We are 15 days away from the initial POOL rewards period ending. As such, now is a great time to determine a longer term strategy for POOL distribution. The initial POOL distribution period has been quite successful in
- Generating ~$200,000 in weekly prizes
- Growing AUM to ~$237 million
- Growing reserves by $75,000 - $150,000 weekly (depending on interest rates)
Even with this success, there are a few issues that have become clear with current POOL distribution:
- The initial distribution schedule was very aggressive (5% of total supply over 14 weeks). We want to move to something that is more sustainable for a longer period of time. Uncertainty about when POOL distribution will end or change discourages deposits so long time frames are helpful.
- Some large whales are simply farming the POOL and don’t care about winning the prizes. These whales should not be eligible to win prizes. We’ve had many wins by small depositors but there is a perception problem that only whales win.
- The yield rates on assets are highly varied. Targeting high yield assets with POOL distribution leads to larger prizes and faster reserve growth. Targeting low yield assets helps grow AUM but doesn’t contribute significantly to prizes.
- POOL distribution is equal across similar asset types (stablecoins both get the same rate) this fragments prizes and prevents the growth of really large headline prizes ($1 million per week).
The goal with adjusting POOL distribution is to address these issues while accelerating the positive outcomes. I propose the following:
- Reduce POOL distribution to low yield non-stablecoin assets by 80% (50 POOL per day instead of 255 POOL per day)
- Reduce POOL distribution to the Dai prize pool by 65%, this is currently the pool being most heavily farmed and also has a lower average yield than USDC.
- Reduce POOL distribution to USDC prize pool by 13%. The idea here is to make a very modest reduction that would make the USDC prize pool the default prize pool with the largest prize
- For USDC and Dai prize pools, split POOL distribution 80% to sponsored deposits and 20% to regular deposits. “Sponsored” deposits are deposits that contribute interest to the prize but are NOT eligible to win. So the yield farmers should go over to sponsorship and increase the probability of small depositors win large prizes
- Keep 300 POOL per day LP incentives
- Keep 100 POOL per day to POOL pool depositors
- Plan for up to 500 POOL being allocated to new prizes pools
- Message that these rates will continue for one year. Obviously governance can change them if needed but ideally this is avoided and providing some long term clarity is important.
This plan would accomplish a few goals. 1) Net an immediate 40% reduction in daily POOL distribution 2) remove some yield farming whales and increase odds for smaller depositors to win 3) create a clear single largest prize pool to rally around to get to the largest possible weekly prize. View the details here.
These changes to POOL distribution ultimately lay the foundation for our next push but get to $1 million in weekly no loss prizes. They are important but I don’t want to lose sight of this bigger goal!
I look forward to all feedback and counter proposals! We should have the goal of getting a proposal up for governance vote 8 days from today.