Mining Pool Model Selection: Analyzing PPS+, FPPS Rates, and Risk

Miners contribute their hashrate to a mining pool to secure stable and reliable revenue. However, different pools utilize different settlement models and fee structures. These seemingly minor distinctions can significantly impact your final earnings. Choosing the wrong settlement model could cost you substantial profits. This article will thoroughly analyze the three most common mining pool payout models: PPS+, FPPS, and PPLNS. We will explain in detail how each calculates your income. After reading this guide, you will be able to formulate a revenue-maximizing pool selection strategy based on your risk appetite and mining scale.

The Importance of Mining Pool Model Selection

The essence of mining is finding the correct block hash. The probability of a single miner finding the correct hash is extremely low. Therefore, miners aggregate their hashrate to form a pool, which vastly increases the probability of finding a block. Once a block is found, the pool distributes the rewards to all participating miners.

However, pools use different methods to distribute rewards—these are the various settlement models. For professional miners, understanding the risk and reward characteristics of these models is crucial. Selecting the appropriate model is a key step in achieving stable and maximized returns.

Model Foundation: Block Reward vs. Transaction Fee Distribution

Before diving into the models, we must be clear about the sources of miner revenue. Miner income consists of two main components:

Block Reward: This is the newly issued Bitcoin from the system, which is the primary source of income.

Transaction Fees: These are fees paid by users to have their transactions included in a block.

The primary difference between various mining pool models lies in how they handle and distribute transaction fees.

Detailed Breakdown of the Three Main Settlement Models

Currently, the three most common settlement models on the market are PPLNS, PPS+, and FPPS. They represent different trade-offs miners make between stability and revenue potential.

PPLNS Model: Lagging Rewards and High Risk/High Reward

PPLNS stands for "Pay Per Last N Shares." This is one of the earliest settlement models.

This model only distributes the Block Reward. It does not guarantee that miners receive payment immediately after submitting hashrate. Miner income is only finalized when the pool actually finds a block. Furthermore, the payment calculation considers the amount of hashrate the miner contributed to the last "N" blocks found by the pool.

The PPLNS model is characterized by high volatility. If the pool is lucky and finds blocks continuously, the miner's revenue will be very high. If the pool is unlucky and goes a long time without finding a block, revenue will be very low. Pool fees are typically very low, sometimes even zero. This model suits miners who are willing to take on high risk and believe the pool’s long-term luck will average out.

PPS+ Model: Stable Base Income

PPS stands for "Pay Per Share." This model offers the highest level of stability.

Under the PPS+ model, the miner's income is independent of whether the pool finds a block. The pool provides a fixed, theoretical payout based on the miner's contributed hashrate, calculated according to the network's current difficulty.

The calculation is based on the Block Reward. However, unlike the pure PPS model, PPS+ also distributes transaction fees to the miners. The pool deducts its service fee first, and then distributes the transaction fees to miners at a fixed ratio. PPS+ fees are usually slightly higher than PPLNS. It is suitable for miners who seek stable cash flow and are risk-averse.

FPPS Model: The Highest Earning Potential Option

FPPS stands for "Full Pay Per Share." This model is one of the highest-earning potential settlement methods currently available.

The FPPS model builds upon PPS+ with further optimization. Not only is the Block Reward locked into a theoretical value, but the entire transaction fee amount is also converted into a theoretical value. The pool then pays miners on time based on this complete theoretical income.

This means the FPPS model pre-pays miners for the full block income (Block Reward + all transaction fees). The pool absorbs all risk associated with transaction fee fluctuations. Consequently, the FPPS model’s fees are typically the highest. It suits miners who pursue the highest theoretical yield and anticipate transaction fees to continue rising.

Strategy for Maximizing Miner Revenue

The choice of model depends on the miner's scale and risk tolerance.

Miners prioritizing stability should choose the PPS+ model. This model guarantees fixed daily cash flow, simplifying cost calculation. Large-scale miners with substantial capital may choose PPLNS. Although income fluctuates, the extremely low fees save significant costs in the long run. Miners optimistic about network congestion and rising transaction fees should choose the FPPS model. This model allows miners to fully capture the extra revenue generated by transaction fees.

Learn More Professional Insights at Bitdeer

Selecting the mining pool settlement model is a core task in miner operations management. Professional miners must clearly understand the risk transfer mechanism of each model. PPLNS transfers "luck risk" to the miner, while FPPS transfers transaction fee volatility risk to the pool. You must configure and select your pools based on your own needs. Only by making the correct choice can miners ensure their mining income is maximized in this highly competitive market.

If you wish to explore more advanced analysis on hashrate management, tokenomics evaluation, or mining strategies, we welcome you to visit the Bitdeer Learning hub for more professional blogs on blockchain and cryptocurrency.