RFC: Convert $489K DAI balance to stETH and deposit as sponsorship into stETH pool on Pooltogether

I like the idea of sponsoring the stETH pool! It’s a great community-led project that can help to promote PoolTogether’s public goods funding / charitable use-cases.

A sponsorship would be no loss. In a perfect world there will be a stETH pool running on the PoolTogether hyperstructure. The stETH pool can potentially help to bootstrap this one by bringing in some early depositors. Our sponsorship could be moved over at this time.

$489k feels like a lot though. I would prefer starting with a smaller amount. We still have about 30 ETH that is currently stuck in the governance contracts. It would be interesting to explore if we could potentially could make those liquid again by going the steth.win route.

Same same! :handshake:

These are interesting points, thanks for sharing.

The one big take away I got is that it would be great to know the 2023 plans with stable spending as it relates to V5. Is there any plans for a large chunk to be used in someway? ie Marketing, audits, subsidies, etc

These funds would also be used to promote an older V3 pool and while the initiative is great, I think we should focus on the next version of PoolTogether and maybe use these funds to kickstart it.

The public doesn’t know what version of PoolTogether the stETH pool is using. And they probably don’t care. Using the stETH for this prize pool helps carry the vision of what is possible with PoolTogether. And that will help further PoolTogether by bringing in that awareness.

Then when V5 comes out we can transition the ETH/stETH to a V5 pool. From what I understand having a ETH/stETH pool in V5 is possible?

I think this is the time to swap stables for ETH. And maybe that is the first ptip, just swap for ETH, then we can figure out what to do with it.

Yes exactly, currently we don’t have a written plan for the launch of V5 and I agree that we should write one to figure out how to launch it and which portion of funds should be allocated to the launch.

Yes, it will be possible to launch a ETH/stETH pool in V5 but since people need to withdraw and then re-deposit in the new pool, it’s not really straightforward and I think a lot of users won’t really bother.

Speaking of users, there is only 12 unique depositors in this pool and 3 sponsors.
Amount deposited by depositors is around 38.5 stETH and by sponsors is 12.85.
In total, about 51 stETH is in the pool, which at current price equals $83,200.

So it seems kinda crazy to me to deposit almost $500k as sponsorship in a pool with only 12 users and $83k in deposit.

1 Like

The deposit to the stETH pool is for a good cause and we can see what kind of growth we can get in a non stablecoin pool. Think of it as an experiment and a diversification into holding the most trusted blue chip asset in our ecosystem. What’s crazy to me is funds sitting in crypto earning bank interest on government dollars.

1 Like

I think we should have more ETH in treasury and generally agree with Tuna’s sentiments about crypto and dollars. I admit I know nothing about ETH price short-term. I’m guessing $1k is as likely as $2k for ETH. Long-term I think we all believe it will outrun USDC, especially inclusive of staking yields. Our treasury does not reflect this conviction.

I do think we should sponsor the stETH pool. But am biased. I will add that for stETH specifically I do not think v4/v5 will work because of the daily rebase. A TWAB based prize would be gameable - poolers could withdraw, collect rebase and re-deposit - collecting TWAB credit but not contributing to the prize. The wrapped version of stETH would work and is also available on L2s. Building now is better than waiting from my perspective.

With 5 million stETH out there I see a huge opportunity for a prize pool. Sponsoring the pool is a unique way to contribute to a good cause and attract more depositors while only sacrificing the staking yield.

My feeling (not a Finance team position) is that we should get our feet wet by buying some ETH / converting to stETH and depositing to the pool. If price goes down we could consider buying more. If price goes up we are not missing the train.

I am comfortable with 250k (USDC or DAI)

  • Transfer to exec-team
  • Buy stETH at market with the condition that price is less than $2k
  • If price greater than 2k USDC for one week while held by exec team then USDC returned
  • Deposit to pool as sponsorship and send tickets to treasury

For those who voted less than $489k @BraveNewDeFi @dancingcat.eth @Pierrick @thumbsupfinance @Tjark

  • $250k I could get behind
  • $125k I’m willing to try
  • I have a different idea
  • I’ll never go for anything like this

0 voters

1 Like

After some thought, I could get behind swapping the all the DAI to stETH, as it nets a higher yield than we are earning on Aave. But even $125k and $300k diversified into a liquid staking derivative would be healthy for the treasury. A smaller subset could be used to sponsor the stETH win pool, as well, but primarily, holding stETH in the treasury would make a portion productive.

I’d specify that I wouldn’t be comfortable with more than $50k being used to sponsor the ETH win pool. Instead, stETH could be held as a productive assets and, potentially, be borrowed against in the future, should an opportunity or need arise. Some could be used to highlight that PoolTogether can be used to build products. That would essentially be advertising for the protocol and brand that pays for itself and draws interest in ahead of v5.


Great discussion so far on this topic. Let me put my thoughts here.

stETH is indeed centralized, but so is USDC and the whole v4 protocol runs on USDC, so that seems like a non-issue to me. stETH being centralized may result in a slightly higher risk profile compared to rETH, but then again rETH requires a much more complex smart contract infrastructure to work which could also be seen as a vulnerability. I don’t think those risks are significant and I definitely think it would be a good move to diversify the treasury into productive staking derivatives. If you want to really hedge your bets, it could be smart to split the diversification between stETH and rETH. However, I am of the opinion that if either of those assets is succesfully attacked the fallout would be so significant that they could very well both depeg.

Even though I am a depositor in the stETH pool, which makes me biased, I don’t think depositing $500k worth of stETH as sponsorship in the stETH pool is a conservative move for the PoolTogether treasury. I can get behind depositing between $100k and $200k in sponsorship though. It is obviously true that there are not a lot of funds deposited right now, but that’s the same bootstrap problem PoolTogether v4 also experienced, and a sponsorship deposit from the PoolTogether treasury could easily change that.


Thank you for taking the time to write this up @TheRealTuna!

I’m generally a supporter of the idea but at this point, I would oppose this proposal.

The reason being is I don’t think POOL token holders should be taking arbitrary actions with protocol assets.

If POOL token holders want protocol assets to be managed more actively according to some strategy I think that should be done by transferring those assets to an entity with a mandate to do so.

To me, this is a part of a bigger conversation we should be having around how to best structure the protocol for success going forward. I think a lot has been learned in the last 2 years since the POOL token launched and we can leverage those learnings to holistically approach this.

Holding ETH has been brought up several times before and generally had majority support. For some reason it hasn’t ever had strong support from the PT inc side. Since V4 launched we have been limited to being a stablecoin platform which has been quite dissappointing for someone like myself who is in crypto for the upside it has and not interested in holding US government dollars. I await V5, which promises any asset and multiple chains. In a bear market where you would expect a stablecoin platform to be at it’s strongest, we instead burned through $3MM in funds and without OP rewards we would have been in a much worse position. We had a lot of new depositors during that time frame but some of that may have to do with the prize cap. The last thing we should do is head into the next bull market with mostly stablecoins, we can manage our treasury better than that. I don’t see this as an arbitrary decision but a decision to help lift the spirits of POOL token holders and allow us to stand by our beliefs. Our belief in Ethereum and an alternative financial system that everyone can benefit from. Adding ETH to our portfolio would give Pooltogether treasury some upside that POOL holders desperately need. We have enough stablecoins to carry us through the V5 launch and beyond that i should hope that V5 brings the income needed to sustain the protocol.

As far as depositing some of the stETH to the stETH pool. It’s for a good cause and we can use it as an experimental platform to see what the future can bring. This would be a big morale boost to the community and those who have worked hard to help grow Pooltogether and help the community.

Judging by the polls we have a majority in favour of diversifying some funds into ETH and depositing some of it into the community built stETH pool. It would be nice to have PT inc work together with it’s community here. I can’t see what we stand to lose from this proposal other than the $9,000 in annual interest which is gonna look pretty sad compared to $2.5MM we’ll have when ETH is $9,000+.


Again to re-iterate, my issue isn’t really with this specific idea. I personally would actually be in favor of a more radical approach and converting even more to ETH… however, I’d only be in favor of that if it was a part of a broader overhaul in how POOL protocol treasury is managed. I think having that discussion is worth the opportunity cost of waiting a bit on this.

Thanks for the follow up, Leighton. Can you elaborate on this comment:

I personally would actually be in favor of a more radical approach and converting even more to ETH… however, I’d only be in favor of that if it was a part of a broader overhaul in how POOL protocol treasury is managed.

I’m not sure I understand what you’re looking for, and I’d love to continue this discussion to understand your reservations.

I’ve outlined my thoughts below, so you can see where I’m coming from, as well.

Past treasury management decisions

Before the council and the TBR process, the first working group formed by community members, including myself, and ratified through a PTIP was the Treasury Working Group (TWG).

One of the TWG’s mandates was to review treasury management; this now falls within the purview of the Finance Team and, to a wider degree, discussion within the council. However, this process has always been open to any POOL holder that has a strategy that benefits the treasury and the protocol at large.

When the Treasury Assets Management #1 discussion took place, there was wide support to deploy a portion of the DAI held by the treasury into Aave v2 to earn yield and to deposit USDC into PT v4 to held increase prize network liquidity.

POOL holders voted to accept PTIP-54: Treasury Assets Management #1 at that time, which deployed the DAI were discussing now to earn yield in Aave v2.

Right now, the DAI in Aave v2 on Ethereum mainnet is earning 1.51% vAPY. After almost a year, the treasury has earned ~$8,449.55 in interest. With Aave v3 launched on Ethereum mainnet, it’s likely that the APY on Aave v2 drops and the treasury earns less interest.

At the time PTIP-54 was discussed, the goal was to offset the prize subsidy, which caused sizable outflows from the treasury. While the TWG then and Finance Team now have worked to decrease the subsidy from the treasury, the protocol still earns less yield than prizes awarded, which means that funds flow out from the treasury.

The interest earned from nearly one year in Aave v2 offset about one week of prize subsidy; during times when the subsidy was high, this interest may have offset the subsidy for one day.

Point being, the interest earned is intended to maximize the protocol’s funding, which is used to fund community-driven teams through the TBR process; provide prize network liquidity, which the prize network cannot operate without; and to provide subsidies for prizes when yield < prizes awarded in any given day or week.

Diversifying into stETH

If the 488,449.554 aDAI were traded for stETH, the protocol would hold ~297.10 stETH. If you take into account slippage and trading fees, this is likely ~296 stETH.

At the 4.9% APR available on Lido, this would earn the treasury 14.504 stETH in one year’s time. At current prices, that would be the equivalent of 23,845.3012 DAI, or 282%+ the yield we would earn on Aave v2.

This would subject the protocol to market risk, but there’s clear upside potential, given yield + demand for stETH may increase after the Shanghai upgrade. There’s potential to earn significantly more should the price of ETH/stETH increase in USD terms and there’s the risk of losing value in USD terms if ETH drops in price.

However, if the long-term belief is that ETH will be higher than it is now and the protocol will have use for ETH in the future and will benefit from further diversification, I don’t think there’s a wider discussion necessary for treasury management, but I also want to hear your perspective, @Leighton, as I believe POOL holders should have community input with an array of viewpoints before making any decision.

To date, the community has been supportive of making the DAI in question productive. The USDC is used for prize liquidity and to fund community teams working to support the protocol.

stETH for sponsorship in the stETH Win pool

Even if $125k of the stETH were deposited as sponsorship capital, assuming this proposal is put to a PTIP as-is, then it would reduce yield for the treasury by ~25%.

Instead the treasury would earn:

  • 17,809.02 DAI worth of value, at current prices
  • 10.792255 stETH worth of value

This is still more than 2x the yield earned through Aave v2.

The stETH win pool could be used to highlight the potential ways to build frontends in v5 with a defined use case and product with a unique value proposition.

The ~3.71 stETH in yield generated for the stETH win pool would be an advertising expensive, so long as it is well marketed and used to showcase the benefits of composability and the improvements coming with v5.

Closing thoughts

I would be supportive of this proposal, as I do not see significant downside here. There are many reasons to hold stETH in the treasury, especially since native ETH cannot be held in and then withdrawn from the current timelock, so an ERC-20 ETH equivalent that earns yield would be all the better to hold.

Sponsoring a community pool built by a core community contributor that highlights a unique usecase for the protocol for a total expense of 3.71 stETH seems like a worthwhile endeavor. The community has issued grants for more with less value delivered to the protocol on a whole.

stETH win is aligned with the ethos and values of the PoolTogether community. In this case, we can see a working product that is generating yield for depositors and donating a portion of the yield to a good cause.

Overall, this proposal seems like a win-win-win for the protocol and community.

  • Adds greater treasury exposure to ETH
  • Increases yield earned by greater than 2x
  • Upside potential of ETH
  • A 25% allocation to a no-loss pool built by @underthesea that donates to charity and costs 3.71 stETH annually

Open to hearing other’s thoughts and views!


Happy to provide a bit more context.

First off, I want to say, my feedback is strictly related to the idea of swapping Dai to stETH. The subsequent idea of using the swapped stETH as sponsorship is not a factor in my opinion.

My biggest concern is that I want to avoid making (what I view as) ad hoc, one-off, decisions on managing assets under POOL token control. Instead, I’d like to focus efforts on agreeing to a holistic plan that addresses both the purpose of the treasury and how it is managed.

I see this proposal as a step towards active management… which might be fine but if that’s the path we want to take but if we do, we should be thoughtful about it and understand what risks we are now taking on and how those differ from the current setup.

So I see a pretty marginal benefit to making this change right now compared with taking some time to analyze what overall setup we want and implementing that.

One piece of missing context for you @BraveNewDeFi is that last week on the council call I discussed how PoolTogether Inc had just hired a researcher to explore if & how we want to setup a “foundation” type entity to manage some activities related to the protocol. I anticipate that in the next couple of weeks there will be an initial report for the community to read on that. So I’d see a decision like this as subsequent to that conversation.

In the past, I do think it’s been clear the purpose of the treasury is to further development, awareness, and growth of the protocol.

Adding productive assets to ensure the protocol has some interest flowing in to offset the large subsidies used for development, growth, and adoption of the protocol.

Do you have any estimated timeframe on the work the researcher will be doing and the time to implement any of these changes? The difference between weeks and months would impact my view on this particular proposal.

I do think that POOL holders can put forward and vote on proposals they believe to be beneficial. Most proposals are ad hoc decisions. Most funding proposals, bounty proposals, grant funding requests, etc. are all ad hoc decisions. The TBRs submitted each quarter would fall into this category.

I don’t see this proposal as active management. If POOL holders voted to swap DAI to stETH, the stETH would remain in the pool; any sponsorship stETH could remain in the timelock, as well, just like the sponsorship USDC held in the timelock. In my view, it’s no different than the POL or other assets held in the timelock contract.

I’m happy to hear more about the work the researcher is doing. PoolTogether Inc, though, is one team working to support the protocol. Other POOL holders could vote on a proposal; if most are aligned with PT Inc’s direction, then any potential PTIP would be defeated.

In the past, I do think it’s been clear the purpose of the treasury is to further development, awareness, and growth of the protocol.

Agreed! I think that is still clear. If the protocol already held stETH and this proposal was to deposit it, I would support it. The nuance I see here is that this is moving us towards a more active management. The protocol doesn’t currently hold stETH so this involves swapping which involves making assumptions about what assets are best to hold, when they should be liquidated, etc.

Do you have any estimated timeframe on the work the researcher will be doing and the time to implement any of these changes? The difference between weeks and months would impact my view on this particular proposal.

I think we’ll have an initial report in the next 2 weeks. But there still will be the question of 1) if it’s something people want to pursue and 2) if people want to pursue it, what would it look like exactly?

I think question 1 could be addressed relatively fast and question 2 would be a matter of 1-2 months depending on what structure was being pursued.

I’m happy to hear more about the work the researcher is doing. PoolTogether Inc, though, is one team working to support the protocol. Other POOL holders could vote on a proposal; if most are aligned with PT Inc’s direction, then any potential PTIP would be defeated.

I’m not sure I understand this exactly what you are saying here… I think you are just saying ultimately POOL token holders can do what they want? Which I agree with! :slight_smile:

1 Like

I don’t agree with the active management interpretation. I believe most people in support of this would prefer to hold the stETH over a long-term period as a passive asset held in the timelock. Previously, POOL holders voted to swap non-stablecoin assets for stablecoins, which had wide support and was approved at the PTIP level.

We do have ETH in the timelock, which cannot be withdrawn without an upgrade, and ETH is earned by the POL positions. stETH is a passive asset akin to these same two holdings in the treasury. Similar to how we hold aDAI now, stETH would be a long-term position.

Yes, that’s what I’m saying :grin:. The research effort is being led by PT Inc as you pointed out in this comment.

I’m under the assumption this is an initiative being led by PT Inc that will be presented to the wider community for feedback once the report is available within the next several weeks.


Yes, this is correct. Although, I hope the initial report for feedback is no later than the end of next week.

In terms of the comments on active management. I think we understand each other but just disagree on definitions. :handshake:

I agree with having more stETH, that’s perfect…

But I do think we are in a pretty bad moment to make that purchase…

Would feel way more comfortable with a lesser amount and for it to be spread out over the year, basically DCA’ing it completely instead of locking us into a buy right after a 22% jump YTD.

That’s my only concern but other than that the plan seems solid.

Hey @DenicioDelToro1,
the conversation moved here: PTIP-84- Increase ETH exposure while supporting the stETH pool

Here are my thoughts:

  1. I don’t love speculating on ETH price with treasury as we might need every stablecoin we have to survive the bear.
  2. I think staked ETH has a major role to play in the future of Pooltogether. It is the only sustainable yield source we have right now that provides decent yield (unlike Aave) and will continue to do so perpetually.
  3. I also think coupling pools with charity is a great experiment and could be a marketing driver.

As such, I support governance giving explicit support to the stETH pool through sponsorship. I think it’s good we’re swapping a small amount to stETH and I think we should use it all as sponsorship.

This should also be seen as a vote of confidence in the stETH pool (or future iterations of it) and promote it to an official pool that gets more marketing exposure and considered if there can be an easier way to find it through the PT app frontend.

I don’t have concerns with the sponsorship being large compared to current deposits, as 50% of yield gets donated anyway so it’s still higher return to not use the pool if that’s the only thing you care about.