How Does the Pool Operator Manage the Variance Risk They Assume in the PPS Model?
In the PPS model, the pool operator guarantees payment to miners regardless of finding a block, absorbing the variance risk. They manage this risk by maintaining a large reserve of the cryptocurrency.
They use this reserve to pay out rewards during periods of bad luck and replenish it during periods of good luck. The higher pool fee in PPS also compensates them for taking on this financial risk.
