We are ~3 weeks away from the second period of POOL rewards ending. The last adjustment was quite successful and we have an opportunity for further optimizations.
This thread is to kick off a discussion on our primary options. Once a rough consensus emerges I will re-draft into a PTIP.
To get started, it’s helpful to take a look at what current POOL distribution rates are and how much AUM those prize pools have. All details of that are available here.
A few observations on current POOL distribution:
- Since the last POOL distribution change we’ve clearly seen the USDC prize pool emerge as the largest now representing 62% of all deposits.
- The USDC prize pool has actually grown from $80 million to to $108 million despite it’s daily POOL distribution being cut 39%
- The Dai prize pool has shrunk from $57 million to $33 million over the same period of time. Its POOL distribution was cut 70%.
- We’re seeing strong signs that that effective APR from POOL distribution is not the sole factor in which pool people join. The Dai prize pool has had a higher APR than USDC for but more unique depositors and AUM are joining the USDC prize pool
- The non-stablecoin prize pools continue to drive the most AUM per POOL distributed and larger reserves
- We continue to have tension with large whales primarily interested in farming POOL. It seems there is a strong community consensus to not JUST change the distribution rate.
- Daily POOL emissions are 2,950. For context this is 1,076,000 in annualized POOL distribution. The treasury current has about 5.1 million in POOL tokens. Another helpful comparison point is the Compound protocol which has the same supply as POOL is currently distributing 2,312 COMP per day.
With the next round of adjustments, we have There are three primary factors to determine:
- What distribution method should be used
- What token should be used
- What distribution rates should be used
What distribution method
Currently the POOL token is being distributed to depositors in the prize pool. This has the benefit of simplicity and providing the dual value proposition of a chance to win + an effective APR. However, it also means that the largest depositors get the most POOL and also have the best chances to win. In general, the largest depositors don’t care very much about the prizes and are primary farming POOL.
One option to address this is to move the POOL distribution to “sponsorship”, depositors of “sponsorship” are NOT eligible to win the prizes and instead would only get the POOL. In theory, this should give smaller depositors who are not earning POOL a much better chance at much larger prizes.
Decision point: should the token be distributed to sponsors / depositors / or both
What Token Should Be Used
Currently POOL is being distributed directly. This could be continued or it could be switched to pPOOL. pPOOL is POOL that is already deposited into the prize pool. The pros have this approach are 1) saves people gas of needing to deposit into the prize pool 2) automatically opts people into rewards 3) automatically opts people into gas free voting 4) introduces defacto vesting because you would need to wait 3 weeks between claiming and withdrawing without an early exit fee.
The downsides are that it increases the initial transaction fee to claim and also centralizes more voting power in the POOL pool
What distribution rate should be used
No explanation needed on this point.
At this point, I just want to get a general feel for what people are leaning towards in the community. Specifically in regards to distribution method and tokens being distributed. I think from there defining distribution rates should be pretty simple.