PTIP-22: Operation 10x, Saving The Little Fishes (Phase 1)
Simple Summary
Increase the number of weekly prize winners by 10x
Split the accrued COMP evenly across all winners.
Increase POOL staking APR by ending the POOL pool prize
wagmi
Motivation
Not enough small depositors are winning prizes. For PoolTogether to scale to the next level of growth (billions AUM / millions in weekly prizes) we have to find a way to get more people winning prizes. Especially people who have smaller deposits (10k or less). This needs to be done while keeping the protocol simple and not driving away the large depositors which create the large prizes.
Specification
This PTIP would do three things:
Increase the number of weekly winners to the following
Dai Prize Pool: From 3 to 30 winners
USDC Prize Pool: From 5 to 30 winners
SUSHI Prize Pool: from 3 to 10 winners
Instead of giving all the accrued COMP to the “grand prize” winner, split the accrued COMP among all winners equally for all prize pools (Dai, USDC, COMP, UNI)
Stop the 200 POOL weekly prize and instead distribute that as increased APR to POOL stakers
Overview
This should be considered phase 1 of Operation Little Fish. This phase uses the levers immediately at the control of governance (i.e. no new solidity code written). It will meaningfully adjust the odds to favor smaller depositors by. Phase 2 is in R&D and will expand on this same goal.
NOTE: the same wallet can win multiple prizes. So large whales will still win many of the prizes but far less of the total prizes than today.
Rationale
PoolTogether is currently a victim of its own success. With over $200 million deposited, $100,000+ in weekly prizes, and prize pool reserves growing things are going better than ever. BUT, deposits into the prize pools have become increasingly dominated by large depositors. We’ve gone from the majority of prizes being won by large depositors to almost all of them being won by large whales. We need more depositors like the person who deposited $73 and won $43,000. The core value proposition of PoolTogether is giving people the chance to get an outsized return on their money without risking it. Having more prizes means the odds of winning increase and this value proposition becomes stronger. PoolTogether becomes more FUN.
The change to the POOL pool to emphasize staking APR over a weekly prize also helps improve returns for POOL hodlers.
There are other methods to achieve this goal that the community has discussed. Specifically the idea of moving the POOL incentive to “sponsored” deposits that are not eligible to win. This idea has merit (I’ve been a proponent of it) but has some key limitations.
Adding a second token “drip” will increase gas costs for all users (TBD on exactly how much)
We will likely still have whales winning all the prizes, the whales will have the same % of total deposits but a smaller deposit in absolute numbers
We risk losing a lot of capital in the migration
We lose the benefits of having the value propo of “a chance to win + an APR” for depositors
The value prop of sponsorship becomes solely yield farming which is not competitive for us long term
Ultimately this is the simplest change to immediately and meaningfully help out small depositors. Phase 2 of the operation will expand on this same goal.
Technical Specification
All these changes are simply parameter adjustments. This proposal pushes the limits of the current architecture and prepares us for phase 2.
1.Not really sold on part 1.
Positives:
-Higher chance a small fish hits.
-Maybe multiple small fish can hit.
Negatives:
-No headliner prize
-Don’t know that seeing Yearn win 17 out of 30 prizes improves sentiment.
-If pods wins it will be split so much each user will only get a couple bucks.
-Increased gas cost. I’m not too fussed about gas normally but if it’s not an impact full change I don’t see a point in wasting it.
This change seems good.
I like the increased APY but I feel like we can do more for this pool. The POOL pool has the least amount of imbalance and this is where many loyal community members live.
I share the same sentiment, more winners means PoolTogether becomes more fun. This dramatically boosts the odds of someone winning the weekly draw and will encourage smaller/medium depositors to deposit which is ultimately what we want. Thankfully, these are just parameter changes and won’t require a mass-migration like the drip moving over to the sponsorship. This change definitely emphasizes the values that PoolTogether and the community share, getting an outsized return on your money without the risk of losing it. Plus, the more draws the more fun people have as they have something to look forward to. Shoutout to @DeFi.Donut for that bit.
I saw some concerns in the Discord that awarding the prize to so many winners minimizes the allure of winning a prize. Well, today very few people will experience winning anything. Also, if this proposal incentivizes way more small and medium depositors we may reach our tentative goal of $1M dollar weeky prizes a lot sooner. There has been some low morale from smaller depositors and this proposal should alleviate some of those concerns and boost morale. I agree with Leighton, we need depositors with modest sums to start winning more and this proposal does just that.
This is a valid concern, however if we don’t somehow incentivize smaller/medium depositors to use PoolTogether then we’ll never have headliner prizes. We can’t rely on whales and yield farmers forever, they go where the grass is greener.
There has been a lot of low morale among smaller depositors which has soured their perception of PT, this should alleviate some of that. Now, will sentiment improve if Yearn wins out 17/30 prizes? We’ll see, then again you have to consider Yearn is comprised of a bunch of users who are indirectly using PT. I’d say having Yearn is a net-positive for PT.
I tend to agree with @TheRealTuna.
Not sold on 1., I like 2. and 3.
Prizes will become relatively small (maybe even pointless for Pods users), and having so many winners will make awarding prizes more expensive in terms of gas on mainnet.
I think I prefer moving 80/90% of POOL drips over to sponsorship. Would be nice to know how much this will increase the cost of depositing/withdrawing if we have 2 drips going.
Having a majority of funds in sponsorship keeps the prizes the same, but increases the chances of winning for anyone in the pool that doesn’t move to sponsorship. It will give us a lot more https://www.smallfish.win/ winners that win big amounts. If we just increase the number of winners by 10x, we will also get more small winners but their winning amounts will be 10x smaller.
The headliner prize – in terms of the total weekly prize shown on the “pools” page would be the same. The only only difference would how many ways that prize is split. Since the same wallet can win more than once large depositors (and pods) will still be able to win large prizes.
-Don’t know that seeing Yearn win 17 out of 30 prizes improves sentiment.
Agreed, it will be an issue but I think an improvement on the current state. Is yearn winning 17 of 30 better than it winning 2 of 3? I think so.
-If pods wins it will be split so much each user will only get a couple bucks.
This pretty much already the case. Currently a 10k deposit into the Dai pod would yield $340 in winnings if the Dai pod won the grand prize. This change would improve pods because smaller pods would make more sense and bigger pods would win more often. Remember, a pod can still win more than once.
-Increased gas cost. I’m not too fussed about gas normally but if it’s not an impact full change I don’t see a point in wasting it.
To be clear, this does NOT increase gas costs for any users. It only increases the gas cost to award the prize.
This may have been discussed somewhere, but is it possible to make sure the multiple prizes for one week go to unique winners? This does break the whole “win prize(s) proportional to your deposit” for whales, so it may not be desirable in the end, but this is just out of curiosity.
Scenario #1 DAI pool leaving prizes as is and implementing 80/20 split to sponsorship
-Yearn and a few other wallets would move to sponsorship.
-Dai pod would now be a frontrunner to win. If it wins 1 prize under the 3 equal prizes scenario each pod depositor would get an instant 1.5% return on their investment.
Scenario #2 30 equal prizes
-Yearn still wins bulk of prizes.
-If DAI pod wins a prize each depositor would get a 0.15% return on their investment.
Scenario 1 seems like the obvious choice here. 30 equal prizes would actually have a negative impact on sentiment in my opinion.
I tend to agree with most that higher number of prizes will likely result in yearn still winning the majority. And if a small fish wins, he will get a substantially smaller prize, so less content for smallfish.win
Nevertheless I think we should try it out and experiment with it. Economically, it shouldnt change anything for anyone really as odds and expected value remain the same.
The real difference would be to allow each wallet only to win once, but with a more fractionalised prize it would change the game completely and make it unattractive for whales/yearn.
This. EV doesn’t change for anyone unless the POOL awarded was split to sponsorship. It seems like there’s too much focus and worry about how many times a whale/pod is expected to win. By breaking the prize into more pieces, it just smoothes out the curve over a smaller timescale.
Given that mainnet prizes are awarded weekly, a prize pool like DAI currently has a maximum of 156 unique wallets winning in a given year. With a change from 3 to 30 you’re opening it up to a maximum of 1560 unique wallet addresses winning per year. While the odds for each user don’t change, it will likely impact more wallets in the same period of time.
There will be weeks where whales/pods win multiple prizes and negatively impact some mentalities. But there will also be weeks where small depositors win and can spread their stories to friends and family.
Not sure I like this point too much. Having too many winners will turn it into more of an APY product than a lotto so need to be careful not to make it too much that way. Even though the gripe is with whales winning too regularly there are still players with 7 figure sums that have never won prizes too. I see what frustration we are trying to fix, but a lotto is suppose to be something most people never win.
Support 3 fully. I would probably support 1 and 3 or 2 and 3, but not 1 and 2 together.
I feel like we’ll have different perspectives about a lot of things if we can just move that drip over to sponsorship. I think that some things are a bit confuddled the longer that goes undone; like this move to drastically increase the number of winners probably wouldn’t be proposed.
My initial reaction to x10ing the number of prize winners was that we shouldn’t do it. I agree with the sentiment that having a larger prize is more headline grabbing. While the only headline anyone cares about right now is yearn, I believe moving the drip to sponsership and adding the yearn integreation will be enough to move the news cycle. Also I would like to know how substantial an increase this would have on gas costs of the protocol.
However, given some more thought I see a lot of the merit in the idea. Most traditional lotteries have many other prizes than the jackpot, it would be cool if we could make the prizes exponentially smaller to mimic traditional lotteries, I think Mkkoll brought this up. I am willing to follow Sir Leighton down this rabbithole and explore with the concept. It might be a good idea to only change one pool first, maybe DAI, and see how the reaction is before changing the rest.
I am for splitting the COMP but again would like to know what effect that would have on protocol gas costs.
I agree with stopping the weekly POOL prize, but I actually do not think we should have any drip or prize for the POOL at all, and instead focus on using the treasury to better increase protocol reserves.
Has there been any recent discussions or ways we could implement a larger progressive jackpot? The idea is that a portion of each weekly prize is put aside similar to reserve rate (progressive rate?) to award a much larger prize less frequently. This could be once every 3/6/8 or even 12 months without impacting existing weekly prizes by much. Could tie in well with drip coming from sponsorship to prevent large whales from winning.
In regards with current discussion I have been in favor of more weekly prizes for a long time. 10x might be a bit much at this point. We could test 5x first and evaluate it’s effect.
In favor of COMP distribution.
I do want there to be more utility and rewards for POOL holders. One of the few prize pools where ole Andy has a decent shot though . Staking instead and increasing APR seems healthy.
If this is Phase 1, what specifics does Phase 2 focus on?
50% of users have < 258 USDC deposited. 65% of users have < 850 USDC deposited
If we 6x the number of USDC pool winners, then each prize will be worth about 1700 USDC (COMP + USDC). That means 15% of our users would at least double their money and 50% of our users would at least 6.5x their money. That’s a big win for a lot of people.
6x the number of winners means that these fish will have a 6x higher chance of winning. That’s an order of magnitude better odds and time-to-first-win.
Dai Prize Pool
87% of users have < 750 Dai deposited 80% of users have < 380 Dai deposited
If we 10x the number of Dai pool winners, then each prize would be worth about 750 Dai (COMP + Dai). This means that at least 80% of our users would triple their money.
These changes improve the protocol significantly for the vast majority of our users.
Point 3
Stop the 200 POOL pool weekly prize and instead distribute that as increased APR
The POOL pool is distributing ownership of the protocol; they’re not simply prizes. We want ownership to be as widely distributed as possible; so we should replace the prize with higher APR to benefit everyone.
Final Notes
These changes use our existing levers of control; no new code needs to be planned or deployed. We can execute this proposal right now.
This proposal has zero impact on gas usage for the end user. Only the reward function become more costly.
Some people are proposing alternatives. Yes we are exploring that, and yes there is a phase 2. However time is of the essence and we need to take action now.
This is an incredibly important data point. Many of us see this change as moving away from a lottery, to something akin to yield farming due to the lower individual prizes.
However, these smaller prizes can still substantially increase someone’s initial deposit/investment, earning that outsized return which is something a yield farm cannot provide. I think it’s prudent to act now and not hesitate. I am 100% for this change and will vote accordingly.
Maybe this will sway you a bit. I don’t think these changes make PoolTogether an APY product. It’ll still firmly be a lotto for most users:
I used to think one major headline prize from a single pool like USDC would drive more users. However, I now think PoolTogether will benefit more when a larger amount of users/players are winning rather than few users winning large prizes. Sure, they’re not winning a huge jackpot, but as the data above shows many users would be DOUBLING their deposit.
Also, today most users will just deposit their funds and probably won’t win anything, however with this 10x increase more users will be impacted MATERIALLY by these changes. This will encourage them to stay because they are winning and may deposit even more because they’re winning something. I think that “something” is very important and a bigger motivator than the chance of winning $100,000 or whatever since most people know they wouldn’t. Plus, these changes might drastically increase TVL to the point where these “small” prizes we’re talking about aren’t so small anymore.
*TLDR: people get bored when they deposit and “nothing” happens. When they finally win something, that’ll incentivize them to keep playing instead of leaving altogether, or even worse not even trying in the first place because the odds of winning the jackpot are so abysmally low. This change ultimately brings in a lot more fun to the protocol from my perspective.
How much of an increase in cost for the protocol is it to facilitate extra winners? Think @sarfang was also asking about this?
Leighton made a good point in the discord, that users can win more than once so in that sense the possibility of a small fish winning a big jackpot by winning multiple prizes is still maintained. I’m a bit more comfortable with it after thinking about it like that. It would be ideal if one prize was considerably bigger than the other ones all the same. And I think we need to know the gas cost increases to the protocol for deploying this, that is an essential piece of information to take into account before making a decision.
It would be very interesting to see what happens. I think it would be a positive change and it would go something like (hopefully): More winners = more people talking about the project = more deposits = bigger prizes = more people talking about the project =…
And the whales wouldn’t be discouraged as far as I can see which is super important as well.
… I think we need to know the gas cost increases to the protocol for deploying this, that is an essential piece of information to take into account before making a decision.
That’s a good point! The impact is significant to gas overhead. While this cost will be borne by PT Inc for now, it will eventually be transferred to the protocol.
I forked mainnet and ran the award process for two scenarios: when we increase winners, then when we increase winners and split COMP across everyone.
Gas Usage for More Winners
Number of Winners
completeAward() Gas Usage
10
2.4m
20
4.3m
30
6.3m
40
8m
Gas Usage for More Winners + COMP split
This test split the COMP award across all winners.
Can’t see this has been discussed already but would it be possible to increase the winners over x amount of weeks?
Point 1 - I like the idea of increasing the winners although a 10x on the Dai and USDC pools might be a bit extreme, maybe we can look to put something in place where it increases over time. e.g on the Dai pool, we up to 10 > 15 > 20 > 25 > 30 and we can review every 2 weeks to see what is happening with the pools?
Point 2 + 3 - Good ideas, would be willing to try both
. Staking instead and increasing APR seems healthy.