Thinking about what has worked and what has not for PoolTogether in versions 3 and 4 I came to the conclusion that incentives have consistently driven more growth to the protocol than prizes. First it was the POOL token, then MATIC, CELO, and now OP. In all cases the value of incentives overshadowed the value of prizes and were the focus of interaction with the protocol. Yet PoolTogether is not destined to be a yield farm. We want to build a fun way to save and have a chance to win outsized returns. I think if we look outside the box of traditional prize savings we can innovate new ways that leverage blockchain technology to make prize savings viral.
Incentives as Prizes?
Observing incentives as the primary draw to the protocol I initially thought the solution to highlight prize savings was simply to put the incentives into the prize machine. Awarding all protocol value as prizes would highlight our core value proposition, prizes. However, I’m confident we would not be as successful with $40k of OP per week in prizes as we are currently with $40k in OP yield farming. Prizes come with a downside of waiting for them to happen. The DeFi appetite wants dopamine hits, waiting is boring. There is a lot of fun in yield farming - seeing money accrue in real-time and returns fluctuate with prices. Watching the number go → up only.
Prizes as Incentives!
Instead of putting the incentives into prizes, what if we did the opposite. What if all prizes and incentives were streamed and winning was a yield boost. Streaming prizes would bolster the savings component of prize savings - winners have to remain deposited to get the prize. Imagine one day the apr shows 4% and a win boosts it to 450%. The returns are now visualized and real-time.
More unfleshed out ideas
Chance of winning could be relative to deposit time, not a specific prize period.
I.e. Saving for 1 year gives more chance than saving for 1 day.
Adding a time component to prize distribution opens up a possibility to revive the narrative of a reserve that is a flywheel for growth. Unclaimed prize value compounding returns.
Just an idea.
Hoping to start a discussion on how to make prizes as attractive as incentives. How we spilt the value is what makes PoolTogether unique. Do you have another idea for prizes? Do you think I’m crazy? Please share.