Grand Prize Frequency
In DeFi, immutability should reign supreme. Unlike earlier versions of PoolTogether, once V5 is deployed, its settings become unchangeable. This emphasizes the necessity of making the right choices from the get-go. In this post, let’s examine one crucial parameter: the frequency of the grand prize.
Understanding the Grand Prize
The grand prize in V5 accumulates over an extended period, enticing depositors eyeing a life-changing win.
For both V4 and V5, the grand prize operates on a statistical basis. For instance, if we calibrate this prize to have an annual occurrence, it translates to a 1 in 365 chance of being awarded any day. However, it’s essential to realize this is a probabilistic model; the prize might be given out sooner or later. We can set it to target once a year and it might happen twice in one year OR it could take two years to see the first one.
Unlike V4, the grand prize is chain dependent. The protocol deployed on other chains will not share the grand prize.
In Beta the grand prize was set to 365 days assuming that’s what would be used in the public launch. Full disclosure, I’m bringing forward this topic because I disagree with that decision.
Let’s look at the potential advantages and disadvantages of having an annual grand prize:
Pros of annual grand prize
- Size: The longer the prize accumulates, the more substantial it becomes.
- Consistency: Fewer resets where the grand prize dwindles to zero and requires a rebuilding phase.
Cons of annual grand prize
- Liquidity Challenges: Increased difficulty in providing adequate POOL liquidity for a winner to realize the prize value.
- Fewer Winners: A reduced number of overall big winners.
- Delayed Gratification: Extended wait periods dampen the enthusiasm and thrill for participants.
How Other Games Do It
- UK Prize Savings: Awards two big winners with $1 million every month, effectively translating to 24 grand prizes annually.
- Powerball Lotto (USA): This traditional lottery pays out billions in jackpot winnings annually. Over the past four years, the breakdown for jackpot wins has been roughly 6 per year.
- 8 winners in 2022
- 6 winners in 2021
- 6 winners in 2020
- 7 winners in 2019
I propose that the ideal duration for the grand prize should be between one to three months. If it were up to me to decide today, I’d aim for a two-month interval on Optimism. This is a fast paced world that wants results to stay engaged. While the protocol will run autonomously into the future there is a high likelihood that a new version will take over in popularity in the years to come. Just like we see with the most robust and popular protocols like Uniswap and Aave. A two month interval will build an exciting prize that brings excitement and a big win that won’t have a huge price impact on POOL if sold.
I think this is an important community decision. What are your thoughts on the optimal grand prize frequency? And while we’re at it, any suggestions for what we should call Tier Zero also known as Grand Prize aka Headline Prize aka……
- 1 month
- 2 month
- 3 month
- 6 month
- 1 year