A Sustainable PoolTogether

1

There has been a significant amount of pushback on PTBR-12 in the forums and on Discord. People have voiced a number of concerns and fears, but the strongest theme was questioning what a sustainable PoolTogether looks like, and whether the proposed deliverables achieve it.

My goal in this post is to present our vision of a sustainable PoolTogether in the hopes of finding common ground and reaching consensus among Poolers. Let’s start with yes; let’s agree to our destination before diving into details of how we are going to get there. It’s much easier to change our path if we know the destination.

A Sustainable PoolTogether

Let’s imagine PoolTogether at a point in time in the future when the core has stabilized and the protocol is growing outward. There are two layers to this picture we’ll want to look at; the protocol and stewardship.

The Protocol

In the future:

  • The protocol is deployed to all chains, and incorporates hundreds of assets. Each chain’s grand prize is huge because it’s aggregated from so many sources.
  • Users deposit whatever token they wish, and win prizes in that same token for a simple, intuitive experience.
  • POOL staking is available to encourage holding for those with POOL.
  • The POOL monetary policy is set because the ability to mint POOL has been renounced and the POOL in the treasury is burned or disbursed.

This means that:

  1. The user experience is simple. Users deposit their favourite asset, they win their favourite asset.
  2. The liquidity is streamlined. Conversion from prizes to assets and back is done largely internally.
  3. The system incentivizes long-term POOL holders and provides a stream of value.
  4. There is a finite and capped amount of POOL in the system.

The protocol has been fully realized, with a strong user experience and a solid tokenomic backbone.

Stewardship

A protocol is nothing without its people; the stewards of the protocol. This will look very different in the decentralized future.

Each deployment of the protocol is autonomous and permissionlessly extensible, which means anyone can experiment with new vaults, assets, liquidation mechanisms, or otherwise. A fully decentralized, permissionless protocol can have any number of experiments running at the same time.

It’s important that there is funding for development, bd, marketing, design or otherwise. Each chain, asset, or partner will have their own needs, so decision making must be decentralized in order for it to scale.

Stakers can choose to keep their rewards, or band together in groups to share spending for the efforts above. These groups will coordinate via multisigs, token-weighted voting DAOs, or any other means.

There will no longer be PoolTogether “governance”, but a multitude of cooperating groups. We will still need Discord and the forum, but it will be a place for collaboration and coordination.

Summary

This vision will allow us to realize a fully decentralized protocol and sustainable stewardship.

The Roadmap

We’ve made great progress towards this future. The past six months were a challenging R&D phase, but we proved the autonomous protocol worked. The next major steps are to complete the user experience and finalize the tokenomics so that the protocol is sustainable.

  • Autonomous PoolTogether V5 Core
  • POOL Staking
  • Prize Compounding (prizes are in your deposit asset)

These are the two remaining major pieces that need R&D.

The Consensus

We need to move forward together if we want to achieve our goal. By establishing a shared vision we can rally around what we need and focus and align our efforts. This will be our north star and inform everything we do.

I’ve created a Snapshot vote that lets POOL token holders signal whether they support this vision or not. Let’s establish our common ground.

Snapshot Vote

7 Likes
2

I do agree with this.

I’d like to hear more details about the final economics of the token, because at the moment we are scaring away every mr_whale that knoks our door.

Because if we spend all our stables - and we are on the way to spend them - we will need to spend POOL, and for this we need mr_whale to buy and hold and have profit while holding.

Can you go a little deeper on the topic?

1 Like
3

Thank you, @Brendan, for taking the time to share your vision for the protocol. This vision looks pretty far into the future and comes back to where we are now. And much of this should like the engineering solution to engineering problems, which are fine to solve in the medium term.

Since we have a finite amount of resources in the treasury that are liquid and can be used to fund development, bd, marketing, design or otherwise, we do need to focus on a shorter-term roadmap that looks at the next six (6) months with a vision on how to scale, how to address liquidity, and how to increase adoption with incentives, new yield sources, or a combination of both. I know vision statements typically look far ahead, but we have to focus on a shorter timeframe if we have hopes of making it toward a longer-term vision.

I do appreciate the roadmap, but it doesn’t define OKRs for how we solve the problems we current face, which is the core of what people have raised in the last several days. I don’t believe we can look so far ahead without clearing the present hurdles.

It might be beneficial to consolidate the current problems we face, so we can discuss the potential solutions and form OKRs as a community. I previously shared that the GOOSE framework Lido uses is beneficial, but really, any process that allows us to define a six-month roadmap with clearly defined OKRs and a path toward cutting costs wherever possible to implement austerity measure until we achieve growth in V5.

In my view, the biggest problems are:

  • Lack of clearly defined objectives and supporting key results
  • Lack of adoption and growth, which creates an environment where V4 is still more attractive than V5
  • Severe liquidity issues that affect the core protocol and the profitability for people running liquidation bots
  • Price volatility due to liquidity issues, which create a bad product experience if people don’t sell their POOL prizes for their desired assets soon after they win. This conflicts with the benefits we market, which is a passive experience where you can win and prizes go directly to your wallet without needing to check every day
  • Lack of sustainable incentives to deposit (i.e., attractive yields, LM (which we have plans for with existing OP but hasn’t been effectively communicated/executed with existing council members), and larger prizes). This is why scaling TVL is crucial in the shorter term.
  • High rates of spending on deliverables that are not 100% focused on growth at the moment

I’m sure others have thoughts as well, but this is my opinion on the current shared vision and roadmap.

9 Likes
4

Let me add this: we really need to change our vision of the token.
We need new holders, new investors, new whales buying POOL.
Every new person buying and holding the token will talk about PT, use it, shill it to friends, it is a snowball effect.

But what we have done in these years is to scare investors away, let’s take Discord as an example:

When a possible mt_whale comes on Discord we welcome him with:

no market cap talk - forbidden
no tokenomics talk - forbidden
no price talk - forbidden
no revenue talk - forbidden and also despicable

Basically we tell them to deposit on the vault or GTFO, because every token talk is speculation and we are better people and we don’t need them.

And guess what? they GTFO without even contributing to the TVL!

This is how we ended with a token with no liquidity and a market cap around $1M while - by reasonable comparison - projects like us are valued 10 times or 100 times more.

We also did put concentrated liquidity in a range that has been broken in the lower bound by the price: now we lost all ETH in that v3 LP and it is not contributing anymore to the swaps. If it stays in place it will even slow down the token re-appreciation once the price get back in that range.

My proposal is to:

  • Share the $POOL tokenomics plan now, even if it will be put in action in the future;
  • Open the #⁠pool-token channel on Discord to economics talks, market cap talks, tokenomics talks and the like, in the boundaries of legality and common sense of course;
  • Remove the v3 liquidity and find some ETH and POOL to add to the V2, so that the price can rise again. The v3 liquidity will only stop it from getting back up.
  • Stop accusing potential buyers to be here just for the speculation. Of course some of them are, so what? This is crypto. Some of them will instead want to participate in the protocol and have some revenues for their money.

This hopefully will give us more visibility as a side effect, and will generate some money once we spend all the stables and we will forced to sell the POOL we have in the treasury.
I really would like to use that POOL spending as a last resort, we should spend less next months instead.

1 Like
5

While I appreciate this post and it’s attempt to satiate one of the many topics discussed in the last 24 hours, it does not address the other concerns identified.

This post does not speak to the concerns about draining the treasury and the high costs being put to vote.

This post does not provide a path or methodology to creating community auditable goals. Brave has provided the GOOSE methodology a few times and talked about some kind of OKR. I’ve brought up some adjacent stylization of KPIs. Whatever alphabet you want to throw at it, the teams continue to lack accountability and are just giving lists with checkboxes.

This post DOES appear to be deflecting, putting up a vote that is distracting. Yes, it is an important topic to identify, but misses the mark on speaking to all the issues.
The community is still not being heard.

I fear this vote is here to sate the masses so they feel good about things, to then hopefully get enough good vibe backing to push the next PTBR through.

It’s a close vote right now, they only need to sway one person or rerun the vote with a few more ambivalent voters. This effort seems strategic and shallow.



EDIT:
I’m not voting for this, while I do agree with some of the scoping here, more needs to be hashed out around the issues than just the vision. This is too far looking. With our current spend, we won’t make it to the end of 2024 let alone where this post is looking.

3 Likes
6

Also I’m not sure it this is entirely proven. All the public vaults have needed to be rebuilt due to different issues. It’s not autonomous, it’s still very dependent.

1 Like
7

The vote is important because it will inform a roadmap for a direction we can all agree on. It’s clear that the PTBR hasn’t been enough.

Edit:

By roadmap, I mean:

  • Literal roadmap of items that we need to build and why
  • Burn down chart showing how we can manage that cashflow while making those deliverables
3 Likes
8

Thanks @Brendan for putting this together. It is clear and thoughtful, and I’m strongly aligned with this vision.

That said, I also think @BraveNewDeFi did a great job of clarifying the “bridging” challenges that need to be addressed to make this vision a reality.

I’d be interested to know your thoughts on those specific items, and how you’d recommend prioritizing and tackling them over the next six months to achieve the long term vision.

Summerizing the challenges as I understand them, they are:

  1. OKRs: how can we, as a community, best define and prioritize measurable objectives? (GOOSE framework has been mentioned, and there are others)
    OBSERVATION: I know enabling this well takes a lot of effort, and I would view funding this work as strategic, high-value spend.

  2. TVL: the chance to win a huge prize is a strong incentive to deposit… once there is a huge prize. What are some concrete scenarios (yield sources, required # users, required average deposit, time windows, etc.) to get the first 100k grand prize?
    OBSERVATION: Focusing effort to generate the largest possible prizes on a single chain feels like the best use of limited resources today… rather than allocating effort for many deployments that are not mutually reinforcing.

  3. Liquidity: What would you change about PoL, or liquidity incentives, etc. (if anything) to improve the experience for users today?

  4. Incentives: I’ll expand this to include any subsidized growth activity, including marketing, influencer engagement, etc. What do you believe are the highest ROI opportunities, and what is the best way to launch them?
    OBSERVATION: OP incentives roll-out for v5 felt… haphazard. In every case, the protocol should always gain more than the treasury spends, and this should be planned and measured to avoid waste, and reported for accountability purposes.

  5. Spending: Because v5 involves bootstrapping POOL as a utility token, let’s assume POOL is not an employable treasury asset until after v5 bootstrapping is complete. So… how do we best focus spending to get to a sustainable v5? What can we say no to right now so we can say yes to the critical things?

Side note on revenue: I’m glad that the core protocol does not incorporate fees - I think the vault-level, optional fee approach is good design. However, I also believe the community would benefit from a thorough assessment of bot, vault, PoL, and other potential revenue mechanisms so we understand how v5 functions as an economic machine at various TVL thresholds ($1M, $10M, $100M)… and which of those mechanisms (if any) could help keep the work alive before the “big prize” flywheel kicks in. Alternately, if the treasury - through G9 or Pooltime - is actually subsidizing the protocol through net-loss bot, RNG, or other on-chain activity… that would be good to know too.

Thanks as always for the difficult and vital work you’re doing!

3 Likes
9

i appreciate everyone putting time and effort into these decisions. i think we all agree that PT with enough scale is a wildy useful and sustainable thing. how to get from this runway to that scale is the important thing to measure.
[edit] while i have my pool delegated to gabor and stand with the votes he has made on these issues, id like to vocally support the vision outlined by brendan in the snapshot vote.

i think this issue is addressed by the Prize Compounding mechanic Brendan wants R&D on, right? it would drive trade volume which would incentivize scaling liquidity with prize volume. should help (though maybe not entirely solve) a bigger liquidity issue.

2 Likes
10

No, this doesn’t solve the larger issue. The only sizable liquidity for POOL at this point is on Uniswap V2, where there is 13.04 WETH and 99,020.65 POOL paired in the whole liquidity pool. Because POOL is the prize token, there needs to be enough liquidity to allow bots to buy POOL to power liquidations without incurring too much slippage. There also needs to be enough liquidity to allow Poolers who win to swap POOL to their desired asset or, yes, in the future to prize tickets. However allowing people to swap POOL to prize tickets doesn’t solve the underlying issue: there’s barely any on-chain liquidity for the POOL token.

If TVL grows and we achieve a grant prize of $10,000 (~35370 POOL) and someone won and went to swap to USDC, they would incur a 26.5% price impact on their prize winnings. In my mind, the goal should always be to allow someone to win the grand prize at scale and incur minimal price impact.

Uni POOL
Uni POOL735×1027 47 KB

However, the larger problem in the short-term is that since POOL is the prize token, the more volatility in the value of POOL, the worse user experience it provides. If you win POOL on a Wednesday and check to see that you won $100 in prizes that day and you go to swap to your desired prize asset on Friday to see that your prize is now worth $87, I would imagine you’d be a little disappointed and confused. Since launch the volatility of the prize token to impact the value of prizes over a longer timeframe. A prize compounding interface won’t solve this. Only addressing the core issue of increasing protocol-owned liquidity (POL) will.

I’m happy to share some more detailed thoughts on this later this week, but the TL;DR is that a prize compounder feature in the user interface won’t solve this in the short-term and prize hooks won’t work without sufficient liquidity on chain without costing user’s more value in prize assets when swaps are made.

3 Likes
11

This is the reason why, when we still had plenty of ETH in the V3 position, I asked to move it to a fullrange V3 or better to V2.

We are still in time: POL should be full range, price agnostic in order to work in any situations, like this.

V3 was more efficient no doubt, but V3 has a cost to pay and the cost is that eventually it depletes, while V2 is forever.

If $POOL price appreciate we will have more liquidity and more efficient swaps as a side effect even with just a well funded V2. We could use some funds we are saving each quarter to add to our POL V2.

And as I say here Revenues are not evil, we need to value $POOL more we need to give some love to $POOL: the fear of speculation is right but we cannot fight the speculation just by killing the token. We have to value the token more, liquidity will come as a side effect, visibility will come as a side effect, TVL and bigger prizes will come as a side effect.

12

Great to see you here after such a long time, qwercus! And no worries, I am also aligned with Brendans vision outlined and voted FOR.

2 Likes
13

For the snapshot vote can you clarify what the vision is exactly we are voting for?

The future of hundreds of assets, huge grand prizes, deposit any token, win same token prize sounds great. YES vote.

POOL staking for revenues has been talked about and researched for quite awhile. Sounds good but Im not aware of a clear path to get there. I expressed my skepticism and reasoning for the two most recent proposals - flashloans and assumed reserve burn. I’m not sold on this one without more specifics.

There is a huge difference between distributing POOL in treasury and burning it. Big vision decisions to be made there. Can’t vote on it without more information.

Prize compounding feels like a small component in a big system. I think we need to rewind as Brave suggested.

The core is not autonomous. We have to finalize the random number design to be immutable? I’ve shared my opinion on council that this be prioritized and thought it was added to the budget request draft but did not make the budget request final copy.

I think yield source development is a more immediate hurdle than POOL staking. We have seen just recently that it is not so easy to plug in a yield source. And we have seen that having only one is limiting.

I think we need more economic modeling. We need analysis, projections, and simulations of the protocol that can inform our goals for growth. This modeling then can also inform the story of the success of PoolTogether. Is our core story that POOL buyback exceeds POOL prize sold?

I think the vision of a booming global prize savings protocol is shared wholeheartedly. I think the path to get there needs more consensus.

7 Likes
14

I agree with you.

Staking pool should not be done diluting even more the value of $POOL. We should avoid for example to put more $POOL in circulation from the treasury to subsidize the staking pool or the TVL.

Burning to create value has never worked either.

One of the many possible way to make an economically sustainable staking pool is to diverge part of the prizes to it:
as an example for every 100 $POOL won by any wallet we send 90 $POOL to the winner and and 10 $POOL to the staking pool.
This is a way to make $xPOOL holders win, creates a sustainable revenue (apr, apy, dividents, call it as you like).

If we want to care about depositors too, and why not, we can send 5% to POOL stakers and 5% to TVL depositors.

Percentages are just examples of course.

Edit: $POOL staking pool: an economical sustainable proposal

2 Likes