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Topic: Understanding FPPS Pricing (Read 87 times)

newbie
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Merit: 0
October 15, 2024, 07:07:10 AM
#2
You're on the right track! FPPS (Full Pay-Per-Share) pools calculate miner payouts based on both the predictable block subsidy and the variable transaction fees. The block subsidy is straightforward, as it decreases according to Bitcoin’s halving schedule, but the transaction fees do fluctuate.
To estimate the transaction fees for upcoming blocks, FPPS pools typically use historical data, looking at the average transaction fees from a window of past blocks. Here's how it generally works:
Lookback Window: Pools use a sliding window of recent blocks, such as the last 100 or 1,000 blocks, to calculate the average transaction fees. This gives them an idea of the fee environment over time, smoothing out short-term spikes or dips in fees.
Weighted Average: Some pools may apply a weighted average to give more importance to more recent blocks, as they are more reflective of current network conditions.  YourTexasBenefits
Extrapolation: Based on the average of the past fees, the pool extrapolates this value to estimate what the transaction fees will likely be for the upcoming blocks. They assume that the near-future blocks will have similar fee patterns unless there's a significant change in network demand.
Risk Buffer: Pools may also incorporate a buffer in their calculations to protect themselves against sudden spikes in fees (like during a mempool congestion event). They might slightly underestimate the payouts to ensure that they don't overpay miners if fees unexpectedly drop.
newbie
Activity: 1
Merit: 0
September 13, 2024, 11:57:54 AM
#1
I'm trying to learn how FPPS pools settle on a price to underwrite their miner's hashrate. The block subsidy portion is predictable, but obviously TX fees vary. Are they just taking the avg TX fees over a lookback window of X blocks, and extrapolating that forward to predict the future TX fees will be in the next block?
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