Transparency Policy

Lincoin.io Transparency Policy

Lincoin Mining Pool Transparency Policy

It is our commitment to our users and to the integrity of the Bitcoin blockchain to clarify and disclose our policies, procedures and rewarding method. While Bitcoin is built on transparency and trust, it is our aim to bring the same thing to mining pools.

There are many rewarding methods used by different mining pools such as PPLNS, PPS+ and FPPS. Each of these methods has their own upsides and downsides but FPPS rewarding method is the only one that could be 100% transparent. The problem with other rewarding methods is that  you should trust the authenticity of the mining pool but in the FPPS rewarding method you do not require to trust anyone in order to validate your income. Another benefit of real FPPS rewarding is that the scale and the chance of the mining pool will not affect your revenue.

 

 It should be noted that many pools claim to be using FPPS but practically they are not and they manipulate the hashrate and block rewards! In this document we will explain how you can validate if your mining pool is using FPPS rewarding in an authentic way and will explain how Lincoin will guarantee that.

First, we should explain a few terms:

Mining: Mining is the process of guessing a number, known as nonce, that would satisfy the requirements of the difficulty target. Whenever the right nonce is guessed the hash of the block will become equal or less than network difficulty target. 

Difficulty: Network difficulty or simply difficulty, is a value set the blockchain consensus in order to keep the block time close to 600 seconds. In Bitcoin blockchain, the difficulty is recalculated every 2016 blocks (~2weeks). The higher the difficulty, the smaller the target. Which means as the network difficulty goes higher it will become more difficult for the miners to guess the right nonce.

Pool Difficulty:  It could take a single device many years in order to be able to find a feasible nonce. But as the mining pool we require to validate every miner is playing fair, thus we simplify the difficulty target for each device separately to make sure they could find a valid nonce in matter of seconds and prove their fair play by submitting that answer to the pool.

Share: Share is the solution to the mining tasks (work) that a mining device submits to the pool. The pool will accept and score that submission after validating that. The scoring will take place based on the difficulty of that specific submission.

Hash Rate: Is a number that represents how many accepted shares a mining device has contributed to the pool in a specific period of time. Hash rate is calculated using the formula below:

Hashrate= sum((difficulty of shares) *2^32)/time

The hashrate for a generic device somewhere between 5 and 110 Th/s.

Effective Hashrate: The real instantaneous hashrate of a mining device is so unstable. The pools filter that out with 2 main purposes.  First, is to get a smooth reliable chart and number for calculation purposes. Second, in order to discourage pool-hopping among their users. The most common filter used by the pools is Exponential Moving Average (EMA). The effective hash rate, used for rewarding, is usually the instantaneous hashrate filtered by EMA.

PPS Rewarding: Pay Per Share (PPS) is a rewarding method used by mining pools. In this method, the miners are paid according to the probability of their success in mining regardless of their success in actually mining a block. The baseline for determining the probability of mining success is the block reward (6.25 BTC), network difficulty and the block rate of 1 block per 600 seconds. The PPS reward is calculated using this formular:

 

PPS Reward = (6.25) * Hashrate (Th/S)*600/(2^32*difficutly)   

 

FPPS Rewarding: Full Pay Per Share (FPPS) is a method that takes the transaction fees (Tx fees) into account. The miners’ revenue consists of two elements, block reward and Tx fees. While the block reward is 6.25 BTC per block (for now) the Tx fees per block depends on the fee paid by the Bitcoin transaction senders. After the recent Bitcoin halving that reduced the block reward from 12.5 BTC to 6.25 BTC; the Tx fees has become a lot more important for miners and form as high as 25% of miners’ revenue. In FPPS rewarding in addition to the PPS reward; the same PPS formula is used to reward the miners according to their probability of success in mining a block. The only difference is that instead of 6.25, the average Tx fees in a specific period of time (e.g. 1 Day) is used for calculations.   

1 Day FPPS Reward= 144* (6.25) * Hashrate (Th/S)*600/(2^32*difficutly)

144* (Average Daily Tx fees) * Hashrate (Th/S)*600/(2^32*difficutly)

 

How to validate your mining pool?

There are many websites that publish the data of Bitcoin blockchain on a regular basis. For instance you may download the daily block data from Blockchain.com at the following address:

https://gz.blockchair.com/bitcoin/blocks/

This data could be used to calculate the calculate the daily average of Tx fees in order to be used for reward auditing.

Note that in PPS and FPPS rewarding the baseline for calculations are 144 blocks/day and the average daily Tx fees is used for this purpose. In other words the mining pool guarantee they pay you for 144 blocks per days whether 170 blocks or 100 blocks were mined on that specific day.  

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