Let's Get The Pool Party Started!

1

Treasurer
Treasurer592×591 34.6 KB

TL;DR:

  • Target 2% POOL APR on approved vaults, this is not simply to attract TVL, but to boost POOL volumes around the ecosystem and create an environment where the token can comfortably grow.
  • Allocate $200,000/each in funds to both BASE and Arbitrum incentives to match what’s currently happening on OP.
  • Summary Below of the state of our Treasury and the POOL token.

Game Plan

The team has successfully developed an autonomous protocol that operates independently, eliminating the need for manual controls. Exciting opportunities have emerged as POOL holders now receive a portion of the yield from depositors, while depositors themselves benefit from incentives sourced from the treasury and outside sources.

As a POOL token holder, my primary objective has always been to witness the protocol’s substantial growth, carrying the token to new heights. With POOL pools receiving yield across various chains, the potential appears immense, contingent upon attracting a significant number of depositors and nurturing a vibrant, symbiotic ecosystem. Solid bridge liquidity with Across will play a key role as users will jump between chains chasing the best opportunities to use their POOL. As we foster new partnerships and bring on many new vaults, the POOL token will feel the squeeze.

POOL Token Drip

I advocate for the strategic distribution of the remaining POOL tokens to those who exhibit confidence in Pooltogether vaults, fostering deep liquidity and cross chain volume. Proposing a modest 1-2% APR of POOL for each governance-sponsored pool seems prudent, ensuring steady growth in depositors, total value locked(TVL) and the POOL token price. This low APR will help ensure that POOL drip is not dramatically diluting POOL holders, maintaining the value proposition for long-term token holders. As POOL grows in value I hope we can keep adjusting the distribution of POOL to maintain the 1-2% targeted POOL APR.

For instance, assuming a static TVL of $100,000,000, a 2% APR would sustain operation for 15 months if there is no change in the POOL token’s current price of around $0.60. Alternatively, if TVL and POOL price remained at current levels it would allow us to distribute POOL for the next 66 years. However, should TVL gradually ascend to $100,000,000, the price of POOL would likely surge, thereby extending POOL distribution. Even a marginal increase, such as POOL reaching $1.20 with a $100,000,000 TVL at 2% APR, would elongate runway to two years, demonstrating the significant impact of price growth.

Prepare Incentives from Treasury

We’re well-equiped with assets to bolster the launch of new vaults on both BASE and Arbitrum chains. To ensure a strong start for these deployments, I propose allocating funds as incentives for depositing into the new vaults. For Arbitrum, mirroring the successful strategy of the OP model, leveraging a portion of our treasury assets to acquire ARB tokens seems like a solid gameplan. These tokens can be distributed among the Arbitrum vaults when we are ready. However, since BASE currently lacks its own token, we will need to decide what token we want to promote as our incentive to participate on this chain. Our initial contributions can not only ignite growth but also pave the way for potential additional incentives from the Arbitrum and BASE foundations.

Considering the projected market trajectory following the Bitcoin halvening, which I anticipate to peak within the next 1 to 1-1 ⁄ 2 years from the recent halvening on April 20th, it’s advisable to liquidate some of our USD assets to fund these incentives. This approach safeguards our substantial ETH holdings, poised for significant growth in the upcoming year. While earmarking $100,000 for each BASE and Arbitrum incentive is a solid starting point, now may be the time to be aggressive and double this amount to $200,000 for each chain. Additionally we should have incentives ready for upcoming vaults like the eagerly anticipated rETH vault, which holds immense potential to unlock Pooltogether’s growth.

Let’s Go ALL IN

I think that now is the time to be aggressive with our approach on liquidity and incentives. The window for Pooltogether to achieve success is only a couple years. We’ve experienced some dark times together but are now well positioned for the big show.

I have made my focus on POOL drip and Bootstrapping, we also need to work on improving POOL dex liquidity. I believe some smart people are already working on a liquidity plan and I will leave that part in their capable hands.

The State of Undistributed POOL
POOL Treasury 0x42cd8312d2bce04277dd5161832460e95b24262e 4,549,387 POOL
(Includes 748,381.87 POOL locked in LP’s on L1)
POOL held by Executive team 98,691 POOL
POOL Deployer 0xbe1a33519f586a4c8aa37525163df8d67997016f 388344 POOL
POOL Deployer 0x9a29401ef1856b669f55ae5b24505b3b6faeb370 15,270 POOL
POOL Deployer 0x30430419b86e9512e6d93fc2b0791d98dbeb637b 20,799 POOL
*POOL held in deployers can be claimed by users but most of this POOL has sat idle for a long time and may never be claimed.

The State of Cross Chain POOL
Optimism Gateway 0x99c9fc46f92e8a1c0dec1b1747d010903e884be1 730,294 POOL
Polygon Gateway 0x40ec5b33f54e0e8a33a975908c5ba1c14e5bbbdf 162,313 POOL
Base Bridge 0x3154Cf16ccdb4C6d922629664174b904d80F2C35 148,960 POOL
Arbitrum Gateway 0xa3A7B6F88361F48403514059F1F16C8E78d60EeC 89,643 POOL

The State of the Bridge
Across POOL LP 0xc186fA914353c44b2E33eBE05f21846F1048bEda 88,409 POOL
Across Relayer 0x428AB2BA90Eba0a4Be7aF34C9Ac451ab061AC010 25,541 POOL

The State of Pooltogether Treasury ETH
Treasury ETH 0x42cd8312d2bce04277dd5161832460e95b24262e 189.72 ETH
(91.4 SPETHWIN, 63.981 stETH, 30.4 ETH, and 3.94 ETH in claimable LP rewards)
+1.39 ETH held by Executive team
Current USD value: $601,458.59

The State of Pooltogether USD’s
Treasury USDC 0x42cd8312d2bce04277dd5161832460e95b24262e $436,752.63
(197,292.825 PTaUSDC, 104,397.62 PTaUSDC, 99,373.38 PTaOptUSDC, 27,497.649 PTavUSDCe, 7,991.5 USDC, and 199.65 aDAI)
+$12,468 USDC held by Executive team

The State of Decentralization and Governance.
I estimate that the team/ex-team owns between 1-1.3MM POOL
POOL living on Layer 2 is 1,131,210 POOL
Undistributed/protocol Owned POOL is at least 5,000,000 POOL

Summary of Protocol owned Assets
191.11 ETH ($601,458 USD)
449,220.63 USDC
4,648,078 POOL ($2,788,846.80 USD)
87,982 OP ($204,998.06 USDHeld by executive team)
35,518 stMATIC ($27,866.16 Held by Executive team)

Non-POOL Assets Total: $1,283,579.22

4 Likes
2

We all know what happened when we used POOL to incentive V3 vaults.

A fixed APR is not possible with a token on the free market, it would just be dumped.

I don’t like the idea to start another season of whales depositing just to dump POOL, we are incentivizing people to deposit LP, if in the same time we give away POOL to the whales we are just moving the ETH in the LP from liquidity providers to whales wallets.

I do agree that we have to incentive TVL, but we should not do it distributing POOL.

3

Thx for the Gov post and I agree that incentives will be very important to grow!
I like distributing POOL to depositors and support that!
The tricky part is choosing what Vaults to incentivize, we wanna always choose the best yield imo so we can grow prizes fast and also the POOL Prize Vault benefits most.
One possible way to do that would be a prize hook that auto distributes X number of POOL il addition to a won prize. More yield wins more prizes and so gets more POOL!
Also important to keep in mind is the runway, the protocol is up and running now and hopefully will continue to do so for a long time. Like you explained a POOL price increase will also increase the runway quite a bit. We should imo also have a Plan B if this doesn‘t work out. Slow and steady grow can also be fine, especially in the current environment where good ERC4626 yield sources are still rare and it feels like people are more into Meme Coins atm.
I agree though that we ofc should allocate more now and less later to use the current momentum but don‘t think we should have a go boom or bust mentality, hopefully we grow big and fast but I feel even with incentives this can be quite hard in the current environment.

2 Likes
4

In the past it’s been hard for newcomers to justify buying POOL when faced with slippage. This POOL drip is intended to encourage liquidity and volume around our new cross chain POOL ecosystem. This suggested POOL drip is intentionally light to avoid dilution of POOL’s value. Steady growth will mean the 2% drip is better than advertised. The POOL in treasury needs to be distributed in and the opportunity to make an impact is now. I won’t sit around and wait for the next bear market to try and boost Pooltogether with a depleted treasury. This system will thrive under big TVL and high yields and has the ability to thrive even in a bear market, but we need to grow this beast out of the gate.

I wouldn’t compare this 2% POOL drip to the days of 8-40% when we had a system we knew wouldn’t sustain.

1 Like
5

I do agree with the goal, I just don’t see how the drip you propose will be beneficial on the long run once we close it.
We risk to make the same mistake we made on V3.

I just think whales will just farm and dump POOL, hence reducing liquidity and POOL value if we distribute.

It was not a problem of slippage it was a problem of token value: POOL was not worth much, before we had the POOL pool (a kind of APR).

2% of what?

Can we use those POOL in other ways?

  • Airdrop to notable wallets to get visibility?
  • Burn them?
  • Use them to have a special prize or pay community for gigs?
1 Like
6

Yeah, now is definitely a good time to start this conversation! I’m ready for The Pool Party as much as everybody else. @TheRealTuna Incentives will be important and we should leverage POOL! But, let’s get sorted and comfy on all the L2s we plan to be on, namely Arbitrum and Base and see next steps from there.

Absolutely! I don’t want to squander any momentum, but I feel like we’re just building it. Let’s build some strong foundations first before going all in! I love your enthusiasm and happy to see you back. We’ll get there! V5 is the most engaged I’ve been with any version of PoolTogether, including V3 which was my benchmark in the past.

I’m aligned with Lonser here. We’ve just emerged from a place that wasn’t so great. Let’s focus on steady growth for now! A boom or bust mentality does not mesh well with the ethos of PoolTogether, :3

Like you said, we’ve got a lot of gas in the tank still! Exciting times ahead, hopefully some fast growth with strong momentum, but steady growth isn’t too shabby for now! The fully realized version of V5 is barely 10 days old and only partially rolled out, excited for Arbitrum and Base!

Thanks for laying everything out and providing The State of PoolTogether’s POOL and other protocol owned assets! Super helpful and insightful and will give us direction on how to incentivize and grow V5. Thanks @TheRealTuna! Always a good time reading your proposals.

2 Likes
7

While I don’t believe slow and steady is the way to go for incentives, keep in mind that what I’m proposing only ready’s the treasury to incentivize on Arbitrum and BASE. We will want to be careful how we apply these incentives so we are not giving away the farm but we need to be able to maneuver quickly. The speed at which we incentivize comes later, hopefully only a little later. My hope is to have the ARB in hand for Arbitrum and by incentivizing the ARB vaults with ARB from the get go we have the potential of getting contributions from the Arbitrum Foundation. Same goes for BASE which does not yet have a token. We can generate big BASE activity and in the event BASE tokenizes then we will likely be awarded for our proactive approach. Let’s make the necessary treasury moves and then discuss the approach.

I would describe the 2% APR POOL drip as a slow and steady approach and in this case it’s important we don’t rush to distribute too much at once resulting in price dilution that will offset any benefit. The intention here is to model the POOL drip based in POOL’s USD price to 2% of the TVL in a vault. If a vault is producing far less yield, we could keep it at 1% instead. Let’s build POOL volume.

@Lonser @AtomicNuclei

1 Like
8

In my opinion, the most effective strategy to prevent whales from farming and dumping tokens while also rewarding early contributors is to implement a vesting schedule. Here’s how it could work:

  1. Vesting Schedule: Distribute tokens to contributors over a specified period, such as 90 days. During this vesting period, contributors would receive a portion of their allocated tokens at regular intervals (or even all at the end of the schedule). This approach ensures that tokens are gradually released, reducing the risk of sudden market dumping by large holders which will scare users away from $POOL.
  2. Early Exit Option: While the vesting schedule is in place, contributors could have the option to exit early. However, if they choose to do so, they would receive only a fraction of their total rewards—perhaps between 50% and 90%. This discourages short-term speculation and encourages long-term commitment.

By combining these two elements, the project can strike a balance between rewarding early supporters and preventing market volatility caused by large token holders. It’s something I’ve seen implemented successfully by many protocols, the first example that pop in my mind is Radiant but there is plenty of them.

3 Likes
9

Acknowledged! I think we align there, then!

Yeah, being too conservative and slow can be just as bad as fast and loose. We should definitely strike a balance there.

Fair!

Yes, please!

Overall, I totally want in on your Pool Party!

10

I do like the idea of a vesting schedule and early exit option to complement. I wonder how easily this can be implemented?

A vesting schedule for $POOL is neat because would-be farmers might just stick it out and stay deposited for that duration, win some WETH and end up sticking in the Pool Party for the long term.

I like it!

1 Like
11

I’m afraid that implementing dripping options will not effectively increase POOL trade volume. Additionally, since we are only targeting an APY of 2%, it seems unnecessary as I don’t believe this low drip will create any dilution of POOL value. POOL has been increasing at a steady rate and this should help keep it stable. One little pump and some of our year old inactive LP positions will be back in range. If I believed options were a viable strategy, Id be interested, especially given my involvement with UMA, which previously offered KPI options for Pooltogether. However, my primary goal is to enhance POOL activity and help LP’ing on the bridge and dexes more attractive. We are finally trending up.

12

But how can you guarantee 2% APY if POOL price is variable and TVL is variable too?

13

It’s not gonna be a guaranteed fixed 2%, but an intended target that we will keep adjusting as things evolve. We can adjust the drip weekly or monthly to target 2% based on whatever the POOL price/ vault TVL is at that time. We can even factor in the yield of the vault to favor vaults with higher yield (WETH vault could get 1% APR because it contributes less to the prize, whereas USDC Vault gets 2% APR). If POOL price rises equally with TVL you don’t even need to adjust the drip as often. We can sustain this drip for a long time unless TVL goes through the roof, and if it does go through the roof we’ve achieved our goal.

Example
Prize USDC Current TVL $888,349
Current POOL Price $0.5567
This would mean we set the drip rate to $17766.98 per year or 31,914 POOL at current price. 87.43 POOL per day dripped to this vault. ** Edit, got the math mixed up jumping between days/weeks**

In 1 week or 1 month we re-assess the drip.

If TVL reaches $100MM, I find it unlikely that POOL would still be sitting at $0.55. If POOL is $10 when we reach 100MM TVL then we are now dripping only 547 POOL per day. This drip is small enough to let volume build for POOL without impacting the price. Just think of where our prizes will be at $100MM TVL and beyond.

14

This is not going to work: giving the first POOL will make whales sell it, the price will go down, and we will fix it giving away more POOL, increasing the sell pressure and making the price go even lower, and so on.

It’s 1:1 what Argentina and all the high inflation currencies does in the world.

Why would POOL go to $10 if:

  1. we have concentrated liquidity V3 that slows down the price increase;
  2. there would be constant sell pressure…

We just begun to give POOL a minimum value with the POOL pool and we are already discussing to trash it again!

I don’t understand you guys.

15

I’m glad you kicked off this conversation @TheRealTuna! There is a lot to digest here, so I’m only going to speak to the points that stood out to me.

POOL Farming

I 100% agree that we should drip POOL out to depositors. Distributing ownership of the protocol is essential for growth and decentralization.

That being said:

  1. I think we need to strengthen our position before distributing POOL to depositors. Ideally we’ll first launch on several more chains and integrate at least a few more partners. Not everyone will stake the POOL that they’ve farmed; they may dump the tokens. I’d like to see us in a stronger position first.

  2. I think our POOL distribution should be automatic by being based on the yield contributed by each vault. This will allow us to distribute POOL in a permissionless way, and in a way that is fully automatic and durable. Anyone can spin up a new vault that receives POOL in proportion to how much yield it contributes. Long into the future.

  3. I think it’s simpler to think about POOL distribution in terms of percentage ownership, rather than trying to target an APR. Even if people think of the results in terms of APR, it’ll be easier to reason about distribution as percentage ownership. For example, if we decide to distribute POOL then we can say we will distribute 40% of the ownership of the protocol across 4 L2s, such that each will receive 10% ownership. The actual value of the tokens and the amounts going out will fluctuate, of course.

  4. I’d like to have the POOL distribution partially retroactive; so that depositors prior to farming are rewarded.

Bootstrapping New Prize Pools

When we launch on new chains we should bootstrap by donating directly to prizes. IMO, this is The PoolTogether Way, and we’ll get a lot more mileage out of 1 ETH than we would by distributing it across depositors as farming incentives. A large portion of the donation will go into the grand prize, and therefore will take months to be released. For depositors it is still higher EV, but in the form of PoolTogether prizes.

G9 has some budget that we can dip into to donate to the next prize pools. We’ll spread it out over several days so that the daily prize isn’t too large and gameable.

6 Likes
16

I’m not afraid of sell pressure ,nor do I believe there will be any caused by the proposed 2% drip and will hold my tokens through that. I want to see volumes of POOL moving across chains and via swaps to build confidence. I faced slippage to get back in and will face it if I want to leave and that does not build confidence for users. We need to trust that the demand for POOL will outpace the supply being provided. Most who wanted to sell have done so already.

After what POOL holders have been through I don’t know that they can stomach a retroactive drop releasing tokens all at once. You want a slow and steady build of deposits than you should match that with a slow and steady build of POOL drip. I support tying the drip to yield and I think 2% should be on the high end.

1 Like
17

We want the same thing; a strong POOL token. That means the protocol is healthy and will allow us to continue building!

However, I believe a strong token will follow a strong protocol, but not vice versa. If we have $100m TVL in deposits and a strong product then the POOL token will naturally be valuable. Higher volume and deeper liquidity should follow; but they are not something we can control directly: we can only build the best protocol possible.

We’re gearing up to launch across five more chains, and have leads on some new yield partners. Once we’ve built up a much larger audience, we will have more leverage for when we do announce the start of farming.

Let’s keep building our audience to maximize that impact!

I never said that. I meant that when we start the long-term farming campaign it would be ideal (IMO) to have a small portion go to early depositors in V5. By no means would we release all the tokens, either!

2 Likes
18

I can agree to patience in applying POOL drip when we have more chains and yield sources. Hopefully we have a stronger POOL token by the time we pull that trigger.

Didn’t mean to imply you meant unleashing all tokens at once but was concerned about releasing any large amounts in big retroactive distributions. I feel strongly about slow and steady POOL release. :handshake:

3 Likes
19

Short Version:
POOL drip is brilliant and needed to boost everything once we’re on all the layers we want to be on. We need to be tactical and should develop a way to do it as autonomously as possible - but what’s the cost to develop that mechanic?

I think a retroactive drop of POOL is an interesting idea, maybe a retroactive drop of przPOOL would be more interesting. Demonstrate to those using the protocol the value of the token. I’m not sure how much of a lift a vesting schedule would be, but a vesting schedule with a rage quit option for a small POOL disbursement sounds like a good way to reward and modulate.

Long Version
I do disagree somewhat with the idea of a strong token will follow a strong protocol. While I believe in fundamental analysis of markets broadly. Crypto has been an entirely different beast historically, only the linchpin tokens have trended the way of strong token follows a strong protocol. Many many more tokens suffer from attention as currency. Unless G9 or some faction of the community has a huge marketing junket planned that has never been seen before in the world of crypto - PoolTogether does not have the attention it deserves and waiting for $100M TVL might take too long.

This isn’t to say we should go out guns blazin’ dripping everywhere, we should be tactful. But I am leery of the we need $XYZ TVL to be primed for drip as a metric. We should be tracking our TVL graphically and doing some light analysis on velocity. If our growth velocity begins to wane some X% for some Y period then we should start considering Z thing. That Z could very well be the injection of Drip or something else.

We also need to be very delicate in the use of “ownership”, POOL as a token isn’t the governance juggernaut it used to be, and the current architecture of the protocol is slowly diminishing the governance capabilities of the token for a fully autonomous vehicle. Not entirely apropos but certainly tangential.

POOL is a prize booster now, not ownership. Eventually the holding won’t be able to impact much from a governance perspective. But even as a prize booster, there’s still value to be had - so the token should be dripped. And a retro version would be cool as przPOOL, demonstrate the power.

1 Like