PTIP-94: Redirect Yield from PT V3

[Brendan]

PTIP-94: Redirect Yield from PT V3

This proposal will withdraw yield from deprecated PoolTogether V3 vaults, then deploy smart contracts that redirect yield into PoolTogether V5 permanently.

Abstract

Yield from PoolTogether V3 prize pools will be liquidated using our V5 bots and contributed to the V5 Prize Pool on behalf of the POOL vault. Prizes will grow and POOL stakers will benefit.

Motivation

There are eleven PoolTogether V3 prize pools that are no longer operating. We have facilitated the migration to V5 with the migration app, but there is still $1.5m+ in TVL.

While not large, the deposits are still generating ~$4k USD per month in yield.

Contributing that yield into the V5 Prize Pool on behalf of the POOL vault is the simplest way to integrate the old code.

Specification

Overview

This PTIP will attach a custom V3 Prize Strategy to each V3 Prize Pool. The custom strategy will expose the yield to V5 liquidator bots, which will arbitrage the yield into the V5 Prize Pool.

The yield will be auctioned using a fixed price; this will ensure efficient liquidations as TVL drops and yield diminishes.

Technical Specification

The proposal will:

1. Install adapters for the USDC, DAI, COMP and UNI V3 Prize Pools.
2. Withdraw the current yield from the USDC and DAI prize pools to the treasury (about $75k USD)
3. Set up the adapters to liquidate yield at a fixed price from now on

V3 Prize Pools:

COMP - $524k TVL, only $1791 USD in yield over three years
0xbc82221e131c082336cf698f0ca3ebd18afd4ce7

UNI - $168k TVL, only $1300 USD in yield over three years
0xbc82221e131c082336cf698f0ca3ebd18afd4ce7

USDC - $728k TVL, about $3600 per month in yield. Currently $48k USD
0xde9ec95d7708B8319CCca4b8BC92c0a3B70bf416

DAI - $354k TVL, about $400 per month in yield. Currently $27k USD
0xEBfb47A7ad0FD6e57323C8A42B2E5A6a4F68fc1a

Status

Code has been written, it just needs to be tested and placed on-chain into a proposal.

[Lonser]

Small correction to your post:
The UNI Prize Pool address is: https://etherscan.io/address/0x0650d780292142835F6ac58dd8E2a336e87b4393

Thx for the write up and this proposal Brendan!
It’s good to think about ways to boost V5 and using the yield of old deposits in old versions might be one way to do that.
I don’t have a strong opinion about it and I am generally in support of it cause I think the upside of boosting V5 prevails. I just wanna give some more context about it why other people might be opposed to it.
The Main reason is that it is basically taking (one might say stealing) the yield of the depositors.

As you mentioned, these vaults are deprecated.
What does this mean?
As mentioned in the Sunsetting V3 https://gov.pooltogether.com/t/ptip-86-sunsetting-v3-pools/2814 we disabled deposits, so there have been no new deposits since then. We also stopped awarding prizes, so the prize pool has just grown since then. But V3 was/is permission less regarding the prize awarding, so anyone could have awarded the prizes but no one did (there are no incentives for it and no one can deposit anymore, so that makes sense, at most one of the current whale depositors might want to do it with good chances to win the prize).

Here the Prize Strategy contracts:
COMP - Last awarded 1087 days ago
https://etherscan.io/address/0x3EC4694b65e41f12d6b5d5Ba7C2341f4D6859773
UNI - Last awarded 1244 days ago
https://etherscan.io/address/0xe8726B85236a489a8E84C56c95790d07a368f913
USDC - Last awarded 1084 days ago
https://etherscan.io/address/0x3D9946190907aDa8b70381b25c71eB9adf5f9B7b
DAI - Last awarded 1087 days ago
https://etherscan.io/address/0xbc82221e131c082336cf698f0ca3ebd18afd4ce7
Anyone might award these ones anyday now and then the plan of using the accumulated yield so far fails, future yield would still be used though, just pointing this out.

Technical question:
Will your code us the vault fee function by setting it to 100% ?

Addition to your post:
There is also this USDT Prize Pool with $75k in deposits, ownership has the Exec Team:
Polygon USDT Prize Pool: https://polygonscan.com/address/0x887E17D791Dcb44BfdDa3023D26F7a04Ca9C7EF4
Polygon USDT Prize Strategy - Last awarded 257 days ago: https://polygonscan.com/address/0x5A65f0CE666B8334b6481A8d8C8323BB782386e6

That’s all from my side I think, some more food for thought though:
Do we rly wanna use those funds to boost Mainnet with it? We are already sponsoring it with $500k in Treasury Sponsorship yield. Also gas fees are high, so makes adoption of “normal users” hard/impossible. Other chains might unlock more bonusses, like if we can get more traction on Arbitrum, we get might get Arb Incentives, same for Scroll or Gnosis. I acknowledge though that Mainnet could be automated and L2s would need a centralized multi sig approach.

Last but not least, just wanna say thank you again for bringing this proposal forward, I think it’s a quite interesting one and worth talking about, sad to see engagement on the forum here has been not super high so far.
Also closing this post with some pics of our old Community deployment, showing the current TVL and Prizes for anyone not wanting to use Etherscan good times!

[Brendan]

You can see the adapter code here:

PT V3-to-V5 Adapter (Github).

It’s a custom V3 Prize Strategy that exposes the V3 prize pool as a “liquidation source”, so that a V5 liquidation pair can operate on it.

As you noted, the V3 prize pools haven’t been awarded in almost 3 years. It’s possible for anyone to award them, but it hasn’t happened. It’s just been a slow trickle of withdrawals. It’s safe to say that they have ceased operation. I think the best thing to do would be to use the accrued yield to improve PoolTogether. Plugging it into V5 is the simplest permanent solution IMO.

[Tjark]

I’m in support! Let’s get this going. Some of these depositor wallets might be long dead. No need to accumulate yield and just forget about it.
Let’s get this done!

[Brendan]

PTIP-94 has been submitted on Tally.

Voting goes live in 24 hours.