Quote from: oceancucumber on January 09, 2015, 11:57:38 AM

Quote from: mmpool on January 09, 2015, 07:07:50 AM

The main advice I'd give is that picking PPS for the payment method is a bit risky. This means you'll be paying miners out of pocket until you find a block. You are taking the risk of variance. There's a paper around somewhere that shows a formula for computing what sort of buffer you need, in bitcoins, to run a PPS pool with a low risk of ruin (ie. running out of money to pay miners). It's large - you'll be need a few hundred thousand dollars of bitcoins if I recall correctly.

The other downside of PPS is you are open to block withholding attacks. A miner mines with you but withholds all solutions that would solve a bitcoin block. You are still paying them PPS so they lose nothing. The pool loses a lot.

Interesting... Seems like PPS isn't ideal for a new pool starting out. Would it be better to start with something else until blocks are found, then switch to PPS?

PPS itself isn't ideal for a pool operator as the pool takes on all the risk. Like mmpool states, the miner gets paid no matter what and it's up to you to figure out how to ensure the payments happen, regardless of whether or not your pool has found a block. Here's a simple example of what I mean:

Pool finds a block of BTC, yay! Unfortunately, it took twice as many shares as expected to do so. You have to pay your miners 50BTC but you've only got 25BTC from the block reward. Orphaned blocks are bad, too. You as the pool operator expect to have that 25BTC to pay your miners, but you don't because the block the pool submitted was orphaned.

There's a reason that the vast majority of the pools that do offer PPS do so at an extremely high fee percentage (4% or more). There is currently only 1 PPS-based pool that I know which charges 0% fees, and that's BitAffNet. You can find quite a few threads on these forums about them - I'd suggest looking them over.