Every pool has its own reward method. In this article we will explain how different pool reward schemes work.
Pay-per-share or PPS reward method is the method that miners love the most, but it represents the highest risk for the pool. It means that the miner is paid for every (valid) share he or she contributes to the pool. However, since the pool only gets the coins if the block is found, this means it has to pay its miners also when there are no blocks found. That’s why pools usually prefer to use other reward methods. The ones that are using the PPS reward method, usually also have higher fees.
The proportional or PROP reward method works the opposite. In the PROP scheme, the miners are paid when and if the block is found and the reward depends on how many valid shares were submitted by the miner and contributed to finding that block. If one miner contributed 10% of the total shares that were needed to find the block and the reward in the block is 100 coins, the miner will get 10 coins.
The pay-per-last-N-shares or PPLNS reward method works in a similar way as the PROP scheme, however, it extends the period of the number of shares a miner has submitted over the last few blocks. This prevents so-called pool hopping (which a miner is doing if he or she is using profit switch too frequently) and penalizes disloyalty to the pool. On such pools, a miner will see that he or she earns a very small reward, but with time, the earnings slowly climb to the expected number.
The dynamic pay-per-last-N-shares or DPPLNS reward method works in a similar way as the PPLNS, but with an additional mechanism that dynamically decides for how many last blocks the submitted shares will be checked. It also eliminates the issue of very small rewards at the beginning of the mining.
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