PoolTogether

Different prize distributions per chain

With the launch of the Avalanche network in PoolTogether, also comes a new feature that includes the possibility of having different prize distributions per chain. This concept has constantly been mentioned for the past few months, but it is not even clear if we want to do it or not yet.

Some people argue that this concept would go against the v4 motto of “same pool and same prizes across multiple chains”. I agree that this is true, however, I don’t think that this will do any harm. Instead, we just need to adapt the phrase to look something like this: “same pool across multiple chains, tailored prizes for each chain”.

I think this concept can be a powerful marketing tool. I’ve heard a lot of people complain about $1 prizes while other love this idea. With prizes specifically tailored for each chain, we are opening new possibilities for the users that can now decide which prize distribution better suits their desires.

The biggest drawback that I can think of is the difficulty to capture these different prize tiers in the UI. This change will require work, but I believe it is worth the effort and people can suggest great ideas on how to incorporate this to the website (of course we would need the support from PT Inc. to change this).

Another concept that has been mentioned is the possibility to stop v4 on the Ethereum network. Although this may happen in the future, I honestly think that we should try to get a good product there first and if it doesn’t attract enough liquidity to cover costs, then we can think about just using L2s instead. However, as of how things are right now, it is normal that Ethereum network is not profitable because not anyone of us would like to use it with the current prize distribution.

With all this being said, the biggest problem that makes prize distributions not be enjoyable are gas fees. Claiming a prize and paying over 10% of that prize in gas is just not satisfying (I’m saying 10% as an example and I hope to get your opinions on this). This has been clear in the Ethereum network, were users regularly come to the Discord to complain because they are having a negative experience while using v4. Unfortunately, I think that if we don’t try to act sooner than later, Avalanche users will have the same issue with the $1 prizes. With this reasoning, I think that prizes on the Ethereum network should not be lower than $1000, and prizes on Avalanche should not be lower than $10.

In order to propose different prize distributions for each chain, you first need to know that the total amount distributed in prizes has to be the same for each chain (to keep this fair). This doesn’t mean that if 90% of the deposits are in Polygon and 10% of the deposits are on Ethereum, the people on Ethereum will get the same prizes as the people on Polygon with less money. It just means that only around 10% of the prizes of the Ethereum network will be distributed each day.

My proposal of prize distributions for each of the 3 chains is as follows:

POLYGON (No changes)

Prize Count Total
$2,500.00 1 $2,500
$500.00 3 $1,500
$200.00 12 $2,400
$50.00 48 $2,400
$10.00 192 $1,920
$5.00 768 $3,840
$1.00 3072 $3,072
TOTAL: $17,632

ETHEREUM

Prize Count Total
$10,000.00 1 $10,000
$2,540.00 3 $7,620
TOTAL: $17,620

AVALANCHE

Prize Count Total
$4,000.00 1 $4,000
$1,000.00 3 $3,000
$250.00 12 $3,000
$80.00 48 $3,840
$20.00 192 $3,840
TOTAL: $17,680

Please let me know your thoughs if you thing that different prize distributions for each chain would be positive for the protocol. If so, you can also propose different prize distributions for each chain to try to find the best ones.

5 Likes

It feels very reasonable, the eth gas is indeed too high, the chance of winning is low but the reward is more.

2 Likes

100% agree. This is a great distribution.

1 Like

Hi, thank you for your post, you highlight a very real problem that we need to address.

I think the implications of this aspect are being severely underestimated. And may end up causing more problems than it initially solves:

With the current implementation, let’s suppose PT has support for 12 different chains, users would be able to freely choose where to deposit based on the following aspects:

  • Familiarity with the chain

  • Decentralization aspect (Security)
    Keep in mind this can be a really personal choice (See the eternal debate of PoS vs PoW)

  • Gas prices (For some it may be worth it)

  • Integration of the chain with other ecosystems

  • Jurisdictions

Prize liquidity? Odds? APR? No need to worry about that on PT, you can freely choose based on what you believe is the most adequate chain. Now if we were to add “tailored prize tiers” into the mix, then it would add a new item to the choosing of a chain:

  • Odds

Depending on the chain, with the same deposit, you would have different odds despite being on the same prize pool. What will newcomers do when they enter the app and see that Polygon has better odds than Avalanche? Do we throw a warning at them explaining how prize tiers work? No, small-medium deposits will just go with Polygon since due to smaller prices they can earn the same yield but faster (better odds). And what happened to the personal decision of using the appropriate chain?
All the other points I mentioned are now minuscule, people first look at odds.

If we are building a DeFi for the regular people, I think we should keep the good practice of teaching newcomers, how do we teach them right now? By saying “Look, you have the same odds, same prizes, same everything, however YOU have to choose on which chain to deposit, possibly based on this aspects (the ones I pointed above)”.

This incentivizes users to learn, and to not just blindly trust whatever chain they are depositing to, that’s what happens when you provide clear choice (Unlike V3, where people deposited on whatever token and chain they saw may get better odds).
I believe it’s important we must not loose the unrestricted choice aspect of V4. If someone wants to deposit $500 into ETH, purely because they don’t trust Polygon, so be it.

So, choosing between prize distributions, sounds great, but don’t tie that choice, to the other different, very personal choice of which chain to use.

1 Like

I absolutely understand your concerns and I know that adjusting the UI will not be an easy problem. However, I do think that the problem is bigger as it is right now than what it would be if we make these changes.

If a regular user comes and deposits on Ethereum, because they have the same odds, prizes and everything, their experience will be horrible (as we are seeing on Discord with people complaining). Unfortunately most users don’t really investigate that much and they just deposit their money without understanding where the prizes are coming from or what are the differences between each chain. That is why having the same prizes on each chain will not incentivize users to learn imo. They will see that all the chains are the same and deposit on whatever or usually the cheapest one (most people don’t care about security that much not to use Polygon, and this applies even more for small fishes).

The change in prize distribution will surely be another factor to take into account when deciding on which chain to deposit. Some will be attracted to the huge big prize on Ethereum, some will be attracted to the higher odds on Polygon… but I don’t think that giving these different choices should be seen as something negative for the end user.

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Are you intending to spread the draws out more? Otherwise, with $50,000/day in prize distribution we would run out of funds pretty quickly.

I think you might be confused here?

The total amount awarded is going to be the same with the proposed distribution. Even if the prizes for each chain is equal to $17,000, it doesn’t mean that each chain is going to distribute the whole amount. In fact, each chain is expected to distribute the whole amount multiplied by the percentage of yield that each chain generates.

Therefore there shouldn’t be any extra effect on treasury funds.

Is it $17,620 in prizes total per day or per chain?

$17,620 is the total per day summing the amount distributed in all chains. That amount is the same as we have right now. This proposal does not intend to increase or decrease the amount of dollars distributed, but just change the way those dollars are distributed in each chain.

I love the idea that crypto responsibility includes the personal choice and everyone having their own factors to weigh. I don’t think, however, beginners weigh these items enough to experience PT as you have articulated above. I think you may be correct about users seeing the best odds and hopping in that chain, but for V4 that means they are hopping on the cheapest chain according to Bronders distribution. There’s nothing wrong with ‘blindly’ jumping into a pool with the best odds because they can just as easily hop out once they’ve learned what they’ve done. In my experience, crypto is learned through experience…for that matter, information is best learned through experience. A majority of newcomers will neglect the front end research (albeit unfortunately) and as a protocol aimed at responsibly introducing newcomers, we should set it up so that they can use it without fail; no-loss is the way. It hurts me to see so many users trapped in V4 Ethereum…especially when we know it’s an issue. I can’t even look at underthesea’s pool explorer without pouring one out for the shrimp on the last pages of the Ethereum players. Im all for this distribution unless it’s technically infeasible. Thanks for listening

2 Likes

I’ve already seen multiple people angry after depositing into Ethereum without knowing they can’t claim the vast majority of prizes. On Avalanche, the same can be said for $1 prizes. Whatever problems you see with changing the prize structure per chain are IMO simply not substantive enough in light of people easily being frustrated after depositing. It’s just bad optics.

I mean, who wants to “win” a prize and then not be able to claim it? It’s almost like an insult. Those people usually end up creating a fuss and often leaving the community altogether. There’s no way around it, we need to fix it, honestly.

What will newcomers do when they enter the app and see that Polygon has better odds than Avalanche? Do we throw a warning at them explaining how prize tiers work?

Having different odds per chain is not that big of a deal, honestly. Ultimately, they will equalize (people will arbitrage between chains until it evens out).

As it stands now, the prize structure is a bit misleading. Throwing a notice on different prizes per chain is much better than what we have now: no notices and people forfeiting their prizes because they can’t claim.

I think we should keep the good practice of teaching newcomers, how do we teach them right now?

I think teaching in this case is not a good idea, because it is far too expensive of a mistake to learn from. We really simply have to idiot-proof it via design. The teaching comes from using the protocol consistently, being part of the community and PoolTogether being a gateway to DeFi. The entry-points can’t be points of frustration.

I’m a big fan of underthesea’s idea to hide small prizes on Ethereum + $1 prizes on Avalanche from the UI. I still find the $1 prizes very valuable for chains that allow for small gas fees. It basically gives small fish a chance to participate and still offers lots of upsides to players with bigger deposits.
One part of this is probably also to better communicate how PT works, when to use which chain, how and when to bridge, where to get USDC on which chain, …

I’m also a big fan of $1 prizes and that’s why I’m keeping them on the Polygon network.

Hiding prizes on the UI depending on the network will effectively mean that you’re decreasing the APR for that network. That for me is not the best decision, although it is better than what we have.

Let’s imagine the extreme scenario that claiming prizes on Ethereum costs $2,000. Is the right solution to hide all the prizes from that network except the $2,500 prize? That would mean that the APR on Ethereum would be of 3,5% instead of the current 24%.

Is that good for the treasury? Definitely.
Does it seem fair? Not in my opinion.

What I would propose in that extreme case would be to just have only one $17,000 prize on Ethereum chain. That would keep the APR on 24% (although after paying gas fees for claiming the prize it would go a bit lower (that is unavoidable though). I know that having just one prize is not ideal because it would make very unlikely to win that prize, but it is definitely the better than just showing the $2,500 prize (that would make it so that nobody uses Ethereum network).

Regarding what @Andre said about arbitrage, that is not quiet right. Different prize distributions will not require any arbitrage if the total amount distributed is the same in each chain. It does not mean that each chain will distribute the whole amount. Instead, in average, each chain will distribute the full amount multiplied by the percentage of funds on that chain.

1 Like

After further discussion…I think a warning note with a “check here if you understand” type mechanism should be tried first…

Not a bad idea. How much does that shave off the APY though?

After some back and forth with @underthesea , now I honestly believe that changes in the UI would be more beneficial than changing the prize distribution.

Not making the $1 prizes claimable would take out around 3 to 4% APR (It depends on many factors like gas fees, amount deposited by user… So it is just a rough estimate after some simulations). This is not the fairest solution, but it is a better solution than modifying the prize tiers as I have previously proposed. At least this is true while prizes are incentivized by the treasury. Why is this the case?

If we use the distribution that I proposed on Ethereum, this would mean that the 2 prize cap would be much less effective on the Ethereum network. This basically means that we would be increasing the APR of whales in the Ethereum network. It wouldn’t still be as high as the small fish, but it would be pretty high. This would mean that the treasury would be just giving out money to one whale, which is not the purpose of having incentivized prizes.

To sum up. I still think that changing the prize tiers for each chain should still be on the roadmap for the future (when incentives are much lower or completely end). However, for now it is a better solution to improve the UI and not show the prizes that are too expensive too claim in each chain.

1 Like

I think we should get rid of 5$ and 1$ prizes altogether. I understand the inclusive narrative behind them but they makes no sense for 2/3 of the chains PT operates on. Plus, a lottery becomes more enticing when your odds of winning a price are slightly lower but the payout is higher.