Does a Very Large Pool Experience Less Short-Term Luck Variance than a Small Pool?
Yes, a very large pool generally experiences less short-term luck variance than a small pool. This is due to the statistical law of large numbers.
A larger pool's total hash rate provides a more consistent stream of shares, making its actual block discovery rate more closely align with the mathematically expected rate. Smaller pools have higher volatility in block discovery, leading to more extreme periods of "good" or "bad" luck.
Glossar
Block Discovery Rate
Parameter ⎊ This is the engineered interval between successful block discoveries, designed to maintain consistency in transaction finality and network throughput.
Small Pools
Liquidity ⎊ Small pools, within cryptocurrency derivatives, represent concentrated sources of capital facilitating trading in less established or niche instruments.
Short-Term
Horizon ⎊ Short-term, within cryptocurrency and derivatives, typically denotes a timeframe extending to one month, influencing trading strategies focused on volatility capture and rapid profit realization.
Hash Rate
Power ⎊ Hash rate quantifies the total computational power dedicated to solving the cryptographic puzzle in a Proof-of-Work network.
Luck Variance
Variance ⎊ Luck variance quantifies the deviation between a mining pool's actual number of blocks found over a period and the statistically expected number based on its submitted hash power, or shares.
Variance Swap
Instrument ⎊ A variance swap is a financial instrument designed to provide pure exposure to the realized variance of an underlying asset.