Thanks for your patience. While we took care of rolling out the DDOS countermeasures, a lively discussion has been going on in the ABC thread. We think the time has come to explain a few things about how ABCPool works behind the scenes.
Well-respected forum member Meni Rosenfeld ran the numbers on running a PPS pool, and while ABCPool was still young he shared those with us in a PM conversation:
Most people greatly underestimate what the risk of PPS is. You may want to have a look at my discussion of PPS here
. If you don't take a fee there is a 100% chance you will go bankrupt eventually. If you take 2% fee and start with a reserve of 500 BTC the chance is 67%, which is very high. And this is without considering losses due to block withholding, stales, invalid blocks etc.
That pdf [https://bitcoil.co.il/pool_analysis.pdf
which Meni introduced earlier] seems to offer a straightforward way to compute the fee, great!
You could use it that way. Take some reasonable number for delta, such as 1/1000. Then the fee should be
f = (B ln(1/delta))/(2R) = 173/R
so for a 10,000 BTC reserve you should take 1.7% fee.
To this you need to add losses from useless shares - if this loss is 2% you need 3.7% fee.
It's important to realize that running a PPS pool can't be done as a hobby. It's a serious business that needs a very careful risk assessment. The more accurate your loss estimate (and the lower you manage to make these losses) the more successful it will be.
Well, as you might imagine, we did not have 10,000 BTC. Neither did at least three other PPS pools that have since gone out of business or changed their reward model.
But if we could somehow decrease that enormous risk, the required buffer could also be a lot smaller. That’s why we now do what most miners do. They consider solo mining too risky, and aggregate their mining power with the mining power of others by joining a pool. Or in our case, joining several pools.
And as any pool miner has experienced, the result is as expected: less variation in the payouts we receive. In turn we are now able to pay the ABC miners their PPS rewards without a 10,000 BTC buffer, without a 10% fee, and without the immediate loom of pool bankruptcy hanging over us.
Pool growth in December was overwhelming. Meanwhile we were still compensating (1) orphaned blocks and (2) stale shares. And although the risk was reduced by pool mining, we had (3) a lot of bad luck that month. That's when we had to start charging the 4% fee.
We understand that there might be people who want to leave ABCPool, having heard this news. Maybe you want the pool operator to take the full risk of finding blocks. Maybe you'd rather take your chances on a non-PPS pool, now that you know that we do so too. Maybe you feel that we should have disclosed this information earlier. Whatever your reason, that's fine with us. Of course if you stay, you can continue to enjoy all the benefits ABCPool provides; nothing is changing there.
We hope this explanation clears things up a bit. You are free to ask any question you have about the pool's workings. We will however not go into too much detail because the competition is always watching.
There were a few comments in this thread recently that are inviting a reply:
infos like round stats, block history, top hashers would be nice to have?
Anyway they do not mine blocks or have rounds so they can't post this...
We may list block history and top hashers in the future. There are no rounds however because we pay per share, not per round. See also https://bitcointalk.org/index.php?topic=33586.msg685134#msg685134
So what I do know and can prove is that ABC was sending me hashing power and they were getting paid 105% for this.
Some of ABCPool hashpower went to Goat’s project, around a million shares.
I did not DDOS them, I do not even know why you would think that was related.
The DDOS is indeed a completely separate incident, involving thousands of hosts. Goat had nothing to do with it. Now that the countermeasures are in place, we will supply a post-mortem on the DDOS shortly.
Happy hashing everyone!
MC & Chlorine