Sell Shares for Payouts
Need for Marketplace
When the pool grows so that all miners' payouts cannot be included in the bitcoin coinbase, alternative methods are needed to pay the smaller miners. Given the pool requirements of Unilateral Exits for all miners, coinpools/joinpools using covenants will provide a scalable payout mechanism for all miners on a pool with unilateral exit. However, covenants might take a while to be included in bitcoin and there are ways to solve the payout for P2Poolv2 problem with the current bitcoin protocol.
P2Poolv2’s first effort to solve the payouts problem is to enable a marketplace for shares where miners sell their share to the highest bidder. The buyers of the shares mine or buy enough shares to be included in the coinbase. The payouts for larger miners or market makers are made through the coinbase payout path.
Constraints From Sharechain on Marketplace
The sharechain imposes constraints on the design of the market place:
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Shares need to be confirmed before they can be traded.
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Shares cannot be be traded once their root coinbase height is out of the PPLNS window.
These requirements are explained in the PPLNS Accounting section.
Buying and Selling Shares
A miner that has mined shares and has a coinbase on the sharechain can spend the share instead of waiting for the payouts to accumulate over the PPLNS window. The seller is therefore reducing the risk of pool hashrate changes and is also getting a payout today for what will come slowly over two weeks' time.
The figure below shows a miner being paid repeatedly over a PPLNS window each time a bitcoin block is found - assuming the miner is being paid from the coinbase.
The next figure shows a miner selling the shares at the start of a PPLNS window, once the maturity window is passed, and gets a lump sum payout immediately. While the buyer of the share get smaller payouts directly from coinbase over the rest of the PPLNS window.
The two figures capture the value of trading share.
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Miners are offloading their risk for immediate payouts.
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Market makers are buying the risk for discount in the share price.
How the market will decide on the value of the shares is covered in Pricing Shares As Options page.