Choosing the optimal mining pool reward model
How can a miner choose a reward system with the biggest profit? The answer to this question is usually found empirically, and more often by comparing different pools in practice for a certain period of time using the same set of equipment. In total, there are 13 generally accepted models for calculating rewards, but two of them are more popular: PPLNS and PPS including its modifications.
But enough with the theory — let’s compare which model is a better fit for an average miner with, say, 10 rigs and a total hash rate of 1250 mh/s.
SOLO
Honestly, forget about it! Don’t even try to go out there on your own with less than (at least) 5 gh/s. The mining calculator shows that with a 1gh/s power we need 35 days to mine 1 block!
With free electricity and without other expenses, income for 2 months can be 4.6 ETH (average block reward as of September 15, 2020), i.e. $1,706 (at a rate of $ 371). It seems ok, but you need to consider your luck, fluctuations in the value of the block reward and the coin’s rate over a long period. For comparison, on the CoinFLy pool with the PPS+ model in 35 days you can earn 4.62 ETH, i.e. even more. And most importantly, your income will be more guaranteed than with individual mining.
PPLNS
One of the popular models — PPLNS (Pay Per Last N Shares) — is a proportional payout system, however, the reward is distributed not for the number of shares that the user sent during the interval between the two found blocks, but for the number of time intervals — shifts — that are fixed. At the same time, each pool chooses the number and duration of shifts themselves. So, it can happen that the pool applies the rule of 20 shifts, each of which lasts 2 hours. A pool that uses this model relies mainly on the luck factor. And therefore, sometimes the blocks are found sequentially or off-hour, and sometimes for an extended period you find nothing at all.
For example, let’s take the average income per 1 gh/s for a user who joined the pool a few months earlier. This is how the miner’s rewards are displayed on Ethermine. On average, the daily income ranges from $20 to $35, but there are bad days with an income of $18 and happy days with $40-$50-$60-$80. And even one extra catch of $119. As a result, the average for 3 months is $31.2:
The main advantages of the PPLNS model are: suitable for miners constantly working in the same pool; regular payments with low commissions; if you’re lucky, you can make good money here. However, this model is not suitable for those miners who simultaneously mine coins from multiple pools. Again, their luck can turn away at any moment. And in the case when the pool power is low, blocks are rarely found so miners are not interested in this. This payment system is used by many large pools today, including Ethermine.
PPS
Another popular model that is often discussed is Pay Per Share (PPS) — payment for a share. The pool pays a reward to the miner according to the average number of shares that they deposit to the pool when searching for blocks at a stable rate. Luck has nothing to do with it, and we can say that this model is for “hard workers”, not for “gamblers”. No matter how lucky the pool is, at the end of the day its users receive 100% payout. This payment model is optimal for large farms with large capacities and stable statistics. The main disadvantage of PPS is high pool risks which usually turns into rather high commissions (3–7%) for users for the sake of minimizing the risks. Pools with low power use this payment scheme, for example, Hashcity.org, Hellominer. It’s worth mentioning that some powerful pools like F2Pool, SpiderPool, or Poolin offer several models to choose from.
Poolin profit calculator according to the PPS system $41,96, which is almost $8 less than on the CoinFLy pool with the PPS+ system
Variations on the PPS model, in particular, FPPS (Full Pay-per-Share) become more popular these days. It is used by the Antpool mining pool, which previously offered payment via PPLNS. But the most popular PPS modification is still PPS+.
PPS +: is everything magical?
Why do we think it is so good? Of course, the miner rewards formula is quite simple: it is directly proportional to the accepted hashrate (the sum of the complexity of the accepted shares set by the pool) and inversely proportional to the total network complexity, which is defined for the entire blockchain. And this proportion is nothing more than a share of some conditional block reward. Why is it conditional? First of all, because each block has its own reward that you need to monitor and control. In the case of PPS+, regardless of whether the pool finds blocks or not, it must pay for each accepted share. But at what rate, if the block is not found yet? Is the pool powerful and successful enough to regularly find blocks and preferably the most profitable ones? It turns out that to some extent, the user still depends on the risks and the pool’s luck just like with the PPLNS model.
It turns out that “+” may not be such a plus if the pool lacks power or luck. Therefore, let’s say we decided to pay PPS+ rewards, but make sure that the user is satisfied. On the CoinFly pool, miners can use the hashrate-based reward calculator and use it to track what is divided (multiplied) into what and where the estimated income comes from.
This way we show the logic for calculating the reward: the current hash rate divided by the product of the current reward for the block (by whattomine), the complexity of the network, and the total number of shares per day.
The reward block in our model is set once a day — this is the average reward for the previous day plus commissions. At the same time, if some blocks bring less profit or you simply cannot find any blocks for a long time, the pool takes on these risks averaging this indicator.
This approach allows us to assert that CoinFly is not only a fair pool but also more profitable than others. For example, here’s a comparison with the Hiveon pool
And until the end of September, we’re running a special promotion for the CoinFly pool — we add an extra 10% to everything that you’ve mined! We simply add this interest to the actual block reward when calculating the payout to the miner. So come by, register, and check everything yourself over here.
