Quote from: cuesta on February 28, 2014, 12:10:22 PM

I have a conceptual question, following on from the observation that the profitability of any pool seems to be inversely proportional to its size..

First just want to say I have a huge amount of respect for PoolWaffle, I have no idea how to set up a pool, sort out the coin switching, keep track of the payments, ramp up the pool hash rate steadily and evenly to be I think the biggest switching pool on the planet now, keep on top of the support and be nice about it. Chapeau, as they say in cycling..

My question ...is there a "right size" for a coin switching pool ?

If you are small, you can hit very small profitable coins, run the risk of forks, orphans. A skilled operator has the potential to be extremely profitable. If you are very large then you can't hit the small coins instead go for a steady income on the larger ones. If you are too big then even if you try to hit the small coins as well, and you succeed, you won't actually make much difference to the overall profit per mh since the fraction you can devote to these is negligible in terms of the mh of the pool as a whole.

It seems pool size is a bit like an investment strategy. High risk of high return versus low risk of low return, and this is implicit in the pool total mh. To mitigate this perhaps PoolWaffle could make the risk selectable in terms of the mh submitted by a user, say a score of 1 to 10. This would make everybodys payment different, but would allow the risk profile of the pool to be set by the users. The whales need to be conservative because they consume enough electricity to power a small town, whereas the smaller hobby miners might like a flutter, some may not. Profitability versus mh risk score would be very interesting, and again mirror what goes on in the investment world.

There would be a limit on how much high risk mh there could be, but if we assume that people like sfire need to be conservative, it might actually work out..

(disclaimer - I'm not in the financial business !!!)

I still believe there is a place for Wafflepool Lite - where it is a single stratum with a limit of 500Kh/s per user & a maximum pool size of 1.5Mh/s. This could use the original Wafflepool algos & switchers & payouts without crushing the smaller coins.