Discussion about the Implementation of accruing stablecoin Jackpots.
Currently the entire generated interest is fully redistributed to winners weekly, so far not allowing for accrual of a truly sizeable prize pools. In traditional lotteries, the number of participants correlates with growing size of the Jackpot (refer to the crazy Spanish Christmas lottery, EuroJackpot or Powerball). To unlock further potential of PoolTogether and add an attractive feature, it should therefore be considered to implement accruing Jackpots to the stablecoin pools, cutting a specified percentage from the running stablecoin prize pools until the Jackpot reaches a pre-defined threshold/cap and gets drawn.
In addition to raising more awareness and attracting more users, the Jackpot could serve an additional purpose. An often raised concern is that PoolTogether might be beneficial to whales even if the odds of winning are the same per ticket. This perception is amplified by the fact that most weekly winners tend to be large ticket holders. To attract and reward smaller participants, each wallet could only participate once in the drawing of the Jackpot, regardless of amount of tickets.
The below overview helps to assess the current value accrual potential:
For example, applying a 5% cut on a weekly prize pool in amount of $20k (comparable to current state), this would allow to add $1,000 per week to a Jackpot contract. After 10 weeks, this gives all participants the opportunity to win $10,000 and represents a high value proposition in particular for smaller ticket holders. Applying a slightly higher cut and assuming the Assets under Management (AuM) keep growing, larger Jackpots can also be in reach. The Jackpot size could be revisited from time to time through governance proposals (wen $100k?).
Such a Jackpot could be implemented for both currently featured stablecoin pools (DAI + USDC). Re-deploying of the funds held in the Jackpot into Compound needs to be assessed from a cost/benefit perspective in light of currently high gas fees.
A mechanism to determine eligible users needs to be worked out. My initial thoughts on this would be to limit the participants to ticket holders who did deploy prior to the draw of the previous Jackpot. I.e. everyone would be eligible for the first Jackpot, whilst for the second Jackpot only users who deposited before the first draw are qualified and so on. This also creates an incentive to remain a long-term depositor in PoolTogether.
- Large Jackpots naturally attract more participants
- Drawing of Jackpot can be done in an event format and used for additional marketing, especially when they reach a proper size
- Instrument to honor smaller ticket holders through a fairness mechanism (1 ticket per wallet)
- Creates stickiness with depositors
- Deviation from 1 Ticket = 1 Chance may be perceived as unfair (but mitigated by only a small percentage cut)
- Reinvestment of funds in Jackpot may not be feasible due to gas fees to deposit smaller amounts into Compound weekly, resulting in inefficient use of capital
Looking forward to your thoughts and winning the Jackpot!