Topic: Can someone explain BTCGUILD's PPLNS to me like I am a five year old. - page 2. (Read 16374 times)

Pay-Per-Last-N-Shares, where N is a number, typically 1/2 of Bitcoin difficulty, defining how long your share remains active.

A share is a difficulty-1 proof of work, the method all pools use to calculate miner contribution when sharing rewards. The full difficulty is around 3.5 million, it takes on average that many shares for a pool to find a block.

1. You submit a pool share (about every 10 seconds on a good GPU),
2. For every share that is active, you receive 25BTC/N any time a block is found by pool,
3. Your shares aren't discarded when a block is found,
4. A share expires after all miners have submitted N more shares newer than yours.

You can think of this as a first-in-first-out system. If you have 1% of the hashrate of the pool, 1% of the shares used for calculating reward sharing will be yours and you will get 1% of the reward anytime a block is found. An individual share might expire without contributing to your reward, or it can earn you multiple rewards if several blocks are found before it expires. This is a fair payout system as your expected reward is 100% value regardless of how or when you mine.

PPLNS should be one of the easiest hopping proof methods to understand. It's basically the proportional payout system, but each share can be rewarded on multiple rounds.

A proportional pool counts shares separately for each round, and when a block is found, it pays out the block reward (minus fees) to miners proportionally to their number of shares in that round. Then everyone's share count starts from zero for the next round, as miners begin working on the new block. This method can be exploited by only submitting shares during the beginning of each round (when everyone has very low share counts), and then stopping at a certain calculated moment, if a block is not found by the pool.

A PPLNS pool also pays miners proportionally to the number of shares submitted when a block is found, but it doesn't reset share counts after each block. Instead, it always keeps account of the last N shares, which is usually something like 10 times the current difficulty. This means that a single share will quite probably be used in reward calculations multiple times, but the payment for one share is lower on each occasion. This also means that pool hoppers can't exploit the pool by mining there only when other user's share counts are low, because they are never low.

Variance on PPLNS can be lowered by increasing the number N, so that even more shares are used in reward calculations when each block is found. The drawback of increasing that number is that new miners will have to wait longer to get their payments, but they will also keep receiving payments a bit longer when they stop mining.

I second your request. Im still a new miner myself, and I have a hard time understanding all the different pool systems.

I had some miners on fireducks pool and some on btcguild, I moved everything to PPLNS on btcguild, which right now makes me feel fairly foolish, since I'm hashing the same rates and getting, as far as I can tell a lesser award, Does this eventually pay out by sticking with it? Is it a game of probability.  If you can't dumb it down for me, just tell me to switch back to PPS. Thanks,
And I apologize for the newbish post.

Thanks,

Bsdpunk