Direction for PoolTogether + POOL Tokenomics


@Leighton started a discussion in Discord about a veToken model for POOL. There was a general back and forth between community members, but I wanted to share my thoughts in a longer format and outline what I believe are the top priorities for the protocol.

Objective for PoolTogether in 2022

At Nexus Mutual, I use OKRs, to drive Mutant Marketing forward, while keeping the marketing working group focused so we can accomplish the objective we set every two quarters. OKRs serve as a framework to keep a group or organization focused with clear, measurable yardsticks to measure yourself by. As my colleague in Mutant Marketing recently reminded me, “Your OKRs should be a daily meditation. When you think about the path to achieving your key results, it should be obvious what is and what is not important. Hitting the metrics that make up your key results gets you closer to realizing your objective.”

So, I’ll pose a question to the community: what is our objective for 2022?

My answer: Establish PoolTogether as critical infrastructure for community engagement in DeFi.

Key Results

  1. Grow TVL from $27m to $100m within the next six (6) months
  2. Add three new yield sources that increase underlying APY by 2-3x that of Aave’s
  3. Increase the number of POOL holders form 7,964 to 20,000
  4. Generate five (5) conversations with centralized exchanges that could integrate with PoolTogether
  5. Create a Prize Pool as a Service (PPaaS) product and onboard ten (10) protocols that can provide token emissions via V4 prize pools

Now, these are just some examples that would position PoolTogether as protocol that allows other DeFi protocols to use our infrastructure to drive engagement within their own communities by creating prize pools. Every DeFi marketing working group could use the delegated chance to win feature, token emissions could be done through prize pools, integrations with CEXs help us increase TVL/revenue, etc.

Going back to basics might be the best way to determine where we want to go in the next year.

PT Inc’s roadmap for 2022 has a lot of deliverables, but we lack metrics we can measure in 3-months, 6-months, etc.

This is a larger conversation we should have, but I’ll focus on the proposed vePOOL tokenomics suggested in Discord.

I read the conversation about POOL tokenomics, vesting POOL, having a “vePOOL” model to allow for people to “bribe” or voting in govnernace to direct liquidity to their chain, their yield source. Here’s my long thread response.

Let’s ignore the correlation to equities markets, as buybacks, etc., are often applied in DeFi, but the time to market for an IPO is much different than the launch of a token in DeFi.

Current POOL tokenomics

POOL is a pure governance token that can be used for voting on mainnet. We’re looking at gPOOL, which will allow for cross-chain governace. This will be a big step, as our current governance process isn’t accessible to small fish.

Potential Tokenomics Models

In the Discord thread, we’ve talked about using a veToken model, which allows users to lock up their POOL to participate in governance and extract value from the protocol in some way. Leighton suggested we allow networks and/or protocols to buy vePOOL and direct POOL emissions to their protocol’s prize pool on a specific chain. This provides a potential benefit for a network/protocol.

Leighton also highlighted the two top priorities for PT and any protocol:
:point_right: Growth
:point_right: Network effect

There was also an idea to allow users the option to receive their prize in POOL tokens. I’m fairly certain there are regulatory implications for allowing swaps directly at the frontend level, but I’m not a lawyer, so I’ll refrain from saying any more about that.

I’ll break down my review of the proposed model below.

Reserves and POOL Emissions

The narrative behind PoolTogether is the power of the flywheel, or the perpetual growth machine that powers the protocol foward, earning more revenue for the treasury, increasing the size of prizes, and driving growth in reserve earnings. Our current issue is that we haven’t yet achieved a level of growth in V4 that makes PT profitable, given we’re subsidizing current prizes.

Growth is still very important, but we should consider, in the short term, what we need to do to achieve growth and become profitable.

I think this proposed token model could potentially help us in the future with some modifications, but in the short-term, I think it will slow the flywheel rather than get it spinning faster.

CRV Tokenomics

If you head to the Curve Fi docs, they clearly state the purpose CRV serves:

The main purposes of the Curve DAO token are to incentivise liquidity providers on the Curve Finance platform as well as getting as many users involved as possible in the governance of the protocol.

And why has CRV become extremely desirable? Because people build on top of Curve and utlize the deep liquidity in its pools to bootstrap their token’s own liquidity. The majority of CRV rewards are directed at stablecoins like MIM, UST, FRAX, LUSD, etc.

Yearn has accrued a large amount of CRV, but Convex Finance owns the majority of CRV in the market, which is why they are able to offer such high yields on staked crvLP tokens. They build a business by acquiring CRV, building on Curve, and taking a cut of rewards, while providing users a boost.

But let’s not forget that this hasn’t always improved the value of the CRV token due to the inflationary nature of the token. Many protocols that farming crvLP tokens for fees + rewards sell CRV to boost their yield.


While many think the veToken model is applicable to many different protocols, the truth is that it acts as an incentive to attract liquidity to Curve, and veCRV is very, very, very successful in achieving that goal.

But would vePOOL with the stated functionality (i.e., directing rewards to a certain chain, yield source)? I don’t think it would, and I don’t think allowing a protocol to direct emissions to their prize pool would be healthy for PoolTogether.

Directing Emissions to a Chain

If we had $100m to $1b in TVL, this could be a benefit for a network, but we’re likely going to see growth in TVL across chains and, inevitably, users are going to chase yields from network to network. Given our current TVL on the following chains:

  • Polygon: $23,976,923 | Polygon has $4.5b in TVL | PT TVL makes up 0.5328% of Polygon TVL
  • Avalanche: $2,193,212 | Avalanche has $8.19b in TVL | PT TVL makes up 0.02678% of Avalanche TVL
  • Ethereum: $1,315,833 | Ethereum has $114.3b in TVL | PT TVL makes up 0.001151% of Ethereum TVL

While I like the idea, it seems unlikely that a network would buy POOL, stake, and vote to direct incentives to their chain. Large networks that are truly decentralized wouldn’t be able to do this, and smaller networks should be paying us in token subsidies to deploy onto their network. I’d rather PoolTogether do a buyback than some upstart network direct emissions to their chain, which would then create an obligation to deploy the protocol on that chain.

If this is not the intention of the vePOOL tokenomic structure and it’s limited to protocol approved deployments via governance, we’re creating a token model that could be abused in the long-term.

Directing Emissions to a Prize Pool

This is likely the most problematic aspect of a vePOOL model that allows a protocol to direct liquidity to their prize pool. The prize pool network would distribute prizes evenly, regardless of yield source. If we were to use a vePOOL tokenomics that allowed a protocol to direct emissions to their prize pool, we’re now giving a protocol the option to reduce our operating revenue by directing capital to a yield source with lower APY/APR.

Say we had an Aave V2 prize pool and an mStable prize pool:

Aave prize pool: USDC

  • Mainnet APY: 2.35% + 0.42% (AAVE rewards)
  • Polygon APY: 2.61% + 1.00% (MATIC rewards)

mStable prize pool: USDC

  • Mainnet APY: 12.58% + 3.73% (MTA rewards)
  • Polygon APY: 5.85% + 4.38% (MTA rewards)

Mainnet Reserves + Rewards

mStable on earns $12,580,000/yr w/ a $100m TVL
Aave on earns $2,350,000/yr w/ a $100m TVL

mStable reserve revenue (assuming 50% reserve): $6,290,000
mStable would earn the protocol $3,730,000 in MTA rewards

Aave reserve revenue (assuming 50% reserve): $1,175,000
Aave would earn the protocol $420,000 in AAVE rewards

Polygon Reserves + Rewards

mStable on earns $5,850,000/yr w/ a $100m TVL
Aave on earns $2,610,000/yr w/ a $100m TVL

mStable reserve revenue (assuming 50% reserve): $2,925,000
mStable would earn the protocol $4,380,000 in MTA rewards

Aave reserve revenue (assuming 50% reserve): $1,305,000
Aave would earn the protocol $1,000,000 in MATIC rewards

Unintended Consequences

Allowing Aave to buy POOL tokens, stake to vePOOL, and add incentives could increase depositors into their prize pool, but reduce reserves for the protocol. This goes against the best interests of the protocol.

CRV drives growth in liquidity, which increases revenue for the protocol. Regardless of CRV’s value, it attracts more liquidity, boosts TVL, and CRV has made Curve the #1 DEX in DeFi. I don’t think this is the right approach for PoolTogether, as we’re looking to grow TVL but requiring protocols that act as a yield source for PoolTogether to buy TVL from PoolTogether would most likely result in unintended consequences, like protocols not wanting to serve as a yield source.

Because we’re building on top of other protocols, we should create strong relationships and find ways to use POOL to attract TVL, drive growth, and increase our operating revenue. But we should find ways for other protocols to build on top of PoolTogether, as the prize savings network we have is a valuable piece of infrastructure for community engagement across DeFi and gives users on a CEX a way to earn yield on small deposits with a minimal cost.

vePOOL and Governance Attacks

Again, assuming we allow vePOOL holders to dictate rewards, we can also assume vePOOL holders could vote on proposals to use new yield sources in a decentralized protocol. Let’s say I’m a protocol who wants to grow my TVL, and I see PoolTogether as an easy way to do that. I can buy a large amount of POOL, stake to get vePOOL, create a proposal, bribe other vePOOL holders and/or launch a proposal during times of voting fatigue to approve a new yield source. Now, I direct emissions to that pool that has a questionable amount of risk in the underlying.

We’ve already seen this play out on Curve with the Mochi bribe that was deemed as a governance attack:

How Do We Increase the Value of POOL?

If we’re looking for an adjustment to POOL tokenomics, then we can create gPOOL, incorporate a vesting mechanism, and direct POOL emissions to ve-gPOOL holders if they vest their tokens for a set amount of time. Maybe it’s vesting like Curve does with a 1/2/3/4 year lock time. Maybe it’s voting weight like mStable does with MTA and MTA/WETH BLP: mStable Governance

But a bribe mechanic would lead to bad outcomes in the future, imo.

We need to keep our eye on the prize here. Driving growth and increasing operating revenue should be our only two goals at the moment. The network effect is tied to growth, so that will come with time.

Achieving growth is going to cost us money, but we can’t afford to slow growth. I believe the Marketing Working Group will play a large role in helping us drive growth, and I think we should talk about how we are going to achieve growth rather than trying to amend the tokenomics when we’re providing subsidies for prize pools.

Increasing operating revenue means identifying yield sources that earn us 2-3x the APY we are earning with Aave. Higher APY means a lower TVL requirement to end the subsidies. And this also leads to larger prizes. If we can partner with two yield sources, we can tap them for co-marketing efforts to reach more users. I also think we need to find ways to onboard more users into DeFi, as PoolTogther should be the portal into DeFi for most people.

Partnerships are going to be key for growth in 2022:

  • Prize Pools as a Service (PPaaS): creating a prize pool for your governance token would be an easy way to drive community engagement. Hold a weekly call and announce the winners! You can build it across networks and use V4 architecture to level the playing field.
  • CEX Integration: identifying a CEX that can connect us with deep liquidity held by exchange users. Coinbase is the white whale for us, but any CEX that allows us to reach users who aren’t active in DeFi would be a boon for PoolTogether
  • Delegated Chance to Win as Free Engagement Mining: once we have a distribution contract ready and someone can delegate $50k across multiple wallets, we’ll be able to provide that service to every marketing working group in DeFi. Instead of incentivizing grassroots advertising on social media with governance tokens, do it with a delegated chance to win for a set amount of time. This would save marketing teams money and make engagement mining fun for participants.

Once we determine the best way forward to drive growth, the rest will fall into place. Driving growth and operating revenue is our mission for 2022. I don’t see the benefit of altering existing tokenomics besides the gPOOL initiative in the short-term, as it doesn’t contribute to growth in TVL and revenue, nor does it help us achieve network effect.

I love PoolTogether, and I want 2022 to be the year the prize pool network became the gateway to DeFi and financial freedom for users around the world. I’m hoping we can have a conversation that puts us on that path.


Thank you for that comprehensive write-up Brave! You always take the time to provide rich analysis.

Vote Escrow

I agree with you regarding vote escrow. It seems to me that ve is trending right now, but I don’t think it would benefit our protocol. The positions get tokenized anyway.

What I think is particularly interesting are the Curve gauges, which is what CRV holders are competing for control over. The gauges are interesting to me because they make governance much more fluid. CRV holders signal on the pool they want to receive emissions, and the pool receives its share of tokens based on the strength of the signal.

I think this “fluid governance” is ideal for this type of decision-making. Imagine trying to decide via proposal what the emissions should be over dozens of pools? It would be impossible to have a definitive answer that satisfies everyone due to the complexity of the solution space. Allowing users to shape the solution via token signalling is extremely efficient.

Prize Pools as a Service

I agree that the future of PoolTogether is multi-pool. We’ve proven the efficacy of V4 prize pools, now we can bring it to other tokens and create new networks. We saw great success with the Olympus V3 pool, and Klima is now building their own V3 pool, so we know demand is out there.

There is work to be done first, though. V3 required a decent amount of operational infrastructure to run. V4 even more so, although we’re taking steps to simplify it. The DPR is the first step to simplifying operations, and a little more R&D is needed for the rest. By eliminating any operational transactions (i.e. poking the contract once per day) we can easily spin up new prize pools for anyone without requiring them to run infrastructure.

What remains unclear, is what the PPaaS opportunity looks like in terms of revenue. For now I think we’ll get much more value out of growing and optimizing our core USDC prize pool TVL. It’s currently our best opportunity and demands our full focus.

Engagement Farming with Delegated Chance

This is an exciting opportunity to grow the TVL in our current USDC prize pool network. I’m 100% on board with this, and I think it would be relatively low-lift to get some basic tools in place. The bulk of the work here in my mind is engaging with influencers and really pushing the partnerships and marketing.


You’ve outlined that the strength of the POOL token will follow TVL, and have given some strong product direction. I’m aligned with you on direction, but in terms of priorities I think we’ll see the biggest returns from improving our core USDC prize network. Let’s stay focused.

I want to add that over the last few days some ideas have formed that I’m extremely excited about. Synthesizes a lot of ideas that people have had and solves some core prize pool issues. I will share soon.


Absolutely agree, Brendan. The other ideas were just an aside for now, but growth is the goal for us. On the Vote Escrow note: allowing users to direct emissions via a gauge would be efficient. mStable has been doing this, and it’s been very effective! But the different, for now at least, is that MTA emissions are directed by community members and Curve has additional products built on top that have turned CRV into a product unto itself.

While it might be efficient, I’m not sure it’s priority #1. Making governance accessible is high on the list, but onboarding new Poolies is still #1 in my mind. We agree on the what but perhaps not on the how.

Driving growth in the USDC pool is important, but I also think allowing for USDT, USDC, and DAI deposits into one prize pool would help us grow TVL faster than we’re currently able to achieve. Currently, we have ~2.136% of all USDC on Polygon deposited into PoolTogether. Of all USDC in circulation, there is ~2.302% on Polygon. To achieve $100m in TVL on Polygon, we’d need ~8.751% of all USDC on Polygon deposited into V4.

Allowing users to deposit the three most well established stablecoins into PoolTogether V4 would help us drive growth in TVL and revenue. By using an underlying yield source like mStable, we could increase APY and have the functionality to provide rewards in the deposit of choice. I’m still working on an outline of how that would work/benefit PT, but I’m sure there are technical aspects I’m overlooking/discounting with this approach.

I’m looking forward to hearing the things you are working on, and I’m glad we’re aligned on direction. The priorities aspect is what we all still need to iron out. Thank you for the response, ser :pray: :ocean: :trophy:


I think Prize Pool As A Service is the biggest marketable value offer PoolTogether has, prize splits from V3 lends itself very well to this. I don’t know if the contracts need to be modified for V4, but to implement those opens up more than just offer Prize Pools to protocols.

Establishing a prize split V4 pool where a creator creates a prize pool and sets up the prize split to be 75/25 or something like that becomes a very nice unlock. A majority of the yield goes to the creator, and a subset goes to the supporters. Additionally, the creator can issue NFTs or tokens as bonuses for supporting them in the prize pool which can also act as token gates for other items the creator sets up in their ecosystem. I think this could also be utilized for charities, and even could act as a “Kitty” for a games portal for swim points where we could host monthly PTaUSDC prizes in addition to all the fun had with swim points.

I jotted some of these ideas down in a google doc a few weeks ago, I’ll drop it here for those curious, but haven’t had a chance to refine them into a post yet: Together Ecosystem - Google Docs