PoolTogether

Pod of War: Defeating Yearn

Pod of War

We must defeat Yearn by growing Pods until they eclipse the Yearn Strategy.

Yearn’s Dai strategy now holds $40m / $65m of the deposits. They are capturing and dumping more and more of the pool every day. But we now have Pods.

Pods are a unique addition to the PoolTogether protocol; they combine tickets together to give users a higher chance to win. Instead of tickets, users hold Pod shares.

Pod shares are distinct from Pool tickets in that they’re fully fungible: I can swap my shares with someone else and it doesn’t affect my chances of winning. Pod shares are simply tokens that can claim a randomly increasing amount of collateral.

This is a huge boon for PoolTogether: Pod shares can be bridged to other networks with no risk to the protocol. We can push these tokens out to every single EVM out there. Shares will likely get arb’d and so users can pull their winnings directly from the AMMs.

How can we do this?

We incentivize LP positions across our favourite AMMs on different networks. This has two effects:

  1. Liquidity is put into PT. LPs must mint Pod shares in order to create positions.
  2. Liquidity is bridged across blockchains.

For example, by creating an LP position for Pod shares in Quickswap, users will deposit into the Pods then move shares over to Quickswap. Boom. Pods are now cross-chain. LPs earn POOL by doing “work”.

I propose we incentivize LP positions for Pod shares across all of the popular AMMs. This will:

  1. Increase TVL
  2. Make Pods available across all AMMs.

To do this efficiently, we’re going to need to:

  1. Select our favourite AMMs
  2. Bridge Pod shares to the relevant networks
  3. Bridge POOL to the relevant networks
  4. Deploy faucets on those networks for the LP pairs and fill them up with POOL.

Who’s with me? :crossed_swords:

8 Likes

Update on this:

Token bridges:

Token Polygon Address
POOL 0x25788a1a171ec66da6502f9975a15b609ff54cf6
Dai Pod Shares 0x18C4315847Cf73D5028c8A98EAd16e862450E618
USDC Pod Shares 0x96d161cbf38FACCeD333851A9cEf20936DDA88F4

Next item to look into is Sushi LP incentives.

Update:

Pod shares are now trading on Polygon! Swap for shares on Sushi for next to nothing.

Details & Instructions Here

Summary:

  • Trade any asset for Pod shares on Sushi
  • Recommended trades are < 100 USDC (for slippage). As liquidity grows this will get better.
  • When the Pod wins, you can cash out using Sushi! We are arbitraging the price so that it matches the Pod share prices on Ethereum.

Now…shall we have LP rewards? Hmm… :slight_smile:

It wasnt until todays community call that I realized what all this actually means. Access to cross-chain liquidity that drills down to Ethereum mainnet at the end of the day.

PoolTogether is positioning itself gloriously to reap the benefits of L2 and sidechains with tools like this. Defi summer will be the biggest growth opportunity for PoolTogether yet. It should be seized.

The stablecoin Pods need to grow to defeat the defi goliath that is Yearn :slight_smile:

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Regarding incentivising pods on sushi on polygon, how much liquidity is desired?

My thinking is, we want to provide the pods option for users that want exposure with relatively small amounts? It should in some way be anchored to the gas cost of how much it costs to directly buy the pod shares on ethereum?

For example, it should be cheaper for a user to buy $100 on polygon because the gas cost to directly buy on ethereum would represent a significant %, but as that number rises it makes less sense why a user would use polygon over ethereum to join a pod? Am I thinking about this correctly?

Yes, exactly: for users buying small amounts they should use L2. For users buying huge amounts they should mint directly on L1.

@dylan had a very interesting idea yesterday: when users want to buy Pod shares we recommend where to buy them based on the size of the purchase.

  • For a whale buying $100,000 of Pod shares it’s cheaper to mint them directly on L1 and pay $40 in gas.
  • For a user buying $100 of Pod shares it’s cheaper to swap on L2 and pay $1 in slippage.

In this way, our interface could behave like an aggregator in that we always find the user the best price.

2 Likes

I hope so, just contributed heavily to a POD.
But looking at Yearns size is discouraging. Massive whale.

In the last 7 drawings alone, which appears to be when they started on April 23rd. They’ve won 12 of 21 prizes. Which will only increase from here on out, as their deposits continue to increase.

At a certain point, I think people will start having the internal dialogue of what am I doing here?
It’s great that it is a no-loss lottery but if there’s no chance for me to win why keep your funds in the pool?

I am sure some of you much smarter than me have been thinking about this.

I also read in another thread that monetizing or increasing the value of the POOL tokens wasn’t a priority or not in the plans, so why would someone keep their money in the stable pools?

At least with the other tokens, they are increasing in value while you play the lottery.

2 Likes

At a certain point, I think people will start having the internal dialogue of what am I doing here?
It’s great that it is a no-loss lottery but if there’s no chance for me to win why keep your funds in the pool?

That’s exactly why we’re pushing the Pod: so that more people win.

Once that pod gets large enough, we can create more to offer a variety of chances.

Total agree with you. Just read this comment. Thanks for sharing and I hope you stick around while we get this optimized.

This is a really cool thread. I agree that the current state of Yearn isn’t beneficial to the growth of PoolTogether. While, yes, incentivizing the pod model does provide a route to be able to defeat the goliath of Yearn, that is about all it does.

Instead of embracing and incentivizing LP positions directly for the fungible PT pod tokens, I would strongly suggest that the DAO explores this using Fuse LP tokens. Yes, I am a member of the Rari Capital team and have my clear biases but let me explain. PoolTogether already has a pool inside of Fuse, a platform for lending and borrowing. When users deposit their PoolTogether deposit tokens, the winnings are shared with all lenders, creating what is essentially known as a ‘pod’.

Now there are a few key differences and advantages with using the Fuse LP tokens instead of the native fungible pod tokens.

  1. Provides an easy way for people to leverage up on their chances of winning the lottery, directing more liquidity to beat Yearn.
  2. It is much more capitally efficient as people can borrow against their LP tokens instead of them just sitting doing nothing. Productive assets are key to potential growth here.

Plus, it doesn’t cost users much. Fuse inherits a lot of the security and lindy that Compound has achieved as it is a fork. Two more things: 1) when Rari begins liquidity mining, this will make it so that all the users could get potentially double liquidity incentives (POOL and RGT) and 2) we can direct stablecoins into the pool to match borrow demand if if is strong enough (from the yield aggregator).

Together, let’s push this pod-like mechanism and bring back fair lossless lotteries to PT. Keen on hearing y’alls thoughts here.

1 Like

I’ve very excited about being able to use tickets and pod shares as collateral for lending! It increases the capital efficiency of PT, and really strengthens the idea of PT as a financial primitive.

I think both options have their merits and are worth exploring.

Lending Pods, as in the Rari one, have complexities:

  • Users would have to pay interest to borrow
  • If the user has deposited non-stablecoin tickets, then there is a risk of liquidation

This additional risk and complexity is not appropriate for all of our users and pools. I think more advanced users will definitely take advantage of the leverage, but it’s not for everyone.

The reason I’m pushing the L2 AMMs above is because we’ve seen the number of deposits directly correlates with gas prices. We have many small depositors, so when gas costs are prohibitive the number of deposits drops significantly.

Rather than bootstrapping prize pools on every single L2, it’s much simpler to bridge the existing prize pools to L2s so that people can get in at a much lower cost.

This weekend volume increased significantly for USDC Pod shares on Polygon (see pair analytics). I believe we can get significant growth by actually linking users to the pairs in our user interface. Right now they are very difficult to find.

So, all of that being said, I think we should pursue both options (and we are!). The Rari collab so far has been great!

3 Likes

+1 That would be incredible. Imagine a mass exodus to the pods! Whales can fight with Yearn while pods create their own ocean of TVL :slight_smile: