A single miner may go years without finding a block. Pools exist to convert that lottery into a steady income, and the method they use to divide the proceeds is where the differences between them lie.
Shares measure contributed work
A pool sets a target far easier than the network's, and members submit solutions meeting that easier target as they search.
Those submissions, called shares, prove effort was expended on the pool's work without being valid blocks themselves. Occasionally one clears the real target and becomes a block.
Because shares arrive frequently and predictably, the pool has an accurate ongoing measure of each member's contribution, which is what payment is based on.
Proportional schemes pay from what is found
The simplest arrangement waits for a block, then divides the reward among members according to shares submitted during the round.
Members carry the variance, since income depends on how often the pool finds blocks. A long unlucky stretch pays nothing to anybody.
These schemes are also vulnerable to pool hopping, where miners join late in a round when the reward per share is temporarily favourable and leave afterwards.
Score-based schemes look back across rounds
The widely used alternative pays from the last several rounds of shares rather than the current one, weighting recent contribution.
This removes the hopping incentive, because a miner who leaves forfeits the value of shares still inside the window, and one who joins receives nothing for a period.
Variance is reduced but not eliminated. Payouts still depend on the pool finding blocks, and a miner who stops has income that tapers rather than stopping cleanly.
Pay-per-share moves the risk to the operator
Here the pool buys each share at a fixed price derived from its expected value, paying immediately regardless of whether a block is found.
Miners receive predictable income and the pool absorbs the luck, which requires it to hold reserves deep enough to survive a long dry spell.
That service is priced. Pure fixed-payment schemes carry the highest fees, and many pools use a hybrid that pays a fixed amount for the block reward while sharing transaction fees as they arrive.
Fees are not the whole comparison
Stated fee percentages are only comparable within the same payment scheme, since the schemes distribute risk differently.
Payout thresholds, transfer costs, how transaction fees and other block revenue are handled, and how promptly the pool credits work all affect realised income.
Pool size matters too. Larger pools smooth income but concentrate the network's block production, which is a consideration for the chain even when it is not one for the individual miner.