The special ‘coinbase’ transaction, which begins every block of the main chain, usually contains a single output with a single address (owned by the person or the pool that generated the transaction).
However, the fact that this transaction usually contains a single output is not enforced by the system. You may have a look at what an Eligius block looks ...
Generated coins mean you are getting new bitcoins that were generated with the block. Eligius has the pool setup to pay you out when you have over a certain amount of work put in at an address. Rather than having all 50 coins go to his address and then pay you out, he pays everyone out directly by having the coins paid out upon generation.
It allows the pool to avoid making new work for every single request. Instead, it just increments the time by a second and gives that to the next miner. Under heavy load (longpolls), Eligius might use the same work for up to 7,200 miners, meaning the last miner gets a work timestamped 2 hours into the future. This helps reduce stale shares significantly.
How does Eligius pay miners directly from the newly generated coins?
It simply generates the coinbase transaction to include payments directly to its miners, instead of only a transaction to itself.
What are the pros and cons of this compared to how Slush does it?
Here are some I can think of:
No transaction fees necessary for these payouts (...
By simply adding addnode=220.127.116.11 to your bitcoin.conf file then any transaction you send will automatically be broadcast and eventually make it into a block. No one but you has to add this node and nothing special needs to be done beyond this one configuration.
Now it may be true that the bitcoin-qt client will not actually allow you to send a ...
Do you want to create p2pkh output and send zero satoshies on it? Such output is non-standard (dust) and will not be relayed and mined (but it is possible)
Or may be you want to create nulldummy (OP_RETURN) output? This is possible
BTW, sometimes miners confirm non-standard transactions, for example https://blockchain.info/tx/...
In the last few hours I am getting 100% connection rejections from
Eligius. I am using a Mac and the Asteroid miner GUI. I also have
MacMiner setup. both are not failing after about a month of
successfully working. But that is not the point of the question.
Check your ISP, check luke's threads on btctalk and on eligius or their IRC chan #Eligius on ...
For the second part of your question:
Some EWallets can handle generated bitcoins, some can't -- depending on what client they are using. If the wallet refuses to support these, you could losse funds. i.e., it is best to not use an EWallet when mining on Eligius, P2Pool or any other pool that generates coins directly to the address supplied by the miner.