Mining Pool Payouts explained: PPS vs. FPPS vs. PPLNS vs. PPS+
What is a Mining Pool?
A Mining pools is a hub where a group of Crypto currency miners share their processing power to the network in order to solve the blocks quicker.
The rewards will be split equally based on the amount of shares that they contributed in finding a block.
Pool mining was introduced during early Bitcoin mining days when solo mining became non-viable.
The more powerful your hardware is, the more shares you’ll submit, the more shares you submit, the more you’ll earn.
In order for the pool to pay its miners each pool uses its own payment scheme. Two of the most popular option is PPS and PPLNS.
The first thing a miner has to decide is which pool mining payout is best for their requirements.
PROP (proportional), FPPS (Full Pay Per Share), SMPPS (Shared Maximum Pay Per Share), ESMPPS (Equalized Shared Maximum Pay Per Share), CPPSRB (Capped Pay Per Share with Recent Backpay), PPS (Pay Per Share), PPLNS (Pay Per Last N Share) and lastly PPS+ (Pay Per Share Plus).
Among them PPS and PPLNS are the two types of payment models that are mostly used by mining pools currently. Before we explain both PPS and PPLNS we’ll make a short note on mining pool.
There are numerous payment systems (over 15), but the vast majority of the pools operate on a PPS, FPPS, PPS+ and PPLNS basis.
However, before trying to understand the different settlement models, it is important to come to a consensus on some terms used in crypto mining.
Block Reward: Block reward refers to the new coins issued by the network to miners for each successfully solved block.
Hashing Power: Hash rate is the speed at which a computer completes an operation in the cryptocurrency’s code. A higher hashrate increases a miner’s opportunity of finding the next block.
Luck: Luck, in mining, is the probability of success. Imagine that each miner is given a lottery ticket for a certain amount of hashing power they provide. If they are to provide 1 TH/s hashing power when the overall hashing power in the network is 10 TH/s, then they would receive 1 of 10 total lottery tickets. The probability of winning the lottery (in this case finding the block reward) would be 10%.
Transaction Fees: Some networks (like Bitcoin) also have substantial amounts of transaction fees rewarded to miners. These fees are the total fees paid by users of the network to execute transactions.
PPS offers an instant flat payout for each share that is solved. With this payment method, a miner gets a standard payout rate for each share completed. Each share is worth a certain amount of mineable cryptocurrency.
After deducting the mining pool fees, the miners are given a fixed income every day. Therefore, under the PPS mode, the returns are relatively stable. Miners are exposed to risk here. They may not get the transaction fees.
It is ideal for low priced orders for an extended period. This model becomes lucrative during a bearish run of a particular coin.
With this payout, profits will be allocated based on the number of shares miners contribute. This kind of allocation method is closely related to the block mined out. If the mining pool excavates multiple blocks in a day, the miners will have a high profit; if the mining pool is not able to mine a block during the whole day, the miner’s profit during the whole day is zero.
Notably, in the short term, the PPLNS model is highly correlated with a pool’s luck. If the luck factor of a particular mining pool decreases in the short term, the miner’s income will also decrease accordingly (the opposite case of the mining pool being lucky in the short term is possible too). However, in the long term, the luck factor tends to average out to the mean.
Hence, this model is ideal for fixing orders on a big pool that has a high chance of finding a block within the order time limit. Or a standard order which will have miners connected for a longer time.
Pay Per Share + (PPS+)
PPS+ is a blend of two modes mentioned above, PPS and PPLNS. The block reward is settled according to the PPS model. And the mining service charge /transaction fee is settled according to the PPLNS mode.
That is to say, in this mode, the miner can additionally obtain the income of part of the transaction fee based on the PPLNS payment method. This was a major drawback in the PPS model.
Full Pay Per Share (FPPS)
With this pool payout, both the block reward and the mining service charge are settled according to the theoretical profit. Calculate a standard transaction fee within a certain period and distribute it to miners according to their hash power contributions in the pool. It increases the miners’ earnings by sharing some of the transaction fees.
With the PPS and FPPS payment methods, you will get paid no matter if the pool finds a block or not. This is the most significant advantage over PPLNS. The risks and rewards are higher with the PPLNS plan.
The decision on which mining plan to choose from needs to be preceded by the decision of choosing the right mining infrastructure.
Difference between PPS vs PPLNS payment models?
PPLNS stands for Pay Per Last (luck) N Shares. This method calculates your payments based on the number of shares you submitted during a shift.
It includes shift system which is time based or by number of shares submitted by the miners on the pool.
Your pool may find blocks consistently or in overtime it may have huge variations in winning a block and that ultimately affects your payments. PPLNS greatly involves luck factor and you’ll notice huge fluctuations in your 24 hour payout.
If you maintain your mining on a single pool then your payouts will remain consistent and it only differs when new miners join or leave the pool.
Pay Per Share pays you an average of the number of shares that you contributed to the pool in finding blocks.
PPS pays you on solid rate and is more of a direct method which completely eliminates luck factor.
In PPS method regardless of the pools lucky at winning blocks you’re going to get 100% payout at the end of the day. This is because there is a standard payout set for each miners based on their hash power.
It won’t be more than 100% or less than that and with this PPS method you can easily calculate your potential earnings.
On the other hand with PPLNS payment system on average you can either get more than 100% or less than that. It is based on how lucky the pool is at finding blocks.
Should I choose PPS or PPLNS?
This is one of the common questions most miners have initially.
Should I choose Pay Per Share or Pay Per Last N Share pools?
If you are the person who don’t switch pools often then PPLNS is definitely for you as such pools are good at rewarding its loyal miners.
Pay Per Share: No matter what, if you need a fixed payouts at the end of the day to liquidate or for whatsoever reason then your choice would be PPS.
Pay Per Share works well for large mining farms who can calculate and have statistics based on their mining power.
PPS is good for large miners but really bad for pool owners as there is a guaranteed payout for work no matter if the pool hits the block or not.
For this reason and because of pool hoppers (not loyal miners of the pool) most of the mining pools have switched to PPLNS payment model.
Pay Per Last N Shares: If you are the one that is looking to accumulate and hold more coins then PPLNS is recommended.
For each block that your pool finds you’ll get a share based on your hashrate.
Unlike PPS, in PPLNS you’ll get payouts more often and in the long run you’ll be rewarded more with PPLNS than PPS.
However due to huge variance it’s really hard to calculate your mining income.
PPLNS is good for both mid-range miners and pool owners as the payouts is only based on the blocks found.
If your pool is more lucky then you’ll see payments more often. This is the reason why miners stick to a pool where there is more hash power assuming the pool finds block very often.
You can find more comparison of mining pools payment system here.
How to find out if a pool is PPS or PPLNS?
Cryptocurrency mining can be a lucrative process. However it’s very important that you find out what payment scheme your pool is using before committing your hashing power.
Most of the mining pools has this information listed on FAQ page or at payouts page. If you’re unable to find this information then the only option is to contact the pool support.
Hope the information on this page is helpful for you to decide the right mining pool.
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