Mining pools are groups of miners who work together to increase their chances of earning rewards for verifying transactions on a blockchain network. When a block is successfully mined, the rewards are distributed among the members of the pool according to the mining distribution scheme that the pool is using.
A mining distribution scheme is a system used in cryptocurrency mining to distribute the rewards earned by miners for verifying transactions on the blockchain. The distribution scheme can vary depending on the specific cryptocurrency being mined.
Two of the most popular mining distribution schemes are Pay Per Last Number of Shares (PPLNS) and Pay Per Share (PPS).
- Pay Per Last Number of Shares (PPLNS): PPLNS is a mining distribution scheme that rewards miners based on the number of shares they contributed to the pool during a specific period. A share is a calculation that a miner performs in order to prove that they contributed to the mining process. The number of shares a miner contributes is determined by the amount of work they do, such as processing transactions or solving complex mathematical equations. PPLNS takes into account the last N shares submitted by all miners in the pool. The miner who contributed the last share before the block was found receives a higher payout than the miners who contributed earlier shares.
The advantage of PPLNS is that it rewards miners based on their work contribution, rather than simply the amount of time they spend mining. However, it can also be more difficult for miners to predict their payouts since they are based on the number of shares they contribute during a specific period, which can vary.
- Pay Per Share (PPS): PPS is a mining distribution scheme that rewards miners based on the number of shares they submit to the pool. In PPS, the pool pays a fixed amount of cryptocurrency for each share submitted by a miner, regardless of whether a block is found or not. This means that miners are paid for every share they submit, regardless of whether their share contributed to the block reward or not.
The advantage of PPS is that it provides miners with a predictable payout, since they are paid for every share they submit. However, PPS also puts more risk on the pool operator, since they are responsible for paying miners even if a block is not found.
In conclusion, both PPLNS and PPS are popular mining distribution schemes that are used by mining pools to distribute rewards. PPLNS rewards miners based on the number of shares they contribute, while PPS rewards miners based on the number of shares they submit. Each scheme has its advantages and disadvantages, and pool operators must choose the best scheme for their specific needs.