PoolTogether

PTIP-25 POOL pool Boost and GUSD drip

PTIP-25

Simple Summary

  • Increase POOL pool drip to 200 POOL per day
  • Add 50 POOL per day drip to GUSD pool with a 10% reserve rate
  • Add 50 POOL per day drip to Sushi pool with a 25% reserve rate
  • Increase the COMP pool reserve rate to 100%

Motivation

Time to reward loyal POOL pool depositors as well as attract new depositors to the GUSD pool.

Specification

This proposal will:

  • Increase POOL pool drip to 200 POOL per day.
  • Add a 50 POOL per day drip to the GUSD pool
  • Set the reserve rate on the GUSD pool to 10%
  • Add a 50 POOL per day drip to the Sushi pool
  • Set the reserve rate on the sushi pool to 25%
  • Adjust the reserve rate on the COMP pool to 100%

Overview

These changes shall get us by until we revisit the distribution rates at the end of July.

Rationale

POOL pool depositors are a very loyal group to the protocol and deserve earning a higher drip. This increase in drip can also help attract those earning POOL in the other pools to retain their POOL tokens and use them to earn more POOL instead of potentially selling them off. POOL pool APR should be in line with that of the deposit pools and the goal is also to attract more POOL pool depositiors.

GUSD is a new pool that we should be trying to grow and allowing depositors to earn POOL is the best path to growth. This pool also earns Aave for the protocol and that is the reasoning for not applying the standard 50% reserve that is used in the Compound pools.

Sushi pool sushi rewards end soon and in anticipation of continuing the pool we should set a new reserve rate and drip 50 POOL per day to maintain the pool.

Most of the Compound prize comes from the Compound rewards. As discussed in the community call we should adjust the reserve rate to 100%.

Technical Specification

This proposal only requires simple adjustments to pool parameters.

Status

Voting.
On Chain Vote: PoolTogether Governance
Snapshot Vote:https://snapshot.org/#/poolpool.pooltogether.eth/proposal/QmTK8z7vNYyKYfwMy5jrGxJE1Kke4gKQouRS1KKtfgLXT1

Increase the POOL pool drip to 200 POOL per day.
  • Accept
  • Reject
  • Abstain

0 voters

Add 50 POOL per day drip to the GUSD pool and set the reserve rate to 10%.
  • Accept
  • Reject
  • Abstain

0 voters

Added some new polls after the community call discussion.
July 2nd additions:

Increase Sushi pool reserve rate from 0% to 25% in anticipation of extending the pool to be a long term pool.
  • Accept
  • Reject
  • Abstain

0 voters

Increase Compound pool reserve rate from 50% to 100% as most of the prize comes from compound rewards.
  • Accept
  • Reject
  • Abstain

0 voters

What should be the Total POOL distribution in the POOL pool after the increase.
  • 200 POOL per day
  • 150 POOL per day
  • No change
  • Other

0 voters

Should the Increase to POOL pool and GUSD pool be offset by a reduction to the USDC and DAI pools
  • Yes
  • No
  • Abstain

0 voters

2 Likes

I’m all for adding a drip to the GUSD pool and experimenting with a low reserve rate!

I voted against the increase in the POOL drip because of the reasons I mentioned before.

  1. I don’t want to just reward POOL holders, I want to reward governance participants and in the last snapshot only about 20% of the PPOOL holders actually voted.
  2. Increasing yield will mean more people deposit there, leading to more centralization with voting and all the aforementioned problems in my other posts.

I know it will pass, but I’m voting against as a signal that I think there are problems that need to be solved there.

6 Likes

I agree this is an issue that needs to be solved. perhaps there could be some kind of slashing mechanism. if you are in the POOL pool and do not vote then your rewards are slashed. or we can go the opposite route and reward people with POOL when they cast a vote in snapshot.

2 Likes

I appreciate your desire to reward voters and I think it is very important but I think users should also be rewarded for simply believing in the POOL token. This is actually very minimal compared to other DeFi platforms in early stages.

One idea I really like for rewarding governance participants is a token swap airdrop with another protocol with aligned interests. We would swap an equal amount of tokens and airdrop them to governance participants.
This would:

  • Attract new active community members.
  • Give us some voting power within the other protocol.
  • Allow both communities to reward governance participation.

Another idea that I’ve previously brought up is rewarding KPI options to governance participants. Personally I like the token swap airdrop as something to in the near term. We could even do both.

3 Likes

Rewarding by voting, may be the simplest way to involve POOL holders in voting, some will abstain, but others will enter the discussions and participate.

4 Likes

We just increased the pPOOL drip by ending the weekly prize. Why should we increase it again?
The APR on the POOL pool is already quite high. 7% is more than most staking programs.
200/day would be double that amount.

I also agree with @drcpu that low pPOOL voting participation is a problem.

Actually, we did not increase the drip or remove the prize. It ended up not being possible without burning the prize stream. Most new protocols go much higher than 7% initially to attract new users. This doesn’t even come close to shifting the imbalance between what depositors receive over what POOL holders receive. This is a very small ask from POOL holders.

Edit.
Currently depositors in the pools are getting a combined 2200 POOL per day while those most loyal to the POOL token earn 600 POOL per day (LP and POOL pool). It is mind blowing to me that anyone can be against increasing POOL pool rewards.

2 Likes

I definitely feel like this is an interesting idea.

This is only my opinion of course, but people in the POOL pool that do not vote are not contributing at all to the protocol, they are leaving them in the POOL pool collecting yield and idly hoping for a price appreciation. I’m guessing they will be the first ones to dump them as soon as the price increases significantly.

People that put their money in the other pools hoping to win a prize are subjected to a reserve rate and are, in that way, actively contributing to the protocol treasury. The deposit value of the USDC and DAI pool combined is 20x of the POOL pool, so I’d say a combined 2100 POOL drip versus a 100 POOL drip seems pretty fair. Note that I am excluding the LP pool rewards from the equation here, I do think those people should be rewarded appropriately as they take on a signficant risk.

Essentially, I think increasing the POOL pool APR currently send the wrong signal that you can get a significant reward for doing nothing.

1 Like

I agree with rewarding people who use pool to cast there vote, I am new to PT and I am trying accumulate as much pool so I can participate in voting. I voted using snapshot the other day. I support rewarding everyone who believes in pooltogether. I think the airdrop idea for everyone who has deposits in the Ppool and LP depositors. I also agree with raising the amount per day for the Ppool

I feel like the Ppool should have the highest distribution per day

Due to technical constraints the proposal that went on-chain did not eliminate the weekly prize. So the weekly prize still stands.

First off, thanks to the @TheRealTuna for taking the action and writing this up! Here is my feedback with a bunch of research I’ve done.

I want to provide some high level context for everyone thinking about this.

  • Our current daily POOL emissions is 2,800 that just over 1 million POOL per year. So at this rate, we would deplete the treasury in 5 years if we kept it up (treasury has a bit over 5 million POOL right now)
  • For a useful comparison point, the Compound protocol distributes 2,312 COMP per day. I think this is a good comparison because COMP and POOL have the same total supply (10 million) and about the same amount in their treasuries.

That gives some context for how much POOL we have and how much we are currently distributing. Next, to evaluate this proposal, it’s worth restating what the purpose of POOL distribution is, two things:

  • The first purpose is to distribute control of the protocol. Ideally, to people who are interested in controlling the protocol for the long term. Not simply claiming and selling POOL.
  • The second purpose is to use the incentive of POOL distribution to help bootstrap the network effects needed to become the largest no loss protocol in the world.

So does this proposal help us achieve these goals?

Based on an analysis of the top 10 largest depositors in the POOL pool, none of those accounts are selling the POOL they are accumulating. This evidence indicates that increasing the drip to these depositors will help us achieve goal 1. However, it does not directly help with goal 2 because it does not directly make the other prize pools grow or bring long term value to the protocol.

In contrast, looking at the top 10 depositors in the Dai prize pool, 7 out of 10 of them are selling all the POOL they receive. These depositors are helping us achieve goal 2 but not goal 1. (analysis here).

Ideally, changes to POOL distribution should be focused on the best ways to achieve goals 1 & 2 at the same time. Increasing the POOL pool drip potentially helps us achieve goal 2 by increasing the incentive to hold POOL but in my view it’s unlikely to make an impact (the number of people who are dumping at 7% APR but not dumping at 14% APR is probably small).

In summary, I support this proposal because I believe it is a small but solid step to

  1. improve the incentives to hold POOL and
  2. give more POOL to people who are long term aligned.

However, I think this is only a small step and likely insufficient, because it doesn’t help us with goal #2 of POOL distribution and it also moves us in the wrong direction in terms of total daily POOL distribution.

Ideas:
As stated, I’m supportive of this proposal already but I also want to throw out a few more ideas:

  • I would consider decreasing other POOL distribution to keep the same net daily emissions (decreasing the Dai pool makes the most sense to me).
  • I think the change to dripping pPOOL instead of POOL would likely be most effective at meaningfully aligning the two goals of POOL distribution
  • I would consider adding a reserve rate to the SUSHI prize pool of 25%. Assuming we will want to add POOL distribution when the SUSHI distribution ends in 10 days, we might as well set that now.
6 Likes

However, only 2 of those 10 holders voted in the last snapshot, which I would consider not really helping with controling the protocol. Granted, one snapshot is hardly a good statistic, so I would have to check more snapshots for getting their average voting rate.

1 Like

Thanks Leighton, this is really great feedback. I definitely agree that we should lower some of the other pools to offset this increase. I was kind of anticipating that a reduction would be happening at the end of the month but would definitely be into including some reduction as part of this proposal. Thinking it would be good to reduce both the DAI and USDC pools. Do we just want to offset this and then do a further reduction at the end of the month? Or have the total distribution actually drop right now? I would support dropping both USDC and DAI by 200 each right now but am also happy to wait and have a deeper discussion on distribution later. I’m in favour of revising this to include a reduction.

3 Likes

I dont think we should reduce the USDC drip at all. thats our flagship pool. the apr is about 5% and if we drop it anymore we will lose depositors. DAI is higher at around 8% so we have more room to work with there.

2 Likes

My thought is that it would reduce sell pressure and a boost in price could make up for it. It is clear that a lot of farming happens in these two pools. If we lose some depositors initially the APR would also rise for those who remain. At some point we gotta bite the bullet and I think doing it now while DeFi rates are low across the board would be worthwhile. Our previous reduction resulted in a price increase and we should not be afraid to do it again. Eventually we want our flagship pools to be below 500 POOL per day as we will have many more pools to feed. This would also put us in line with Compound’s distribution rates that @leighton mentioned.

Say I’m wrong and this doesn’t affect the price at all, the rates have only dropped from 5.55% to 4.77%. Doesn’t feel like a big enough drop to cause a big loss in depositors. Hopefully it will be made up for by the 15% less tokens to be farmed. DAI pool would also be dropped to 5.68% but 28% less tokens being distributed. These numbers are based on dropping 200 POOL per day from each pool.

1 Like

I still think the POOL pool should be increased to 200 POOL per day and not 150. I am hoping we add some new depositors and it settles in the 10-12% range. If we are worried about the LP we should boost the LP as well.

2 Likes

Some notes from the community call on this particular PTIP.

  • POOL Pool drop might be better at 150 POOL than 200 POOL. At 200 POOL it’s half the LP APR and we really want/need to encourage LPing. Additionally, we will track the impact of this change on the POOL Pool for an 8 weeks period. The goal of this modification in the Drip is to increase POOL Pool depositors with a hope to decrease sell pressure.
  • Add in setting the COMP Pool Reserve to 100%. Currently the COMP yielded through compound to the Pool that’s put into the Lootbox is greater the interest derived from yield. With the new Phase 1 implementation, COMP depositors will actually get more COMP from the split Lootbox than the interest.
  • Add in setting the Sushi Pool Reserve to 25%.
  • Should these changes to the POOL Pool drip and GUSD drip be offset through reduction in drip from the USDC Pool, DAI Pool, both? It should be noted that the Badger Pool drip is ending shortly so we’re only really offsetting the POOL Pool drip as the GUSD drip would effectively be offset by the Badger drip.
Where should the POOL Pool drip be?
  • 200 POOL
  • 150 POOL
  • 100 POOL (no change)

0 voters

Should we set the COMP Pool reserve to 100%
  • Accept
  • Reject
  • Abstain

0 voters

Should we set the Sushi Pool reserve to 25%
  • Accept
  • Reject, instead set it to 10%
  • Reject, instead set it to 15%
  • Reject, instead set it to 20%
  • Reject, No Reserve
  • Abstain

0 voters

Where should we reduce POOL drip to offset the POOL Pool drip increase
  • Reduce DAI drip by the additional POOL Pool drip
  • Reduce USDC drip by the additional POOL Pool drip
  • Reduce DAI and USDC evenly for the POOL Pool drip
  • No Reduction, we don’t need to offset the drip

0 voters

What is the rationale for having governance risk asset pools with different reserve rates? changing COMP to 100%, having UNI remain at the current reserve of 50% and setting SUSHI at 25%?

The issue is the difference between the reserve rate and the effective reserve rate.

The reserve rate = the % of the accrued interest retained by the protocol (not including farming rewards taken)
Effective reserve rate = the % of total value retained by the protocol

The general idea is to keep reserve rates ~25% but that’s hard to do given how the value of the accrued COMP fluctuates. The math is below given current variables. SUSHI is an exception here as they have no bonus farming rewards.

USDC:

  • Reserve rate: 50%
  • Effective Rate: 19%

COMP:

  • Reserve rate: 100%
  • Effective Rate: 28%

UNI:

  • Reserve rate: 50%
  • Effective Rate: 11%

Sushi:

  • Reserve rate: 25%
  • Effective Rate: 25%
2 Likes