AaronDaniel on Nostr: ...

quoting nevent1q…xq22

They exclude the three lowest and highest fee blocks of every 24 hour period from the payout calculations. This has important implications that create misaligned incentives between the pool and their customers.

The pool can game this formula to maximize their own profit in two ways: minimize empty blocks and maximize high-fee blocks. Minimizing empty blocks is obviously good for everyone because it produces more fee revenue for miners and pools and increases throughput of the bitcoin network.

However, this formula creates a perverse incentive for large pools to work with every shitcoin pump and dump that causes on-chain fee spikes. The pool doesn't have to share profits from the three highest fee blocks per day. Those fees contribute to mining pool profits at the expense of miner profits.

Is this how the mining pool industry should work? Is there a better model? 🤔