What are the different common pool payout schemes (e.g., PPS+, FPPS, PPLNS)?

Explaining the differences between the most common Bitcoin mining pool payout methodologies

There have been more than a dozen different pool payout schemes in Bitcoin mining pool history, but there are only three distinct payout methodologies remaining today: Full-Pay-Per-Share (FPPS), Pay-Per-Share Plus (PPS+) and Pay-Per-Last-N-Shares (PPLNS).

In Bitcoin mining, finding the right block hash (i.e., mining a valid block) is based on probability. The higher the pool hashrate, the more likely the block will be mined in a given time interval, but there is no guarantee that a block will actually be mined. Therefore, for any given time interval, there is a “luck” factor, meaning that the pool can find more or less blocks than is expected based on its hashrate. The variance between expected and actual number of blocks mined should trend to 0 over a long period of time. The key difference between the three payout methods lies in who absorbs the “luck” risk, the pool operator or the miner.

As shown in the table below, in the FPPS model, the pool operator pays out the expected value to miners for the block subsidy and the transaction fees based on their hash contribution to the pool, therefore absorbing all the risk on when the blocks are mined. In the PPS+ model, the pool operator pays the block subsidy part of the reward based on the expected value of hashrate, but pays the transaction fees part of the reward based on the actual blocks mined and the transaction fees within them. The PPLNS pool operator do not pay miners until actual blocks are mined and then distribute the block subsidy and transaction fees to the miners proportional to their hashrate contributions, therefore the miners are taking all the risk related to the pool luck.