- Increase the reserve rate for governed pools from 5% to 50%/ Week.
- Eliminate 5% Reserve Rate on community pools
If this proposal passes then 50% of all interest earned in governed pools will be captured in the reserve. These Treasury funds are deposited into sponsorship of each respective pool. The current 5% reserve rate on community pools would also be eliminated.
The current TVL in PoolTogether is disproportionately generated by Whales. Most of those whales joined because of the liquidity mining program introduced with the POOL token debut. if those whales take their funds elsewhere after the liquidity mining period ends then our prizes will be considerably lower. The value that PoolTogether provides to whales is greater than the value that they provide to PoolTogether. Whales are earning 30-40% APR in mining rewards and winning prizes at a high rate. The funds they supply to the interest pool are only earning 8-15% for the prize.
Community Pools spread the word about PoolTogether. They are also typically stake prize pools where the creator supplies the prize. Taking a reserve from those pools may discourage others to build their own pools if they are required to give a percentage to the protocol. they are already supplying the prizes themselves and paying gas fees associated with awarding the prizes.
Setting the reserve rate to 50% will allow us to build a sizeable sponsorship that will support high prizes into the future if whales withdraw liquidity. This will also create a perpetual growth machine.
Eliminating the reserve rate on community pools will encourage other projects or individuals to create their own pools.
By raising the reserve rate while whales are deposited we ensure that prizes will grow over time. if the value locked drops then we still have the sponsorship reserve earning interest for the prize. This sponsorship pool increases in size every week. the opportunity to win large prizes will attract new users, and this is the simplest mechanism to ensure that prizes remain large. now is the time to implement this. it can be adjusted in the future if needed, but right now we need to take advantage of the liquidity that we have access to. Whales are here for the steady yield, the prizes are a bonus. I do not believe that this proposal will cause a whale exodus. I will also include a couple of points from @leighton post.
- It takes winnings away from the whales and instead keeps more money in the protocol “sponsorship”. This raises the effective APR for everyone and minimizes the impact of whales leaving.
- It begins to build a powerful and reinforcing network effect that having a deposit in PoolTogether is ALWAYS better than having a deposit in the underlying yield source.
- It opens up the option to use reserves for a variety of things that have been mentioned in this forum
The contract will need to be altered to allow for different reserve rates on different pools.