How Does the PPS Payout Scheme Transfer Risk from Miners to the Pool Operator?
In the Pay-Per-Share (PPS) scheme, the pool operator pays miners immediately for every share of work they submit, regardless of whether the pool actually finds a block. The payment is calculated based on the expected value of a block reward.
This guarantees a stable, predictable income for the miner. The pool operator assumes the risk of variance, meaning they pay out even if the pool experiences a "bad luck" streak and fails to find blocks commensurate with the expected payout.
Glossar
PPS Payout Scheme
Mechanism ⎊ The Pay-Per-Share (PPS) payout scheme is a mining pool reward distribution mechanism that guarantees a fixed, calculated payout for every valid share submitted by a miner, regardless of whether the pool successfully finds a block.
Miners
Validation ⎊ The term "Miners," within cryptocurrency contexts, fundamentally denotes entities responsible for validating and adding new transaction records to a blockchain.
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.
Risk Transfer
Mechanism ⎊ Risk Transfer is the fundamental mechanism by which derivatives operate, shifting the financial exposure associated with an underlying asset from one party to another.