Explain the ‘Pay-Per-Share’ (PPS) Method of Reward Distribution in Mining Pools.
Pay-Per-Share (PPS) is a pool reward system where miners are paid a fixed amount for every valid 'share' they submit, regardless of whether the pool actually finds a block. The pool operator absorbs the 'luck' or variance risk.
The payment is calculated based on the expected value of the block reward, normalized by the total shares required to find a block at the current difficulty.
Glossar
Pool Reward System
Incentive ⎊ A pool reward system within cryptocurrency and derivatives markets functions as a mechanism to align participant behavior with protocol objectives, typically involving the distribution of tokens or a portion of transaction fees to those contributing resources ⎊ such as liquidity or computational power ⎊ to the network.
Pps Model
Model ⎊ The Pay-Per-Share (PPS) model is a mining pool payout structure that offers miners a fixed, predetermined payment for each valid share of work they submit, irrespective of whether the pool successfully finds a block.
Reward Distribution
Incentive ⎊ Reward Distribution within cryptocurrency, options trading, and financial derivatives represents the allocation of generated yield or value to participants based on their contribution to network security or liquidity provision.