How Does the PPS Model Impact the Pool Operator’s Need for a Large Capital Reserve?
The PPS model necessitates a large capital reserve for the pool operator. Since the operator guarantees payment for every share, they must have enough liquid cryptocurrency on hand to pay miners even when the pool experiences a prolonged period of bad luck and fails to find a block.
This reserve acts as a buffer against the variance they have absorbed.
Glossar
PPS
Protocol ⎊ The term PPS, within cryptocurrency and derivatives contexts, frequently denotes a Payment Protocol Standard, a framework designed to facilitate atomic swaps between distinct blockchain networks.
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.
Capital Reserve
Provision ⎊ Capital reserve within cryptocurrency and derivatives contexts represents segregated funds ensuring solvency and counterparty fulfillment, functioning as a critical component of risk management frameworks.
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.