What makes Chia pooling so unique?
Chia ‘Pooling’ is the hot topic these days since netspace growth makes it unlikely that any user with less than 100 terabytes will receive consistent rewards. In order to allow fractional rewards for users that don’t require your private keys, Chia.net is implementing pooling for Chia. Chia pooling is unique to other crypto currencies for three reasons, 1. Blocks are found by the actual farmer and not the pool, 2. Farmers receive a ⅛ of the block reward for finding the block, 3. Rewards are distributed directly to the pool users by Chia and not distributed out of a traditional hot wallet.
1 – Blocks are found by the actual farmer:
Chia is unique in that blocks are found by the actual farmer, who then keep ⅛ of the block and send the rest out to the pool based on the Chia pooling protocol (details to follow from Chia.net). This means that even though farmers are pooling resources together, it is not a centralized pool that is finding a block, but the decentralized user themselves. This makes Chia pool even more decentralized than BTC (massive BTC farms) or ETH (32 ETH staking at $100,000+ or fractional ETH stakes through services like Coinbase). Chia’s vision has always been to keep the nakamoto decentralized consensus but keep it green, which is different from all the other big crypto currencies out there today. This means a scalable and secure blockchain unlike BTC and ETH.
2 – Farmers receive a ⅛ of a block reward:
Blockchain pooling is where individual users pool their hash power together to find blocks and split the rewards (source: https://www.chia.net/2020/11/10/pools-in-chia.html) . For Chia, this is a ⅛ to block finder, ⅞ to pool block reward system. This means for every block found, the block finder gets to keep ⅛ of the block reward, then the rest is distributed to the pool members based on % contribution, after pool fees (pool fees are always optional with Poolchia.com). Contribution is usually measured shares contributed to find the block. (Source https://ethereum.stackexchange.com/questions/4529/for-pool-mining-what-exactly-is-a-share). ETH and BTC use a Pay per Share (PPS) or Pay Per last N shares (PPLNS) model but the Chia method is currently unknown and will need to be updated once the Chia Pooling documentation is released. Poolchia.com will work with the community to pick the most profitable/fair method for our users based on what is available from the Chia.net team.
3 – Rewards are distributed directly to the Pool:
Lastly, Chia pooling will not require a centralized hot wallet which then distributes out to other wallets, such as what exists on nicehash or miningpoolhub today. Centralized wallets become a very lucrative vector for hackers to target when trying to steal funds as opposed to distributed cold wallets (see Nicehash 4,640 BTC hack of 2017 https://www.coindesk.com/nicehash-hack-customers-refund-bitcoin-ceo). Chia solves this by having the block distributing the pool rewards directly to Chia pool farmers’ wallet so that it is not easy to attack the pool wallet which makes it more secure for everyone!