How Can a Miner Estimate the Expected Variance in Their PPLNS Earnings?
A miner can estimate variance by calculating the standard deviation of block discovery times for the pool, combined with the pool's average luck over a long period. This statistical measure provides a range of expected outcomes around the mean.
A larger pool size generally reduces the pool's overall variance, leading to more predictable earnings for the miner.
Glossar
Expected Outcomes
Projection ⎊ Expected outcomes in cryptocurrency derivatives represent probabilistic assessments of future price levels or volatility surfaces, derived from models incorporating implied volatility, historical data, and market sentiment.
Variance
Dispersion ⎊ In cryptocurrency, options, and financial derivatives, variance quantifies the degree to which returns deviate from their expected value, representing the inherent uncertainty within an asset’s price movements.
Variance Swap
Instrument ⎊ A variance swap is a financial instrument designed to provide pure exposure to the realized variance of an underlying asset.
PPLNS
Protocol ⎊ Perpetual Protocol (PPLNS) represents a decentralized options trading platform built on Ethereum, facilitating the issuance and trading of perpetual options contracts.