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PROP (Proportional Reward)

PROP (Proportional Reward) is a mining pool payout model where miners are rewarded based on the proportion of shares they contribute to the pool relative to the total shares submitted by all miners. In the PROP system, miners receive a percentage of the total reward (block reward + transaction fees) in direct proportion to their share of the pool’s total work.

PROP (Proportional Reward) Explained in Simple Terms

PROP (Proportional Reward) is a payout model used by mining pools to distribute rewards to miners based on how many shares they contribute to the pool relative to the total number of shares submitted by all miners. A "share" in this context is a partial solution to the mining puzzle.

When the pool successfully mines a block, the rewards (block reward and transaction fees) are divided among miners based on the proportion of shares they contributed to solving the block. For example, if you contributed 10% of the total shares in the pool, you would receive 10% of the block reward.

The PROP system is simple and transparent, as miners are paid directly in proportion to their contribution. However, since payouts are only made when the pool successfully mines a block, the system can result in more variability in earnings compared to models like PPS, which offer guaranteed payouts for each share submitted.

How PROP (Proportional Reward) Works

In the PROP model, miners are rewarded based on their share of the total mining effort. Here's how it works:

  1. Shares Submitted: Each miner in the pool submits shares by solving partial mining puzzles (nonces) assigned by the pool.

  2. Pool Mines a Block: Once the pool successfully mines a block, the total reward (block reward and transaction fees) is calculated.

  3. Reward Distribution: The pool’s reward is distributed among miners based on the proportion of shares they submitted during the mining process. If a miner submitted 10% of the total shares, they will receive 10% of the block reward.

  4. No Guarantees: Unlike PPS or FPPS models, miners in a PROP pool are only paid when the pool successfully mines a block. If the pool does not find a block, miners do not receive any payouts.

Since miners are paid based on their contribution to the pool’s mining efforts, the PROP system rewards long-term and consistent participation. However, payouts may be inconsistent, especially during periods when the pool does not find blocks as frequently.

Example of PROP (Proportional Reward) in Practice

Let’s consider a mining pool that successfully mines a block with the following reward:

  • Block reward: 6.25 BTC

  • Transaction fees: 0.25 BTC

  • Total reward: 6.5 BTC

The pool has 1,000,000 shares submitted by all miners, and the distribution of shares is as follows:

  • Miner A contributed 100,000 shares.

  • Miner B contributed 200,000 shares.

  • Miner C contributed 700,000 shares.

The total number of shares submitted by all miners is 1,000,000 shares.

To calculate the reward distribution:

  • Miner A’s reward = 100,000 / 1,000,000 shares = 10% of the total shares → 10% of 6.5 BTC = 0.65 BTC.

  • Miner B’s reward = 200,000 / 1,000,000 shares = 20% of the total shares → 20% of 6.5 BTC = 1.3 BTC.

  • Miner C’s reward = 700,000 / 1,000,000 shares = 70% of the total shares → 70% of 6.5 BTC = 4.55 BTC.

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Frequently Asked Questions

Still have questions about PROP (Proportional Reward)?
In a PROP pool, rewards are calculated based on the proportion of shares each miner contributes to the pool's total shares. If a miner contributes 10% of the total shares, they will receive 10% of the block reward. The system is simple and fair, but payouts are only made when the pool successfully mines a block.
The main advantage of PROP is that it is straightforward and transparent. Miners are paid exactly in proportion to their share contributions, making the system easy to understand. Additionally, there are no complex payout systems or guarantees, which can simplify the mining pool's operations.
The disadvantage of PROP is that payouts are not guaranteed and depend on the pool successfully mining a block. This means that miners may face long periods without payouts if the pool is unable to mine blocks regularly. Additionally, the variability in payouts can be higher compared to models like PPS, which offer guaranteed payouts for each share.
PROP may not be the best choice for new miners who prefer predictable and consistent payouts. Since payouts are only made when the pool mines a block, new miners may face longer waits for payouts, especially if the pool’s block mining rate is slow. More established miners may prefer PROP for its simplicity and fair distribution of rewards.
In comparison to PPS (Pay Per Share), PROP offers more variability in payouts. PPS guarantees a fixed payout for each share submitted, regardless of block mining success, while PROP only pays miners when the pool successfully mines a block. Although PROP offers fairer reward distribution, the absence of guaranteed payouts means it can be less predictable for miners, especially during block droughts.
Yes, miners can join or switch to a pool that uses the PROP payout model at any time. However, miners should consider factors like pool fees, mining hardware, and overall performance when choosing a pool. PROP may be a good option for miners who want a simple, proportional payout system and are willing to accept the variability in payouts.