POOL Endgame

[Brendan]

The POOL Endgame

The POOL token can now be staked to receive a portion of the prizes; this feature came with the release of PoolTogether V5. The new protocol is also fully autonomous, which means that governance is no longer needed to manage the protocol.

The token is evolving from a governance token to a utility token.

Completing this transition will make PoolTogether stronger. POOL utility will be simple to communicate, and that clarity will help establish a strong narrative for the token and the protocol. A stong token can be leveraged to grow the protocol.

The POOL Narrative

1. Stake POOL to receive a portion of the prizes
2. There will only ever be 10m POOL.
3. You can earn POOL by depositing.

Steps 1 is complete; we have launched V5 across Optimism, Base, Arbitrum, and soon others. POOL staking is live and people are taking advantage of it.

Steps 2 and 3 can be completed with two easy steps:

1. Cap the POOL supply
2. Distribute POOL

Taking these steps will create a strong foundation for the token.

Lastly, to complete the transition, governance should be wound down.

Cap POOL Supply

Governance should disable the ability to mint new POOL.

The POOL supply is still unbounded in two ways: the first is the POOL held by the treasury, the second is that goverance holds the ability to mint POOL.

The treasury holds 46% of the supply of POOL, which means that governance has the ability to nearly double the circulating supply of POOL. That’s a huge dilution risk to holders, and there is currently no plan to leverage those assets. It’s highly unpredictable what could happen.

Governance has the ability to mint up to 2% of the total supply every year. Given how much POOL is in the treasury, I don’t see a foreseeable need to mint new POOL. There is an immense amount of POOL in the treasury; we can safely remove the ability to mint and lock in our current total supply to an even 10m POOL.

Distribute POOL

Governance should distribute the remaining POOL in the treasury through a long-term liquidity mining program on all chains we are deployed to. To execute it properly we need to:

1. Define the key goals and initial program details
2. Execute a pilot program for six months
3. Build a fully automated solution

1. Key Goals and Program Details

The key goals of this program are to:

• Grow the protocol by providing POOL as incentives
• Distribute POOL liquidity across chains

The program should be:

• Long-term, so that the POOL supply change is reliable and predictable
• Automated, so that we don’t need anyone to administer it.

We also want this program to be generous enough to incentivize deposits. I believe we need to front-load the distribution to give depositors a big incentive to jump in now. If growth works as intended, then the value of the incentives will grow alongside the protocol.

For example, let’s say we target 30% APR in bonus POOL rewards for our current $4m USD TVL. We’d need just over $1.26m USD in POOL per year. That’s approximately 2.5m POOL tokens at $.50 / POOL.

2. Pilot Program

A pilot program will manually distribute incentives over a six month period; allowing us to start the program without committing to any particular chain or approach. We’re rolling out to new chains every few weeks, so our chain selection hasn’t quite stabilized yet.

A six month pilot program that uses our Twab Rewards contract is the simplest way for us to test POOL incentives and remain agile. We can manually distribute POOL across the chains and vaults based on their contributed yield, for example.

3. Automated Incentives

When the pilot program ends, the protocol will have expanded to many more chains and stabilized. At this point we will be in a strong position to set up a long-term automated incentive program.

Timeline

Action	When
Define Next Steps	Now
Pilot Program	July 1 - Dec 31
Automated Program	Jan 1 2025 and onward

Winding Down Governance

I believe we need to set the expectation that POOL governance will eventually wind down. We should no longer talk about governance as part of the POOL narrative.

In reality, winding down governance will take time. There are plenty of assets to disburse, and teams need direct stimulus for the moment.

From a practical standpoint, I want to outline a few points as to why this is inevitable:

• We have chosen a decentralized path: the treasury does not “make money”. It is not being replenished. Instead POOL token holders are benefiting from the protocol, and teams building on PoolTogether are applying for external grants and incentives.
• If we choose to continue using governance and extend voting to L2s, the coordination cost will become exorbitant as we continue to add more chains. However, the coordination will be for diminishing returns as the assets deplete.
• If we choose to continue using governance as-is, then the system will be more vulnerable to attack as POOL is no longer delegated and instead distributed across chains.

Summary

With these changes, I believe we can reshape the POOL narrative and leverage it to grow and decentralize the protocol.

Call-to-action

I would like everyone’s feedback on this. This program can be rolled into the proposed efforts by our teams in the upcoming PTBRs for Q3, so we can get started on it right away.

[qwercus]

@Brendan

We also want this program to be generous enough to incentivize deposits. I believe we need to front-load the distribution to give depositors a big incentive to jump in now. If growth works as intended, then the value of the incentives will grow alongside the protocol.

i saw some discussion around using hooks to let users autocompound their PT deposits. do you think holding off on pool emissions until something like this could be implemented would have a significant impact on deposit/prize growth?

[AtomicNuclei]

@Brendan

Timeline

Action	When
Define Next Steps	Now
Pilot Program	July 1 - Dec 31
Automated Program	Jan 1 2024 and onward

I’m totally onboard to leverage POOL to grow the protocol and I’m excited for it. When @TheRealTuna posted about getting the Pool Party started my only reservation was that we weren’t on Arbitrum or Base, yet.

@AtomicNuclei

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.

Now we’re on Optimism, Base, Arbitrum and perhaps L1 Mainnet Ethereum soon. I think we’re comfortable enough to think about the next steps and I think we’re there. It did come sooner than I anticipated, but the Arbitrum and Base rollouts were smoooth.

@TheRealTuna

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.

Yeah, if we just drip POOL for the sake of dripping POOL then it’ll likely be non-impactful. I’m totally for a measured approach to incentivize depositing now.

@Brendan

We also want this program to be generous enough to incentivize deposits. I believe we need to front-load the distribution to give depositors a big incentive to jump in now. If growth works as intended, then the value of the incentives will grow alongside the protocol.

@TheRealTuna @Brendan I think you both have wanted similar goals for PoolTogether, but diverged on how to execute those ideas, albeit always slightly not radically. Well, I think there’s some good alignment here finally! :3

I do like the idea of the Pilot Program so that we can remain non-committal to any possibly ineffective strategies and pivot when required.

This approach

@TheRealTuna

Let’s Go ALL IN

can now be executed upon, but responsibly hehe :3

Also an emphatic yes to:

1. Capping the POOL supply
2. Winding down governance

Governance had its time and I think it was required in our early days. Now, I think we have that hardened, decentralized version of PoolTogether we can really lean into. I think it’s time to say goodbye to the governance experiment for good. At the end, we were probably down to about 10-20 voters, if we were lucky. No need to carry that unnecessary baggage anymore. I even think governance came in clutch the last 6 months or so, it deserves credit for where we are today, no doubt. I just don’t see it being impactful anymore, though, only a burden with an ever-decreasing value proposition.

@Brendan

Call-to-action

I would like everyone’s feedback on this. This program can be rolled into the proposed efforts by our teams in the upcoming PTBRs for Q3, so we can get started on it right away.

Let’s get to it! I am curious on where we’ll land on POOL distribution respective to each chain. Of course Optimism is already incentivized by OP, meanwhile Arbitrum and Base are not incentivized in the same way (there’s some incentives there already, but small). I think the drip will likely focus on those chains more than Optimism?

I am sure the teams will have all sorts of opinions about how to go about distributing POOL in the most effective way possible.

In terms of the proposed Automated Program, I assume the below still stands?

@Brendan

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.

I think @underthesea would be fond of that. After all it’s the yield that gives us prizes, not necessarily the TVL. I think incentivizing yield contributions in the automated program will be critical and definitely the optimal approach.

In any case, I’m personally loving V5 and I haven’t been this engaged with the protocol since V3. It’s special and I want to see that reflected in the broader space. I love our niche but it’s finally time to get back to 2021 levels of protocol activity. Do we deserve it? A resounding yes from me. Everybody that contributed to the protocol over the years deserves massive props. It’s truly something special and was won over wading through a huge amount of adversity at times.

I think it’s high time we make a splash and kick-off the beloved fly-wheel espoused by our beloved lifeguard @Leighton. I think all the pieces are finally in place. As they: Let’s Get The Pool Party Started! @TheRealTuna

[alexandermiltenburg]

This sounds good. 10M POOL sounds like a fair amount. Having a stable amount of coins is imo more attractive for new users because it’s a sign that things are stable. The distribution and maintenance of the POOL tokens value has to be perfect though, otherwise you could end up in the same situation Radiant currently finds itself in. (No hate towards Radiant just observation)

As for winding down governance i just found out today this section existed lmao. I have strong faith in the project and i would love to see it rise and succeed. (Noobie question but how will the decisions be made when gov is gone?).

What are the plans in terms of marketing for active userbase growth? Because i do see PT pop up in CB wallet, OKX wallet if i’m correct and a few websites but it didn’t convey a message to me that it’s a new and improved version of PT. Maybe a start would be getting that message out there. Because V5 is dope.

[cpoetter]

Generally, I’m in favor of this proposal.
But I’m confused a little bit:

1. For “The POOL Narrative” you list three points but later you refer to “Steps 3 and 4 can be completed with two easy steps”. What is step 4?
2. As for the timeline of the automated incentives (3.), you mention Jan 1 2024 as the start of the automated program. Is it Jan 1 2025?

[soldjer]

Say POOL governance is winding down, supply capped at 10m, no ability to mint new POOL, heading towards full decentralisation.

Linear or Tier airdrop distribution with tasks and give vague snapshot date:

1. Provide eth/pool liquidity no minimum any amount
2. Lock funds in no loss lottery for 30/60/90/120 days acting as multiplier for eth/pool liquidity provision 1x 2x 3x 4x
3. Retweet, like, comment and verify to guarantee airdrop allocation
4. Make user claim their own winnings
5. Tweet and verify their winnings before they can claim

Now you get liquidity, you get big prize, you get eyeballs you get hype

More points more more! Launch on blast maybe?

[Tjark]

Thanks for opening up the discussion, Brendan. This topic has so many nuances and levels, I’ll try my best to combine my feedback and commentary while keeping a red thread.

@Brendan

Governance should disable the ability to mint new POOL.

I don’t have an opinion about this yet, but would appreciate any input from PoolTogether OGs like @gabor, @Torgin, @BraveNewDeFi, @therealtuna, or @Leighton.
What has been the initial reason for introducing this governance ability?

The reasoning makes sense though. Winding down governance would lead to this anyway, I’d figure?

@Brendan

Distribute POOL

The time has come!

When thinking of POOL distribution, it’s interesting to browse some posts from back when the distribution initially ended. Example: POOL Distribution & V4 Rollout

It feels like we’re finally able to return to the original plan and vision. Let’s get this dusty treasury POOL in the hands of the users again. I’m all for it.

@Brendan

2. Pilot Program

I see the pilot program as extremely valuable for sustaining some flexibility and ensuring we can react to potential flaws or surprises.
With this in mind, it will be useful to define a set of metrics and questions in advance we can later use to evaluate the success of our pilot program. We’re looking at a tight schedule that’s potentially about to begin very soon, so we should have it all in place to swiftly incorporate feedback and learnings from the pilot phase into the automated program.

@Brendan

3. Automated Incentives

Is there any existing tech to leverage you have in mind or is the plan to create a custom-built solution? Eg. could this simply be streamed to the rewards contracts or do we need to plan for intense security audits?

@Brendan

Timeline

Getting right to it. I like it. We need to force ourselves to action.

At first look, the swift two-step timeline feels scary. I think this is normal when facing a big decision like this. However, this requires us to have a bulletproof plan. It could be worth thinking of adding another phase in between the pilot and final all-in and having two shorter pilot phases instead of a long one.

@Brendan

Winding Down Governance

I believe we need to set the expectation that POOL governance will eventually wind down. We should no longer talk about governance as part of the POOL narrative.

In reality, winding down governance will take time.

This Governance Will Self-Destruct

Great points, Brendan. I’m with you here. Winding down governance feels inevitable and right.

A truly decentralized protocol is owned by no-one because it belongs to everyone. PoolTogether is a true public good and it belongs to anyone onchain. It’s not just a hype-y title from the marketing department but will be cemented with the executing the POOL endgame plan.

What makes PoolTogether valuable is that anyone can use it to make money.

Apps and products can be built on top. The protocol is designed so that any product leveraging it could accrue value in various ways (vault fees, prize hooks, etc). At the same time, the protocol enables builders to direct value generation toward other ecosystems. An example of what I mean by this: A team could build a prototype for a no loss donation platform and acquire direct grant funding from an ecosystem of their choice.

We still need to work on a shift in our culture to better empower and celebrate builders. No one should be afraid to present their work and progress. As a community, we need to become more hands-on in our feedback and support. I’m looking at people like @geeloko and @MTheory here - your help and judgment are super valuable to help us figuring out what direct improvements we can make.

@alexandermiltenburg

Noobie question but how will the decisions be made when gov is gone?

Not a noobie question, but a great one!
Let’s take token tickers as an example. Any ticker could be used by any amount of different tokens. Who decides which is the “official” ticker? It’s the one that’s being used the most and shows the most liquidity.

How are decisions made on Ethereum? It’s the social consensus.
Anyone could make a decision. It’s the distribution and adoption that matters in the end.

This means, that even though there is no “governance”, governance is reborn in other means. There remains a need for platforms of exchange, like a forum, digital meetups, arrangements between contributors & builders, and so on.

Final thoughts

Historically the protocol always had one blocker that prevented it from scaling indefinitely. This time, the tech won’t be the issue.

The protocol is brilliantly designed and is highly adaptable and extendable. It’s ready to deploy to numerous chains and easily integrateable in both directions.

In my opinion, there are three key blockers to the protocol’s success:

1. The POOL Token
2. The PoolTogether Narrative
3. The Distribution
   I believe by leaning into the POOL endgame, we can remove all three.

This is our chance to clean up with all uncertainty and close the gap in PoolTogether’s narrative. POOL incentives will attract yield-generating assets allowing prizes to grow and making it more compelling to use the protocol for its prizes instead just its incentives.

@Brendan

Call-to-action

This program can be rolled into the proposed efforts by our teams in the upcoming PTBRs for Q3, so we can get started on it right away.

I want to echo this call to action to everyone else!

Do you see a spot for you in helping PoolTogether succeed during the POOL endgame?

This is the time to get involved. Create a request for comment (RFC) here on the forum or drop a message in the #governance channel on Discord and get started by collecting some feedback for your ideas & budget.

[mkkoll]

It’s inevitable that governance fully distributes the POOL it controls out into the world. It has never had any real way to ‘buyback’ POOL other than literally siphoning yield from the deposit tokens of the protocol, which would be untenable for depositors.

Running an incentive program that would pique some interest would probably be very expensive however. Brendan’s ballpark figure of incentivizing at +30% APR costing 2.5m pool would nuke the treasury. So its probably something that could only ever be done once.

Governance better make sure all its ducks are in a row before pulling the trigger on such a program. Marketing, timing, infrastructure etc

That being said, the contributors the the PoolTogether protocol are some of the most passionate, mission-driven people i’ve seen in crypto. So i know it could be done and be a success

[Brendan]

Fixed those typos @cpoetter, thanks! This went through many drafts

@Tjark

What was the initial reason for introducing this governance ability? (to mint POOL)

The POOL token and the governance system is a fork of Uniwap’s gov system. The UNI token allows a 2% inflation rate. I wanted to avoid any code changes in order to minimize risk and cost, and we liked the optionality of minting POOL, so we kept it.

We no longer need that optionality, and it becomes a liability as governance is wound down. It’s time to shut it off.

@Tjark

Is there any existing tech to leverage you have in mind or is the plan to create a custom-built solution? Eg. could this simply be streamed to the rewards contracts or do we need to plan for intense security audits?

Yes to both. I think we’ll need to build a custom contract that is as simple as possible, and bases POOL distribution on the contributed amounts from each vault. The distributed POOL by default is proxied to Twab Rewards, or the vault (if there is an owner) can opt-out and distribute the POOL in a different way.

If the contract is simple enough we may be able to avoid an audit, but we won’t know it until we see it.

On that note, I believe that the core of this program is still liquidity mining. I think the experiments will be around how we engage our partners, bootstrap vaults, match incentives with chains, etc. These kind of discretionary incentives are very important.

@Tjark

This means, that even though there is no “governance”, governance is reborn in other means. There remains a need for platforms of exchange, like a forum, digital meetups, arrangements between contributors & builders, and so on.

I would like this many times over if Discourse allowed it! While our voting system will be irrelevant, coordinating to build the future of PoolTogether will be more important than ever. This community will be more like the Ethereum community; decisions will be a social consensus on how to evolve the protocol. There will be no need for on-chain voting.

@mkkoll

Brendan’s ballpark figure of incentivizing at +30% APR costing 2.5m pool would nuke the treasury. So its probably something that could only ever be done once.

This is why we will run a pilot program; so that we can ease into a distribution without fully committing to one path. Once we know the path we can commit to a long-term program.

[TheRealTuna]

Hey @Brendan

I support capping the supply at 10MM and eliminating the ability to mint 2% of new POOL annually. While 2% could be beneficial once we exhaust the POOL supply in 5 to 10 years, having a limited supply offers long-term security for POOL investors by preventing dilution.

I also agree with dissolving governance since our autonomous protocol no longer requires it. To dissolve governance, we need to address the treasury. I propose utilizing non-POOL treasury funds to incentivize adoption rather than heavily frontloading POOL distribution.

I’m excited about resuming POOL distribution, as it should boost trading volume and liquidity. However, I have major concerns about front loading POOL drip and targetting 30% APR. If TVL grows to $20MM, the effective APR would drop to 6%, assuming the POOL price hasn’t plummeted. I feel like you have previously argued against these heavy drips in the past and it gives me flashbacks to when we had much higher TVL and a 30+% on a much higher TVL. Heavy frontloaded release of POOL could trigger a short lived feeding frenzy and POOL holders will be the food for depositors. To maximize value for POOL holders, we should adopt a conservative approach to token release and supplement from non-POOL assets. $1.26MM USD in POOL can very quickly become $500K USD in POOL.

[swimfan]

very good plan. make pool fun again

[underthesea]

I think turning off the inflation is an easy point of consensus and I agree lets do it.

I am for distributing the POOL in treasury. With treasury spent, and no protocol parameters to govern, the tokens gov utility will be done. I’m good with that.

I agree with @TheRealTuna. I think the distribution is critical. The pilot program can be targeted to study specific results without creating heavy dilution. Liquidity is thin and we should be wary of attracting too much mercenary capital. Targeting APRs is tricky and I think it’s better to have goals than to look at current conditions.

5% APR in POOL on $10m = $500k in POOL. This would give the 6 month pilot program $250k in POOL.

We have the OP rewards doubling July 1st which means we should hope for the Optimism TVL doubling. We also have a good size grant of OP to incentivize rETH on Optimism. AND we have OP in treasury to incentivize deposits. These three things combined we can hope push the protocol up to $10m TVL.

The 2% depth on POOL is about $2k on each chain. Liquidity is relevant to high emissions.

I hope any plan has minimal custody. Having to oversee the distribution in any way for years does not seem like a good idea to me. The automated program after the pilot is important I think.

In addition to this proposed POOL farmathon I believe we should consider distributing POOL to the most protocol aligned participants. Im envisioning a linear distribution based on past activities like voting and proposing votes. It could be weighted based on current POOL holdings. I can go into more details on this but it’s probably not great for this thread. Ill bring it up on discord and see if there is momentum.

[Brendan]

I think a front-loaded distribution would work well for us.

• We need extremely competitive APR to bring people in
• Once in, it’s an opportunity to communicate the new narrative and attract long-term holders
• Token fundamentals will stabilize market price
• As an ownership distribution, it’s pretty normal

High APR Brings Them to the Yard

We need eye-catching APR for POOL.

We’re currently offering:

• 11.5% bonus APR for USDC
• 8.4% APR for DAI
• 5.7% APR for WETH

People think in APR; we need to be competitive to draw people in.

New Narrative Makes them Holders

Once people are brought in, it’s an opportunity to showcase how the token works and the token fundamentals.

We can separate the POOL vaults in the app and showcase their unique properties.

We also need to clearly communicate how the token works in comms and otherwise and really push the new narrative. Over-communication is key.

Token Fundamentals Stabilize Market Value

Once we better surface the token fundamentals it will be clearer to determine the true value of the token, and the market should stabilize. Dumping would actually improve POOL vault APR.

As an example:

The POOL vault receives a portion of prizes. That means as prizes increase, so will the POOL prizes.

This reflexivity isn’t affected by the “value” of POOL on secondary markets. If POOL is severely dumped, then the spot price of POOL goes down but the staked APR of POOL will then skyrocket.

Staking will stabilize POOL markets for this reason. This is a positive feedback loop.

In terms of Ownership, It’s a Normal Distribution

Ignoring “APR” for a moment, if we consider the POOL distribution as a release of 23% of PoolTogether ownership over one year, then it’s a normal distribution approach. Especially as we consider that the 23% will be over a half-dozen chains or more. Six chains would each receive 3.83% ownership.

Curve finance released about 37% of their tokens as farming incentives over the first year. For remaining years the distribution is a yearly version of the bitcoin halving model.

That Being Said

While I believe we should have the capacity to distribute 2.3m POOL over the next year, I agree that it would be prudent to start lower, say 15%, and see how far we get. We’ll need to reserve POOL until we’re on more chains as well.

[TheRealTuna]

I don’t think POOL holders can withstand anymore dilution from feeding depositors. This is not going to play out like you envision. We would just be giving away tokens cheap. If we get any growth than it kills the APR and our ceiling is not going to be very high. We need to nurture the POOL token along the way and prove and always up trajectory. If we want to dissolve governance then why can’t we use the non-POOL treasury assets to achieve massive growth while also stimulating the POOL token?

I’m not sure what current TVL is exactly, maybe $3MM? If POOL price remains unchanged and we target 15%, if we grow to $20MM TVL we are now only at 2.25%. If price tanks as well we could be at 1%. POOL holders are getting rekt in this scenario. My approach is to target a low percentage from the start with POOL tokens and use a big chunk of non-POOL assets to stimulate. Let POOL price action drive growth. Do you have other plans for the non-POOL assets after removing community control of them?

[Brendan]

@TheRealTuna

why can’t we use the non-POOL treasury assets to achieve massive growth

I believe POOL is higher leverage; it’s the most valuable asset we have because its a share in the protocol. It’s not simple cash.

POOL is reflexive

Scenario: non-POOL assets as incentives

Let’s play that scenario out and pretend we use non-POOL assets to incentivize:

• We currently have OP bonus APRs of 6-12% on our vaults. Growth has stalled. Let’s assume we need 15% APR to really bring more people in.
• Let’s say our target TVL is $10m. to sustain $10m TVL, we would need $1.5m in assets per year in additional incentives.

We would need our entire balance of non-POOL assets to bring in $10m.

POOL is special

Mechanically, what is different about POOL is that it is reflexive. Higher prize volume results in higher APR for POOL. A drop in the price of POOL results in a higher APR for POOL. If people dump POOL, then it’s an opportunity to scoop up POOL and use it to capture more ETH.

This is the key difference: POOL incentives will increase deposits, and deposits will increase the value of POOL. It’s reflexive. The value of incentives increases as the TVL increases.

Leveraging POOL

By harnessing this reflexivity we can strengthen both the protocol and the token.

However, we need people to SEE this reflexivity. Our current interfaces aren’t cutting it. We need to:

1. Educate everyone about the new narrative and this behaviour
2. Update our interfaces so that people can monitor and see the reflexivity
3. Help everyone be part of it by releasing POOL incentives

[sliponit]

Hey! Tx for opening up the discussion @Brendan.

Disabling new mint and winding down governance are a must. On that we agree

The plan too distribute POOL seem far too complex though. Airdrops or incentives feel kind of unfair to me, especially if distributed to depositors.

About the POOL owned by the treasury, I would say burn it, this should induce inflation.

About other erc20 tokens owned by the treasury, I don’t know. Keep

• for growth (better achieved with partnerships than distribution), or
• for future technical developments around the protocol, or
• for bounty programs. Immunefi bounties appear very low imo PoolTogether Bug Bounties | Immunefi | Immunefi Maybe an partnership with hats.finance is still possible, cc @sombrero @Fav_Truffe

Side question: can you share what the findings of the sherlock audit competition are, if any? I can’t view the findings at the time of this post PoolTogether: The Prize Layer for DeFi Contest - 115,000 USDC

[Loitering_Gorilla]

Let me get this straight.

$4 million TVL (approximately) earning 4% (generously) from Aave. That’s $40,000 in yield annually. When $POOL is fully distributed, that’s 10 million $POOL. So IFFF $POOL holders get the entire prize distribution (which they obviously aren’t), the annual return from owning one $POOL will be .4 cents? Even if TVL goes up by 10x, the annual return from owning 1 $POOL will be less than 1 cent. If it goes up by 100x maybe you get 5 cents annually, pool gets a max imputed value of $0.25.

If the only value of $POOL is you share in a portion of the yield (prizes)…yikes…

If you want my POV- and tbh nobody did ask- stop all work on development, Cabana.fi/Pooltime work, they’re good and you have platforms (OP, Base, etc…) funding growth.

Invest in 2 things and only two things:

1. Partnerships
2. Really Big Prizes- Give away $100,000 USDC every other week for 5 weeks as one big prize. Promote the fuck out of it via your partners. Reveal the winner in a live twitter space (I refuse to call it X)

If you can’t get eyeballs and deposits from the partnerships you have and making noise like that, crypto just isn’t ready to invest in prize-linked savings.

Oh, and figure out a way to get more utility into the $POOL token, other than just a percentage of prize yield.

Hope you are all well,

Gorilla out

[Brendan]

@sliponit

About the POOL owned by the treasury, I would say burn it, this should induce inflation.

POOL can’t be burned, in the sense that the total supply will reduce. We can only “burn” tokens by sending them to an inaccessible “dead” address. In my opinion sending tokens to a dead address wouldn’t have enough visibility to make an economic impact.

@sliponit

can you share what the findings of the sherlock audit competition are, if any?

The Sherlock competition hasn’t ended yet- stay tuned!

[Brendan]

Nice to see you here Gorilla!

We are focusing on partnerships

Partnerships are definitely where we are focusing our attention. We are working with partners on co-marketing such as sweepstakes NFT and incentive campaigns. We are deploying to new chains and integrations in order to increase our addressable market for users, incentives, and grants. More on that in the PTBR, if you haven’t read it yet.

POOL staking is good

The value of staking POOL is right in line with the rest of defi. It’s easier to compare it to other protocols, such as Aave:

• Aave gross revenue as a percentage of TVL is approx 2.57%. They have ~$330m in yearly revenue and that’s for about $12.8b in TVL.
• POOL net staking rewards are about 1% of TVL. Deposits are currently earning 10% APR on average, and about 9% is going to the reserve (will be higher on Ethereum).

Note that our number is net and Aave’s is gross; our protocol has zero additional costs outside of hosting. Our numbers are right in line with the best of Defi.

I think the biggest problem with POOL staking right now is that it’s poorly communicated. We aim to address that in our PTBR with a user interface update and better comms.

Validating the Product

@Loitering_Gorilla

If you can’t get eyeballs and deposits from the partnerships you have and making noise like that, crypto just isn’t ready to invest in prize-linked savings.

I appreciate this blunt statement. I would love to hear more clear-eyed and constructive takes like this.

Our hypothesis is that large prizes will attract depositors. POOL liquidity mining intends to increase the prizes by increasing deposits. However, it will take time for the prizes to grow.

But we don’t have time. We need to validate this product right now.

I like your suggestion of going big or going home. I think that’s the attitude we need to have; to shoot for the moon with the best shot we have and see how far we can get. That’s the intention of this endgame post, but it’s not directly addressing our core value prop.

There is no point in worrying about cash and maximizing our runway on a project where the core value prop isn’t validated. We should spend money now to determine if this is project deserves more of our time and energy.

We’ve received a lot of feedback about using non-POOL incentives, dilution concerns, and rewarding past users. I’m going to fold this feedback into a more detailed plan that is less about the POOL endgame, and more about the PoolTogether Endgame.

Thank you for your thoughts! I’m glad that you’re still loitering.

[sliponit]

Tx for your clarification of the “burn” meaning. That is what I meant as stated in the pooltogether discord channel Discord I disagree with the low potential of the economic impact and this is a matter of principle but whatever.

About security, you did not reply on the small amount of the bounty program on immunity so I am reiterating that the bounty on immunefy seems very low compared to current - and hopefully much higher in the future - tvl in the prize pools. Do you plan to increase these bounties? Shall the “community” make other inquiries with other bounty programs? Again I think hats.finance could be a good fit even if you did not follow through with them in the past regarding an audit competition Audit Competition Proposal for Pool Together V5 Smart Contracts by Hats Finance

Looking forward for the potential findings from the Sherlock competition