Introduction of a New Pool
We are excited to announce that Luxor, one of North America’s largest mining pools, is joining our community by offering a new PPS pool for miners to choose from.
Luxor, a Seattle based mining pool for Bitcoin, ZCash, Horizen, Decred, Sia and a handful of other coins, are experienced in delivering high-quality pools, with strong uptime and customer service. We are thrilled they are bringing this knowledge to the Dash Mining Industry!
What is a PPS Mining Pool?
PPS pools act as buyers of hashrate. These PPS pools purchase miners hashrate at the expected value minus a discount. For example, a 2% PPS pool will purchase miners’ hashrate at 98% of the expected value of mining Dash.
Mining pools are constantly determining the value of hashrate based on the PoW emission rate and the network difficulty. This gives mining pools a live quote on how much hashrate is worth (known as the PPS rate).
Once the hashrate is acquired from miners, the pool uses it to build blocks and submit it to the Dash network. If the hashrate produces a share that is below the network target then it is considered a valid block and is added to the Dash Blockchain. The miner, in turn, is rewarded with the block reward + transaction fees. For a more detailed guide on the mining process you can check out this article.
The Difference in Mining Pools Payment Methods
Aside from PPS pool, there are also PPLNS pools in the ecosystem
Payment Methods: Pros and Cons
Most mining pools use either PPS or PPLNS to distribute the proceeds from block rewards to miners.
On the one hand, Pay Per Last N Shares, or commonly known as PPLNS, offers payment to miners as a percentage of the shares they contribute to the total shares (N). As you mine, you earn shares meaning the more hashes you do, the more shares you earn. In layman’s terms, a miner with 10% of the pool shares would receive ~10% of each block the pool finds (minus pool fees).
What’s the caveat for PPLNS? Mining pool luck is probabilistic and therefore can have wild variance in the short term. (i.e. it’s not rare to see mining pools finding significantly less or more blocks than what they should). This means that the miner assumes the probability/luck risk. In the long-run, it should balance out to the statistical mean if the pool is properly managed.
On the other hand, Pay Per Share, or commonly known as PPS, miners are paid on what is statistically probable rather than what occurs. What this system ultimately does is remove the “luck” and hence variance in a miners payout. Instead, the pool operator absorbs all the risk of variance. For the most part, this structure makes pools accountable for the efficiency and security of their pool as the loss is borne by them and not socialized over the group of miners.
Both payment systems have their merits. PPS is generally preferred by miners (holding all else equal) given they do not have to take on the additional risk of variance (luck).
Is Solo Mining Possible?
Mining is an attempt to find the Number Only Used Once (NONCE) that unlocks each block to receive the associated reward; the more attempts (hashes) you can perform per second the higher the chances you have to get the reward (i.e. the more lottery tickets you have the higher your chance of winning the lottery).
As an individual miner typically does not have enough hashing power to consistently find blocks themselves and do not have the liquidity to deal with luck this is usually only an option for experienced and well equipped large mining operators.
Ultimately, the possibility for solo mining depends on a miner’s hashrate size, liquidity, and risk tolerance. However, for the most part, miners choose to sell directly to a mining pool.
Benefits of More Pools
There are two major benefits of adding new pools into the ecosystem.
Dash has a unique consensus mechanism of Masternodes and Miners. This balance makes it much more secure.
However, it is still important for the network to be decentralized so that no one entity has control over it. As of now, the largest pool has around 34% of the Dash PoW hashrate. While not an immediate risk, especially when taking Dash ChainLocks into consideration, 34% is high for a mining pool. In addition, the majority of the Dash Hashrate is managed by a geographic concentration of mining pools in China. Adding new mining pools helps further decentralize the network by separating the management of hashrate and increasing competition.
For the most part, miners are effectively sellers of hashrate to mining pools. We have thousands of Dash miners, yet, only a handful of mining pools. By adding more pools we are increasing the options for miners to choose from when deciding how to liquidate their hashrate and earn DASH as compensation.
Whether you are an existing Dash miner, or a new one we encourage you to check out Luxor and help decentralize the proof-of-work network. Luxor offers a 2% PPS rate. However, until the end of May, the first 25 miners to join Luxor’s pool will enter at 0% until the end of May!