A mining pool is a collective group of farmers/miners who combine their resources over a network to increase the probability of finding a proof. The individual participants of a mining pool contribute with their plots to find a proof. If the pool is successful, they receive a reward for the found proof.
The reward is divided between the individual farmers who have contributed to the pool. The share of the reward is calculated according to the area contributed.
Although it is possible to receive a reward as a single farmer without a pool, this probability decreases with an increasing number of farmers and their plots.
Example 50 plots:
Expected time for single farmers to find a proof: approx. 1/2 year
Expected time for 100 farmers at XCH Farm to find a proof: approx. 2 days
The more farmers in a pool, the more plots are available and the higher the probability to find a proof.
The farmers who contribute with their plots get a share of the reward according to their contribution of plots. This way the payout is faster and more frequent. The average profit remains the same, but the payouts are distributed more regularly.
The possibility of never receiving a reward while farming increases further as netspace grows. Plotting in a pool greatly reduces this risk.
The almost exponential daily growth of netspace means that for small farmers the chance of finding a proof is getting smaller and smaller. This is also due to the fact that there are a few farmers who make up a large part of the netspace – so-called whales. Often these provide an address to which small farmers provide plots to create a “third-party-pool”. However, the owner of this “pool” has sole control over payouts, and farmers may be stuck with their costs.
To counter these whales, it makes sense to join a public pool like XCH Farm with an appropriate protocol.
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