PoolTogether

Reaching $1 Billion deposited value!

It’s been exactly 3 weeks since POOL distribution began and we’ve seen great growth both in the community and the protocol. We’ve hit a long held goal of having $100,000 weekly no loss prizes (with a total of $234,000 distributed last week alone), total AUM has been hovering at $100 million and we’ve had our first successful governance proposal!

Outside of the metrics, the “community pools” launch and the “prize pool builder” has opened the protocol to work with any token and yield source. PoolTogether is now truly positioned to be a no loss gamification layer on top of all DeFi.

Now that the initial launch period has stabilized, it’s time to reach the next milestone, I’d propose the next milestone of $1 billion in total deposited value (up from $95 million today). I think it’s realistic for us to reach that in the next 1-3 months by focusing on a few high leverage and simple activities.

1. New Assets for Governance Prize Pools
The simplest way to increase AUM is to add new asset prize pools and incentives them with POOL distribution. Three weeks ago we had no idea how well this would work but now we have some hard data to review.

We’ve seen both the power and limits of incentiving deposits with POOL distribution. It’s led to a huge uptick in total deposits but there has been quite a large variance between total amount deposited and how much POOL is being distributed (see a snapshot of how it currently breaks down here). It also seems for the existing assets supported, we’ve hit an equilibrium where absent changes, we should not expect major increases in new deposits.

Action Items: Leaving aside adjustments to current distributions, I would advocate immediately voting on wBTC & Tether prize pools powered by compound yield source. These two prize pools are already deployed as community pools so it’s simply a matter of having a vote to put some POOL distribution to them. Anyone other asset that Compound supports would also be trivially easy to add.

2. New Yield Sources for prize pools
A huge untapped area for growth is including new sources of yield. Historically PoolTogether has ONLY used Compound for yield but now integrations with Aave, xSushi, mUSD, yearn, and Rari are in the works. Hopefully many more!

These new yield sources will 1) offer new assets for prize pools 2) in same cases offer higher returns on already supported assets, and 3) bring incentive alignment between yield sources and PoolTogether. PoolTogether drives meaningful amounts of supply side deposits to yield sources. So yield protocols should be competing to offer the best returns and also to promote their integrations with PoolTogether. PoolTogether governance will play an important role in ensuring security of yield sources and also distributing POOL to the ones that provide the best returns to depositors.

Action items: Get the new yield sources integrated! As mentioned, Aave and xSushi are being actively worked right now. Discussions with yearn, Rari, and mUSD are also underway. There are lots more to work on!

3. Lower gas, new interfaces, options for small fish
Gas is a huge issue! I’m lumping a few things together here because they are related. We basically need to provide 1) ways to deposit that use less gas and 2) ways to increase your odds of winning and these ideally should be done through new interfaces built on the protocol.

This is already happening with yearn building the PoolTogether strategy and also with Kames work on the “poolpower” pod. Both of these options are on L1, we’re going to need layer 2 solutions to this as well. Getting this out asap is essential.

Action item: support those already working on this and potentially create new bounties or other incentives for other to start. Also start working on L2 integrations.

4. New prize strategies
Right now prize strategies are mostly binary, you either win or you don’t. There has always been a lot of demand for different prize allocations. Everything from having a % go to a charity to having a % of fixed interest return (this was the idea @Torgin had for the Kokoon pool) to having winners chosen based on simply being deposited and not the amount of the deposit.

Experimenting here should widen the audience the protocol appeals to. There are likely many people who won’t deposit into PoolTogether today but they would deposit into a prize pool that offered a guaranteed return PLUS a prize.

Action items: Identify prize strategies that have the biggest impact and are simplest to implement. In my mind, a simple modification enabling a prize strategy to send an arbitrary amount of interest to an arbitrary address would be a great place to start.

Summary:
I’ve tried to place these in order from what is most actionable and also highest leverage. I’d love to move on the first item this week and see major progress on item 2 & 3 this month. I believe by making these changes aggressively we can quickly reach $1 billion in deposited funds.

10 Likes

Really well put, @leighton ! Well structured action plan and the order makes a lot of sense starting with most actionable.

On 3., there have been ideas circling around batching deposits. Wouldnt this also be a measure that is rather straightforward to implement and result in a significant reduction of gas costs?

In the spirit of your order, I would like to add

5. New User Acquisition

Right now, the number of players is still very low. DAI pool counts 4,465 players only (USDC only 934). For comparison, Coinbase has more than 43 million verified users.

Your measures will clearly help to gain share of wallet with existing players so they can make more out of idle assets sitting around elsewhere. And adding popular other assets like wrapped BTC or USDT ( :face_with_thermometer: ) as well as yield sources like AAVE makes perfect sense and bring the protocol closer to the $1bn mark. Assuming everyone did throw his entire life savings into the pools already to benefit from POOL rewards, the potential with existing player base is limited and 10x feels out slightly of reach at least in the short term.

Integrations into popular apps like the role model argent has done it are needed. In particular the blue chip ones like Coinbase. PoolTogether is one of the most credible DeFi projects in the world and a really cool product to integrate both as an investment option but also a customer acquisition tool for themselves. Instead of giving away 10$ in BTC, they could also offer the option to receive DAI tickets etc. But this integration is definitely very work intensive and requires buy-in from third parties that are out of the control of the protocol.

3 Likes

Great post! I also believe we can achieve that TVL in that timeframe.
-Would love to see ETH BAT and ZRX added to governance with WBTC and USDT. Assets like ETH despite having low yield could have great demand due to the yield earned via POOL.
-I like the idea of a weekly jackpot collected from all governance pools going to any wallet participating in a governance pool not based on deposit amount. Would be cool to see the accumulating jackpot listed right at the top of the page.

On a side note, it is going to get very complex deciding how much POOL to allocate to all the different pools we’ll have after integrating new yield sources. Would be good to have some kind of tier based system in place to allocate the most POOL to the top earning pools. We will have to find that perfect balance between providing incentive and benefiting POOL holders and depositors.

5 Likes

I like these ideas! The reason I would like to wait on ETH is that with Rari we can get around 10% yield on ETH. So it will actually make a lot more sense than Compound.

Oh wow! that’s great! Rari is the way to go for sure then.

I like the idea of new pools!
But in order to incentivize them with POOL, we should reduce the existing yield farming rates on DAI, USDC, COMP and UNI. We need to come up with some sort of system.

It could look something like this:
In total, there is always X POOL/day distributed for yield farming.
This is split among all governance pools, so if one is added, all others need to be reduced proportionally.

There could be a multiplier for different types of pools. For example: Stablecoins get 5x allocation. (since they embody the spirit of no-loss.)
Or coins get a multiplier based on how much interest they are generating in their yield source.

For example USDC currently gets 11% interest on Compound, while UNI gets 1% interest.
This would incentivize depositing assets according to their cashflow, which can be captured by the protocol to increase its value.

I like the interest route, but it would need to be kept up to date every so often, and if yield sources other than Compound are added, we would need to adjust for extra risk if those yield sources use riskier strategies.

X could be set to something around 2200 POOL/day to put us in line with other protcols, as I have eluded to here:

We need to keep in mind that we need some left for POOL pool, and maybe other ways of distributing POOL, like @gabor’s Extraordinary Airdrop to Governance Participants

4 Likes

Currently there is broad consensus for 255/day for UNI and COMP. I think overtime that will change as the community realises it’s not sustainable to keep these rates while adding new assets and allocating POOL to them.

I think the community should think what sort of ratio is appropriate for stablecoin:risk token as a rough guide for setting some sort of drip standard. Maybe we also want to think about sub categories to class risk tokens too. So, perhaps something like UNI earns more than something like ZRX rather than all giving them the same standard. But as a starting point and for simplicity let’s just assume all risk tokens we onboard through governance will be treated equally.

Let’s also assume that stablecoin rewards are reduced to 1,000/day as the consensus seems to suggest they should be lowered from an earlier poll. This has a ratio of 4:1 roughly. Adding 5 more stablecoins (sUSD, USDT, TUSD, BUSD, RAI for example) and 5 more risk tokens would have the distribution/day at 255x7 + 1000x7 = 8785. This alone will blow ~60% of the treasury in 1 year. So it’s just crazy distribution rate. We have to do any of the following: 1). lower stablecoin reward 2). lower risk token 3). Both. Keeping a 4:1 ratio (and I’m not saying that’s the golden number here, but it does seem somewhat ballparked to the ratio compound has for stablecoins:risk tokens, to get to something like 2,200 like @Torgin is proposing you’re looking at dropping risk token rates to 60POOL/day and stablecoin rates to 240 (using a 4:1 ratio) when we have 14 assets up and running. Governance will likely be busy amending the rates each time a new asset is onboarded. I haven’t even accounted for the POOL pool numbers here either.

I think people are going to be in for a surprise at how much we will have to drop both rates as we grow.

3 Likes

i like the idea, just want to add to consider Pool pool should have similar weight of relevancy as the main pools. i feel at this point in other discussions allocation around pool pool is taken for granted. if needed alternative source other than treasury is discussed in “Pool Buyback Program”