How Does a Mining Pool Operator Calculate the Guaranteed Payout Rate for PPS?
The PPS payout rate is calculated based on the expected value of finding a block over time. The operator estimates the average block reward, the network difficulty, and the pool's total hash rate.
This expected value is then divided by the number of shares required, on average, to find a block. The final guaranteed payout per share is this expected value minus the pool's operational fee.
This calculation allows the operator to consistently pay miners upfront.
Glossar
Pool Operator
Function ⎊ The pool operator is the centralized entity responsible for coordinating the collective computational power of individual miners within a mining pool to increase the probability of discovering a block.
Expected Value
Valuation ⎊ Expected Value, within cryptocurrency, options, and derivatives, represents the probabilistic weighted average of potential outcomes, crucial for assessing risk-adjusted returns and informing strategic allocation decisions.
Guaranteed Payout Rate
Certainty ⎊ A guaranteed payout rate, within cryptocurrency derivatives, represents a pre-defined contractual obligation for a specific return, irrespective of the underlying asset’s performance.
Pps Payout Rate
Calculation ⎊ Pps payout rate, within cryptocurrency options and derivatives, represents the probabilistic payout scaled by the premium paid, defining expected return per unit of premium invested.
Mining Pool Operator
Function ⎊ A Mining Pool Operator is the centralized entity responsible for coordinating the computational power of numerous individual miners into a single, cohesive force to increase the probability of discovering a block.
Guaranteed Payout per Share
Calculation ⎊ Guaranteed Payout per Share is a metric used in mining pools to determine the precise reward allocated to a participant based on the quantity and validity of work shares submitted during a specific epoch.