POOL tokenomics have taken a backseat since the launch of PoolTogether V4; the DAO has focused entirely on the product experience. While this focus has been great for our core product, the POOL token holders haven’t been having any fun. The old V3 POOL prize pool is on Ethereum, so for many it has become unusable. POOL cannot be used to vote on sidechains and L2s. POOL is stuck!
Let’s make POOL fun again.
This plan aims to:
- Enable POOL voting on Polygon and L2s
- Offer POOL staking
- Build hype with a new POOL prize pool
- Make the price durable with deep protocol-owned liquidity
I believe that, in unison, these mechanisms will make POOL much more engaging.
As of today, PoolTogether V4 liquidity is largely on Polygon. The sidechain dominates the prize pools, having over $23m while Ethereum lags far behind at about $2m. Currently, we are using the default Polygon token bridge for POOL. This is convenient, but it means that POOL tokens are locked in the bridge contract on Ethereum. Those tokens cannot vote. Our Polygon users should be able to engage in governance!
If we can delegate the voting power of bridged POOL tokens, then those holders can signal their vote. The votes will be delegated to a multisig, who acts on behalf of token holders. It’s centralized, but its an easy short-term solution to our multichain voting problem. Eventually we’ll be able to move governance to a zk L2.
We can delegate the voting power of bridge POOL by introducing an intermediary token: gPOOL.
gPOOL is a token contract that lives on the Ethereum network. Users deposit POOL to mint gPOOL, and can withdraw POOL by burning gPOOL. The exchange rate of gPOOL to POOL is always 1:1.
Governance will own the gPOOL token contract and delegate the voting power of held POOL to the executive multisig. This means that holders of gPOOL, or its derivatives, can have real voting power.
We can bridge gPOOL using the default ERC20 token bridges, and the bridged tokens and any derivatives can be used to vote using a Snapshot space.
If users stake their gPOOL they can earn POOL emissions. By depositing into the gPOOL they are effectively committing their POOL as voting power, so we reward them.
Starting February 2025, governance will be able to mint 2% of the total supply per year. This means that we can support a 2% inflation rate indefinitely.
A staking contract means that we now have a native POOL yield source.
To create even more excitement around the POOL token, we can create a V4 POOL Prize Pool. This pool could be a HYPE machine. We can use gPOOL staking as the yield source and subsidize prizes to bootstrap it. Once we have the DPR, we can have infrequent MASSIVE prizes.
- The prize pool attracts $2.5m in liquidity
- The DPR is 0.03% for a daily draw (~10% APR)
- We’ve subsidized the prizes by adding $1m in POOL
We could have a prize distribution like so:
|Prize Size||Approx. Yearly Count|
This could create hype, and as demand for POOL increases we can turn the prize down so that it stays the same USD value.
Since the Prize Pool holds gPOOL, we can count V4 POOL Pool tickets alongside gPOOL so that users can still vote.
In order to ensure that winners have exit liquidity, we can take some steps to provide…
The above staking mechanism and prize pool are intended to create demand for the POOL token. However, POOL liquidity is extremely shallow right now. POOL cannot be bought or sold without impacting the price significantly.
To make sure users can get POOL, I propose we supply a significant amount of POOL to a Uniswap V3 POOL/USDC pair. We would supply such that:
- Governance is supplying purely POOL tokens (a sell wall)
- The price range is set slightly below the current market price, to entice early adopters to buy POOL. This will create a cushion of USDC that allows winners to exit, if they desire.
For example, let’s say we create a POOL/USDC position like so:
- Starting price of POOL at 2 USDC
- Min price at 2 USDC, max price at 50 USDC (approx. our ATH)
- Supply 1,000,000 POOL
If POOL was arbitraged until it hit the current market value of $3.10, then we’d effectively be selling POOL for USDC and create a cushion of approximately $800,000 USDC (judging by the Uniswap position). This would create an extremely deep market that would provide winners with exit liquidity and stableize the price. The protocol would also earn trading fees.
I think we need to create volume and demand for the POOL token. It needs more utility. However, to support this added utility we need to provide deep amounts of liquidity. In tandem I believe these will improve the POOL token position.
I invite people to share their thoughts! This is a combination of a number of ideas, so we’ll need to break them up. I think it’s important to present them as a coherent plan that works together.
This post is a synthesis of ideas both new and old: