PoolTogether

POOL pool reward distribution

1). Length of reward cycle
2). Drip Rate || POOL/day
3). Early exit fee
4). Fee Decay Rate
5). Number of Winners
6). Gasless Voting
7). Delegator loss of votes from POOL pool incentive conflict

The reward cycle is something that show be long one would assume?
The POOL/day could be the same as UNI/COMP or different?
Early Exit Fee could be high to encourage staking behaviour?
The Fee Decay Rate could be long to encourage staking behaviour?

Let’s discuss and maybe make Polls when we have more of an idea about what people think.

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Does the rewards will be split between all participants or to 1…5 winners ?
Does the participants will be able to vote even if their token are in the pool ?

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Off the top of my head I think the following parameters are a good starting point:

1). 1 Year
2). POOL/day = 255
3). 20%
4). 3 mo

For 2), I think we could potentially anticipate how much of the supply is going to lock up. 200K = 46%APY, 400k = 23%APY, 750k = 12.5%APY. Do we want a really high rate of return for this POOL? Maybe if we make the penalty for removing expensive we do? If so it should probably be higher than 255.

I think the larger the number of winners the better if we have a long fee decay time so that the variance is reduced and it becomes less of a lottery and more of a yield.

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Thanks for kicking this discussion off @ageless ! I’d love to see this voted on by the end of the week. Here are my thoughts in response to your question

1). Length of reward cycle

I think initial modeling the funding out for 12 months makes sense. Technically governance could adjust the distribution post launch but it’s helpful to think of it in 12 month cycles.

2). Drip Rate || POOL/day

You suggested 255 per day, which would match what the COMP and UNI pools have, this would be 93,000 POOL distributed over the course of 1 year (0.93% of total supply). This seems reasonable to me. Getting about 1% of total POOL supply to long term aligned holders. However, this would not include the weekly prize. So perhaps we do a drip rate of 200 POOL per day and then allocate the remainder so the weekly prize is 385 POOL per week.

3). Early exit fee

I agree making this high makes sense. Again, it rewards long term users. There are some hard caps set by the protocol to prevent malicious prize pools so the highest we can set it to is 10% early exit fee decaying to 0% over 28 days. I think we use that.

5). Number of Winners

3 weekly winners.

6). Gasless Voting

On this point, we simply needed to decide who would hold the multi-sig wallet that would be in charge of committing the snapshot votes on chain

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If we are delegating our POOL to another wallet - or using POOL for governance - it could not be in the POOL pool (Pp) correct?

this all sounds reasonable to me.
how many people needed for the multisig?
i would propose we start with PT team members and a discord community advocate and set some kind of term limit. maybe after a year the multisig ownership could transfer to new people. not sure if that works.

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I will support this proposal

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Correct, when you deposit into the POOL pool, you would now vote via snapshot and your previous vote delegations would not work.

My preference:

  1. Rewards cycle:1 Year
  2. Drip rate: My preference would be 500/per day but I would settle for the 200 or 255 per day others have mentioned. My thought is that the most POOL should go to the longterm POOL holders and to the most popular pools(Currently DAI and USDC). Would be fine with temporarily setting something in place but we should revisit this when deciding on the rates for other pools.
  3. Early exit fee: 10%
  4. Fee decay time: 28 days (Would choose longer if it were possible.)
  5. Number of winners 3-5
  6. Would love to see gasless voting via snapshot.

hmm if POOL moves to gasless voting - and the delegations no longer work - should there be some sort of consideration for those who spent the eth to delegate their POOL on sybil?

its not that big of a deal i imagine but something to consider potentially - or it can just be chalked up to a fast moving space.

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Props to @RegisIsland for getting a poll put together for this:

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I also added point 7). Delegator loss of votes from POOL pool incentive conflict. We could just sweep it under the rug and deal with it when it happens is one way to go or we could think pre-emptively for a solution before making a proposal for the POOL pool.

Some things that have sprung up in the discord to alleviate this problem:
1). Lower the 10k proposal creation threshold
2). Use the treasury in some convoluted way to reinstate the delegators that lost their 10k+ status
3). Whale altruism
4). Actively engage with a whale(s) informally to delegate their votes instead of using the POOL pool and maybe the treasury rewards that specific whale or whales through a treasury vote after a period of time.

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i hate to postpone a crucial proposal, but i feel like we need a solution to this issue beforehand. this could grind governance to a halt.

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I think a drip/prize rate of 255 POOL/day is too high.
If 330k POOL were in the POOL pool (which is the total amount of POOL delegated at the moment, minus investors with locked coins) that would give a staking APR of 28%. If the size of the pool is smaller, that APR increases even more.

What goal are we accomplishing by paying out so much money from the treasury to stakers?

When funding liquidity mining for the standard pools, we get assets deposited that generate interest. This interest can be captured through the reserve functionality, generating revenue for the protocol. Here we are giving out tokens to stakers, “rewarding” them without getting anything concrete in return.

Another problem with the POOL pool being so profitable, is that if the pool’s voting multisig has more than 50% of all votes, that centralizes control of the entire protocol to the individuals controlling that multisig. This is a significant risk. Gasless voting is not decentralized.
This may not be an issue for the next year, as a significant amount of POOL belonging to investors and core team is locked and may not be put in the POOL pool.

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I think it makes most sense for the PT team to be holders of the Multi-sig + another entity in the space with a vested interest in protecting the protocol (such that they lose credibility if acting maliciously). Maybe someone could reach out to Argent to see if they would be interested. I mean, they are one of the largest POOL delegates after all, they should take on the responsibility that comes with that :slight_smile:

Good point on the gasless voting, I had not thought of it. Less keen on this idea just because of that. Think there’s a lot more to think about with a POOL pool than meets the eye and we probably should not rush this out.

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On 5. number of winners, I want to remark that having more winners is more expensive in terms of gas.
The cost for awarding is calculated as follows: 450k + numberOfWinners*290k + 2 LINK.
Here is how much it costs, assuming an ETH price of $1834, LINK price of $30 and gas price of 110 gwei.
0 winners: Free!
1 winner: $210
2 winners: $268
3 winners: $326
4 winners: $384
5 winners: $442

As such, I think having the drawings take place less than once a week could be a good option.
I also think there shouldn’t be a lot of winners, as they are expensive.
Another option is to not have any winners at all. This would eliminate gas costs entirely, and the POOL which would otherwise be spent on gas can be fully used to drip to users.

Source: ⛽ Gas Usage - PoolTogether 3.0

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I agree with @Torgin last sentence.
To me it should be no winner with low drip rate

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i disagree. the core conept of PT is a lottery. i think there should be a weekly prize.

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Yep understand but i don’t see it has a lottery but more has a way for holders to get rewarded… something like staking