RFC: New vault with charitable component

[underthesea]

TLDR I propose we use the OP in treasury to incentive a new Aave USDC vault on Optimism. 33.3% of this vault’s yield would be directed to a good cause.

With PoolTogether we want everyone to win and nobody to lose. I believe we can innovate on the current protocol to create opportunities where more parties can benefit, while also increasing awareness of the protocol.

Current focus
Depositors and PoolTogether win

Potential
Depositors, PoolTogether, and a good cause win, while Web3 benefits by fostering the narrative that it can be a force for good.

stEth.win
In September of 2022 we deployed an altruistic project called steth.win. To date the project has donated 3.85 ETH ($14,630) to good causes. Participants also won 3.85 ETH. Nobody has lost. While we did not achieve all the growth we hoped for, we can leverage our learnings into a similar concept with PoolTogether V5.

In case you haven’t heard of stETH.win before, you can learn more here:

https://x.com/PoolTogether_/status/1641826761741594626
https://pooltogether.mirror.xyz/PpRMyr3kFjbzM-D8xr0QfCln7gnOvpeddRph3N2sTVE
https://pooltogether.mirror.xyz/8fpw3oScPRqb6Nx_8n5l8sgFx-x34_sVzcs-cJ0m97g

The concept has already achieved great verification:

https://x.com/mikedemarais/status/1594738319212044289
https://x.com/DeFi_Dad/status/1666496869789229070
https://x.com/WaterAidAmerica/status/1641856086704570368
https://x.com/WaterAidAmerica/status/1678086646095331331
https://x.com/TheGivingBlock/status/1641828000441200643
https://x.com/TheGivingBlock/status/1677341288616673283
https://x.com/DefiLlama/status/1651981507815170049

Issues with steth.win

• Untrusted .win domain
• No support from Lido
• stETH falling out of favor with the ETH community
• Ethereum gas
• Lack of incentives and clear reason for depositors to participate
• Limited prize structure
• Too high of a prize split (50%)

All of these issues can be addressed with a new program on Optimism with OP rewards

• The vault can be listed on Cabana and Pooltime
• Support from Optimism and potentially Circle
• Use native USDC and Aave for the yield source
• Deploy on Optimism so anyone can participate without worrying about gas
• Use OP tokens to incentivize deposits
• The V5 prize pool has a much more dynamic and daily prize delivery
• Use 33.3% prize split instead of 50%

A new vault
Treasury has 87,982.847 OP (current value $217k)held by the executive team. With the retirement of the executive team we need a plan for these tokens. These tokens came from Aave incentives that V4 depositors generated. Note that OP token can only be on Optimism.

Using the performance of the current Aave USDC vault we can create a reasonable deposit goal.

$217k in OP @ ~ 10% OP rewards = ~$2m TVL for one year

With this goal the vault would increase the TVL on Optimism by 53%.

With $2m in TVL the vault will contribute $113k (2m * .086 * .66) to the prize pool and donate $57k (2m * .086*.33) to a good cause.

Incentive schedule
Linear distribution over 1 year (7,331 OP per month)

Claiming rewards in 1 month epochs

1 year fully deployed so that the rewards are easy to message and attractive for savers

PoolTime is offering to create a new app for this specific project in Q3.

Cause
Vault depositors can choose the charitable cause via Snapshot or the community can decide. With steth.win we chose Feed The Children and WaterAid. The Giving Block has thousands of projects to choose from https://thegivingblock.com/donate/?tx_tags=crypto. With USDC it will be easy to find someone to take donations and we can be very open to finding the right cause.

What’s next
Do you have other ideas of how to use the OP or how to improve on this idea? Please share. This proposal can be executed by snapshot vote if we can come to consensus on using the OP for this initiative.

• I’m all for it, lets go!
• I’m against this and here is why
• I have some questions before deciding

[Tjark]

Bring it on
Let’s show what else PoolTogether can do

[nopey.eth]

I love this idea, and believe it is worth pursuing. I do have a few thoughts/questions:

1. This feels like a strong opportunity to partner with public goods actors - if PoolTime pursues this, I believe it could generate greater buy-in/traction if done as part of an educational or marketing campaign coordinated with one or more recipient/distribution partners.

2. The values are large - rather than a single-shot initiative that we hope works, running a pilot with smaller values and smaller goals might help clarify the best way forward without committing the entire OP reserve. It would also create room to potentially coordinate with multiple partners.

3. Deciding who to give to could become a, um, considerable bike-shedding experience. Having a clear plan in advance could help mitigate this. Everything else being equal, if I have to vote (which I’d avoid if I could), I’d rather vote directly with my deposit.

Thanks for putting this together - I want to reiterate I think this is a brilliant use case, and worth doing!

[underthesea]

@nopey.eth

This feels like a strong opportunity to partner with public goods actors - if PoolTime pursues this, I believe it could generate greater buy-in/traction if done as part of an educational or marketing campaign coordinated with one or more recipient/distribution partners.

Yes! We have had contact with The Giving Block before (see tweets above). And I think we all agree this vibes well with Optimism generally. I think there is a lot of opportunity here.

@nopey.eth

• The values are large - rather than a single-shot initiative that we hope works, running a pilot with smaller values and smaller goals might help clarify the best way forward without committing the entire OP reserve. It would also create room to potentially coordinate with multiple partners.

I feel pretty strongly with the long timeline that this is not that big of a value. I think focus is important to do something meaningful here. From my perspective the DAO has been sitting on these incentives generated by users deposits for a long time and it would be good to get them in a TWAB rewards contract flowing back to users, removing the need for multisig custody. If there is an alternative distribution proposed I think we should consider it! But I don’t want to pass a vote here and only be testing the waters with a portion of the tokens.

@nopey.eth

1. Deciding who to give to could become a, um, considerable bike-shedding experience. Having a clear plan in advance could help mitigate this. Everything else being equal, if I have to vote (which I’d avoid if I could), I’d rather vote directly with my deposit.

Yes sorry if this wasn’t clear but if there was a Snapshot it would be based on vault tokens/twab. Not POOL. We were also discussing the possibility of having a few options for users to choose from when they deposit. This could be different vaults or perhaps some other contract/hook solution.

Ultimately theres a lot we can do here, but I think something simple and incentivized for long-term participants will give us a strong foundation to build on.

[trmid]

I’m all for this initiative!

Like others have mentioned before, there are many ways to use PTv5 for charitable purposes:

• custom vaults with a portion of yield to charity like this
• prize hooks that you set to donate wins under $x to a charity of your choice
• prize hooks that donate a % of every win to charity automatically
• and probably many more

I am not sure which of these is most effective, but that’s a question for another time. With this proposal, it sounds like you’re answering the question of: “what can we do with this extra OP?” And I think that running a charitable vault with it is a great solution for the following reasons:

• it incentivizes more deposits
• helps grow the GP
• and of course, provides value to a charity!

I think there will be a couple indicators of success here:

1. Will there be enough deposits to bring the bonus reward APR down to a similar level of the non-charity counterpart? (ex. if there ends up being 8% bonus reward APR on the charityUSDC vault and 11% bonus reward APR on the other przUSDC vault, it may indicate that there was more demand to participate in a vault for charity than there was in a traditional vault)
2. How much $ will be given to charity compared to OP $ given out through bonus rewards? It is unlikely that the donations will exceed the OP drip, but it will be interesting to see the comparison. Since this is essentially a 33% | 66% split between incentivizing charitable participation and pooltogether participation, will the final donated value match or exceed 33% of the total OP value dripped to supporters?

The charity voting might get a little complicated and I’m not sure what the exact plan is, but I imagine the simplest path forward would be to hold a vote once before deployment and then stick with it for the entire duration.

Finally, I would just like to comment that steth.win always felt a little inaccessible to me personally. This is mainly due to it being on mainnet, which I don’t usually use for gas cost reasons, but it also felt like a bigger commitment since I would have to use a new site with a new system of checking for prizes and results. This is why I’m very optimistic about this charity vault being compatible with existing interfaces. Although a dedicated interface will be nice to see dontation statistics, I think it’s a huge unlock to be able to add this to sites like pooltime and cabana with an extra tag or special description explaining how it differs. The core experience stays exactly the same!

LFG

[Taliskye]

@trmid

prize hooks that you set to donate wins under $x to a charity of your choice

This would be pretty awesome imo.

Fully on board with however this plays out.

[Tjark]

Thanks to all for engaging in the conversation. Great replies here so far. Gets me all excited!

@nopey.eth

This feels like a strong opportunity to partner with public goods actors - if PoolTime pursues this, I believe it could generate greater buy-in/traction if done as part of an educational or marketing campaign coordinated with one or more recipient/distribution partners.

Totally agree! It’s worth highlighting that this is project is solely meant to advance the PoolTogether protocol and community. Pooltime might be the initiator but we really welcome any contributions and input.

We want this to work. Collaboration with ecosystem partners and the PoolTogether community will be essential. The nature of the protocol allows any team to leverage any charity / pg vaults by showing them on their interface. At the same time they will contribute to overall protocol usage and prize growth. We should see this as a PoolTogether project, not as a Pooltime project.

@nopey.eth

The values are large - rather than a single-shot initiative that we hope works, running a pilot with smaller values and smaller goals might help clarify the best way forward without committing the entire OP reserve. It would also create room to potentially coordinate with multiple partners.

This is also a chance to get this right from the start and use potential traction as fuel to grow more. We have seen generous ecosystem grants before. If we can prove the value of charitable crypto integrations, we might be able to unlock more funds for this cause.

However, it’s worth considering using a portion of these funds for marketing.

@trmid

there are many ways to use PTv5 for charitable purposes:

• custom vaults with a portion of yield to charity like this
• prize hooks that you set to donate wins under $x to a charity of your choice
• prize hooks that donate a % of every win to charity automatically
• and probably many more

You’re making a great point here. It’s probably a question for what we want to optimize. On a vault level it looks like there’s not much way around reducing the vault’s odds. Prize hooks on the other hand make it more complicated to implement across different interfaces, as they are handled on the app level.
I believe we can start “somewhere” and improve the product on the go.

@trmid

I think that running a charitable vault with it is a great solution for the following reasons:

• it incentivizes more deposits
• helps grow the GP
• and of course, provides value to a charity!

And as cherry on top PoolTogether is being the good kid in the class once again. The OP was earned with the help of depositors by farming the USDC vault on Aave. Now it’s released back to them. What a fair deal not just for depositors, but also for Aave.

@trmid

The charity voting might get a little complicated and I’m not sure what the exact plan is, but I imagine the simplest path forward would be to hold a vote once before deployment and then stick with it for the entire duration.

Agree. It will be easy to replicate this (or other options you mentioned) for different charities in case the charity vault finds adoption.

Recapping on some that’s been discussed:

• Try removing governance / reducing it to a minimum
• Collaborate with Ecosystem partners (Prepare pitch)
• Ensure easy distribution across interfaces (concise in naming, tagging, etc)
• Handle this as a wider campaign
  → What’s the playbook here? Get things in place before we start
  – NFT for depositors (charity vault depositors on allowlists for future pg airdrops?)
  – Engage in Marketing activities like Galxe/Layer3/Quest Protocol
  – Offer as exclusive story to a crypto media outlet before shipping
  – Get messaging right (clear value prop, quick explainer)
• Potentially: Create dedicated interface/landing page to allow simple deposit + convey messaging (how to apply PoolTogether for good, charity statistics, history of PoolTogether doing good, …)

Some questions I’d like to leave in here:

• What’s the name of the child? steth.win always sounded a little suspicious. How would we call a charity PoolTogether? Anyone having a flash of inspiration when thinking about prize vault, token or product names?
• What’s the first charity you would personally think of supporting? Should it be crypto / Ethereum native or connect us to the “real world”?

[trmid]

@Tjark

What’s the name of the child? steth.win always sounded a little suspicious. How would we call a charity PoolTogether? Anyone having a flash of inspiration when thinking about prize vault, token or product names?

Maybe something along the lines of “Pool for Good” (pool4good. org) or something similar and easily understandable. It would be nice if the interface for this could eventually include options to set the donation hooks mentioned above on any non-charity vaults as well. Happy to help with setting these prize hooks up if that time comes.

[mr_DvD]

I am against and this is why:

Too early imho.

I love the idea, but at the moment I think we should use the OP we have to get bigger and bootstrap properly.

Once we are bootstrapped with 100k or more single wallets using us we will have much more inertia to spend on charitables.

It’s a compound interest matter: doing it so early with OP prevents us to grow faster and do something better and bigger later.

I still like the goal and the idea, I just think we will do much more good if we start later

[underthesea]

I think it’s a mistake to diminish this as “spending on charitables”.

The alternative is to put all the OP on top of the existing TWAB promotions. Holding the OP is not really an option from my perspective.

The opportunity cost here is 1/3 of the yield generated by deposits. In the projections I have that as $57k. I think that’s easily justified by the potential publicity and retro recognition a project like this can receive. It takes a little thinking outside the box of maximizing short term gains but I think it’s pretty easy to see the upside here.

[underthesea]

I think .org is a must and like pool4good!

Yea making it the one stop shop for all things PT good cause would be cool.

[mr_DvD]

If so then… let’s swap all those OP for WETH and deposit them on the vault.

Then we delegate a charity wallet and it gives away all the prizes it win, and this can go on forever.

[underthesea]

Same problem with the WETH as the OP. Who is going to custody the deposit.

If we deposit $200k WETH that would generate 1.3% in prizes per year at current Aave rates. Or $2,600 a year in prize value. Is that a serious counter proposal? Takes too long to get us to any meaningful impact imo.

[mr_DvD]

@underthesea

. Or $2,600 a year in prize value. Is that a serious counter proposal?

You are right, good point

[Tjark]

The snapshot vote for using the OP as user incentives for a charitable vault is here:
https://snapshot.org/#/pooltogether.eth

All POOL & przPOOL on any chain can vote.