PoolTogether V5 Optimism Launch Plan

PoolTogether Updates 📣 Announcements
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The end is nigh… the end of waiting for V5!

April 17 is the launch date for PoolTogether V5 on Optimism

After months of extensive testing, auditing, and design we are finally ready to (re)launch PoolTogether V5 on Optimism!

The necessity for a relaunch became an opportunity to improve V5, and the protocol has been simplified, hardened, and optimized in numerous ways.

This additional time has also given us an opportunity to re-assess externalities and user sentiment. Feedback on both of these has led to some changes to the protocol.

In this launch plan I’ll present:

  • Important protocol changes since PTBR-15
  • Deployment details

Protocol Changes

There have been two significant changes since PTBR-15 was proposed: how external incentives are handled, and POOL utility.

Aave Incentives

Previously, we assumed that there would be very little yield farming through Aave V3. The protocol was firmly established and Aave incentives had ended. However, we have noticed short bursts of OP incentives on USDC on Optimism. These incentives more than double the effective APR; it would be costly to ignore them.

We have decided to handle this by liquidating the additional incentives for ETH and contributing them to the prize pool on behalf of the vault. This means that Aave prize vaults for incentivized lending pools will have significantly higher chances to win, and the prizes will be much larger for everyone.

The solution leverages our existing liquidation bots and infrastructure, but setting up new Aave V3 prize vaults is now a complex multi-step process. As a consequence, G9 will create the initial set of Aave V3 vaults that were voted on in the previous Snapshot proposal.

Going forward we will provide documentation, tooling and support on how to set up Aave V3 vaults. However, in order to expedite the launch we will simply do it ourselves for the initial set of vaults.

POOL Utility

PoolTogether V5 captures a portion of yield to pay for the RNG, then the remainder is used for POOL utility.

You will now be able to stake your POOL for a chance to win prizes

Instead of being used to burn POOL, the remainder of the reserve is contributed to prizes on behalf of a POOL prize vault. Reserve is fed back into prizes instead of being sold. This means you can use your POOL tokens in the most PoolTogether-y way possible: stake your POOL and have a chance to win ETH!

This is a significant departure from the POOL burning utility, but it has been received with widespread and enthusiastic approval by the core contributors. This was very easy lift for us, as we were able to leverage all of our existing code.

Deployment

On April 17th the G9 team will be deploying the core protocol and initial set of Aave vaults to the Optimism blockchain. We’ll then follow by updating all apps and infrastructure to use the new deployment.

The deployment will include:

  • The Prize Pool & peripheral contracts
  • POOL Prize Vault
  • Aave V3 Prize Vaults
    • USDC
    • ETH
    • Dai
  • TwabRewards contract to allow the permissionless distribution of incentives to prize vaults
  • TwabDelegator contract for each of the vaults, to enable anyone to easily delegate their chance to win.

The Cabana suite of apps will be updated shortly after deployment.

The PoolTogether Developer Site will be updated with a new deployed contract list, and over time we’ll align all the documentation with the new code changes.

Coordination

We will be coordinating with the Pooltime team (and anyone else!) to ensure they have what they need to update their app and infrastructure for the new deployment.

Incentives

We will prime the Cabana app for incentives by whitelisting OP and POOL tokens. This means that if anyone adds Twab Rewards for those tokens they will show automatically (tokens must be whitelisted in order to become visible in the interface).

The G9 team is incredibly excited about this launch. The new PoolTogether is the definitive PoolTogether: an autonomous, immutable, permissionless, incentivized prize machine.

If anyone has any questions or comments, fire away!

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thanks for the great design work!

if i understand correctly, yield is held for 3 purposes-
100/114 or ~87.7% goes to prizes
010/114 or ~8.8% goes to reserve to pay rng (then excess to pool stakers)
004/114 or ~3.5% goes to canary for prize tier discovery

in the canary case, if nominally ~1% of total yield is expected to cover canary costs what happens to excess? saved as canary reserve for the unexpected?

another question- if governance is not unwound and we incentivize pool staking, is there a potential governance attack vector where most pool is staked/bridged and someone has enough pool to make quorum and pass a proposal draining the remaining treasury?

sorry i didnt ask these questions earlier in the process!

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Any excess liquidity from canary tiers is fed back into prizes.

If less POOL is delegated on Ethereum, then it becomes easier to control governance. This isn’t a consequence of the above POOL utility; this would happen anyway if people want to trade the token on L2s. Any migration of POOL to L2s would reduce the current voting power on Ethereum.

To mitigate this, there are other paths forward:

  • we distribute the remaining assets in the treasury and dissolve governance
  • we enable L2 voting

Personally, I believe we should distribute the remaining tokens in the treasury. I’m planning on writing up my thoughts on how that could work.

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That could be a karma push for those people who bought Poolys to save DeFi and PT…

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what if i told you multichain governance is coming? :eyes:

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If POOL holders want to move in that direction, they may decide to do so!

The Pooly sale proceeds went to PT Inc, not the PoolTogether treasury. They are two different entities.

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I lost track of what was happening, but I like it!

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It would be a nice idea anyway if you wanto to distribute the tresury to keep them in mind, since they paid for PT inc legal defense.

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Excited for the relaunch, and thank you for the great overview here.

I just wanted to know if @tim or anyone else on G9 is coordinating with the Beefy or Yearn teams to have their vaults launch on or shortly after the 17th? Is that in the works? I know there’s general excitement for new yield sources, so just wanted some clarity around that aspect of the launch.

And on the treasury aspect:

It would be ideal if mainnet liquidity could be boosted within one (1) month of launch to draw down some of the treasury and provide ample full-range liquidity. I believe folks have talked about a POOL-WETH pair on Uniswap v2 to acheive this, and I’m sure that proposal is in the works.

  • That would remove $200k to $300k in ETH from the treasury to pair with POOL
  • The $265,708.20 in OP held in the treasury can be earmarked for incentives, and that would need to be custodied on Optimism, which is another problem to solve :thinking:

Those two actions alone would reduce the non-POOL treasury holdings to $686,617.54 at current values. In June, the next round of funding proposals will go up and I’d assume a good portion of the remaining non-POOL assets go to team funding.

All of this would reduce the incentive for someone to conduct a governance attack, though it would still be possible.

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Yes, coordination is happening! People are talking to Yearn, Beefy, and RocketPool. @Alx will be posting an update soon on those.

For launch on April 17th we will be focusing on Aave V3.

There is a plan to setup mainnet LP. I think @Lonser, @Tjark or @underthesea can speak to the plan.

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Yes, please do. I would like to hear your thoughts on this. Sounds pretty radical, ha. Dissolving governance does harden the autonomous, immutable, permissionless and incentivized prize machine that is V5.

…Still that runs counter to how a lot of protocols operate. Though, we are unique and not many protocols have the above properties. Tell us more :eyes: