I’m eagerly awaiting @Leighton’s post on updated POOL tokenomics, but in the meantime, I would like to list out some problems that I currently see with regards to our token and why it’s important! Hope you find this information useful.
Our DAO Is Our Greatest Strength
To start, by almost all metrics, the PoolTogether DAO is one of the most successful, well-functioning DAOs in the entire industry. The recent report by otherinter.net really showed this in full. For example, I was surprised to read that our governance proposals consistently generate relatively high engagement (>40%) compared to other DAOs. The Discord is also well-organized and always helpful.
I was most impressed by the pipeline of talent that has gone through our ranks. From our DAO, people have gone on to work for Zapper, Zerion, and more.
In all, the DAO has fostered good vibes all around. Frankly, everyone knows PoolTogether. We have strong social power and are widely seen as one of the ‘OG’ communities. Although we have some issues retaining talent at times, I really feel that we’ve got something special going on here.
Valuing the DAO
So, our DAO is strong… but the fungible representation (POOL) of its voting power and protocol ownership is not. As of now, participating in governance, using the protocol to garner governance power, and so on has been rewarded with relative losses in the real financial sense.
Our community is rightfully dismissive of large wallets who deposited into v3 simply to ‘farm-and-dump’ our governance token. Yet, what does it say when we consider the fact that those who did so are actually in a better position now?— While those who stuck around, believed in the protocol and participated in building the DAO only saw losses?
It’s an interesting problem and we should consider the following facts.
- Few people want to participate in a DAO if it means holding a token that depreciates.
- A constant, depreciating valuation immediately gives the impression to newcomers (completely unfairly) that something is going wrong.
- It devalues our POOL treasury, and prevents us from using POOL as more effective means of payment (which may or may not be linked to our problem of retaining talent in the DAO).
On the protocol level itself, there are also repercussions.
- If the valuation of POOL governance is poor, our entire protocol and treasury is at risk. As we have seen with Uniswap many times, entities can amass a large number of tokens if the valuation is low and give themselves free money or worse.
- It limits our leverage on the protocol-level when it comes to deposits since our POOL emissions will be far less attractive. Low confidence means it will probably be farmed and dumped, since it worked well already for those previous actors.
- A depreciating POOL valuation also dissuades deposits more generally since people may think there’s something wrong with the protocol itself because ‘line go down’, even though this is false. It simply becomes a lot harder to convince people.
In short, the key to runaway growth for our protocol is fixing POOL. The token is not tangential to the protocol, it is the fungible embodiment of the protocol itself and intimately linked to its success.
Before v4 launch, we talked about getting the narrative right for the next phase of PoolTogether. It got me super excited. Yet, it seems like our narrativizing efforts aren’t sticking. This is because, frankly, the narrative is far less salient and convincing if POOL itself is weak. It’s a lot harder to onboard people onto a narrative for a depreciating asset. I cannot give a clearer example of this than the success of
abracadabra.money. In short, people like to feel like they’re on a winning team. It’s not that complicated.
In my view, getting POOL right is what will really get the gears moving much faster and easier. It will make our narrative stick easier, encourage deposits, attract new talent (potentially), make our DAO more rewarding, and all-around make the protocol’s success much easier. So, why fight an uphill battle when it’s really not necessary? That’s my thinking at least.
So now, hopefully I’ve convinced you that the POOL token itself is not some sideshow. In fact, the way it exists now, puts a severe limitation on our growth which is a false problem we really don’t need to deal with. So, how do we strength the value proposition of the DAO’s governance? I have some suggestions.
- Incorporate POOL on the protocol-level. I am a huge fan of making holding POOL give one exposure to all lotteries on pooltogether. Additionally, maybe, we can make it so that you need to participate in governance to even be eligible. This would effectively make participating in governance the most fun out of any DAO. Game-fied governance. Fun!
- I’ve heard other ideas about holding POOL to affect your chances to win, slightly. Lock POOL for boosted odds. While I am not as convinced of this idea (since it may be difficult to implement on the protocol level), it is something to consider.
- Make PPOOL more interesting. As of now, the APY is pretty small and frankly very boring. It’s something I would expect from massive & established DeFi protocol, not really from a protocol like ours which hasn’t even begun its parabolic advance.
Finally, I would like to discuss one last thing which is exchange listings. Since I am merely a community DAO member, I can speak about this freely although I really have 0 idea about what’s happening behind-the-scenes.
Although I was not present for the last community call, I have heard through the grapevine that there is some skepticism toward CEXs. Of course, in the purest sense, we prefer DEXs. I do too, I use them almost exclusively. There’s also some expectation that CEXs will happen “naturally,” and we’ll eventually be listed somewhere. But we are stuck in a catch-22 here. Because of high gas fees (and the relatively poor demand for POOL itself), our trading volume has been pretty bad. No CEX is going to list a token with $100k in daily trading volume out of pure charity. So, we are stuck. Providing a fiat onramp to allow users to get involved with POOL is not secondary to the problems I outlined above, nor does pursuing CEX’s compromise our decentralized ethos—Rarible, Gitcoin, and so many other DAOs have pretty aggressively pursued CEXs which has worked out pretty good for them. I’m all for CEXs and find them incredibly important, even though I don’t use them much.
I am not writing this as someone who is new to PoolTogether. I have told dozens upon dozens of people about the protocol, onboarded many folks, have been involved in governance, try my best to vote whenever I can, and hang around the PoolTogether Discord often. I’ve been a POOL holder since spring 2021.
I suppose, in all honesty, I am just frustrated. I’m understandably frustrated that my participation is being devalued consistently by the POOL token. It is equally frustrating to have the most intuitive, easiest-to-explain DeFi protocol also be the worst-performing hold for me. If PoolTogether wasn’t so special and I didn’t see such promise, I probably would have left. I, like all of us, want to see POOL catch up to everything I see great about the protocol itself—and let the resulting positive feedback loop get those flywheels spinning.
Please, comment and give your thoughts! I really hope we can get this right before Avalanche launches on v4 on December 15. Thanks for reading!