Temporary Pool Size Cap for Fairness

[leighton]

A feature of the V3 protocol is the ability for prize pools to have caps on the amount of assets deposits. These caps can be set by whoever created the prize pool. Currently for the pools hosted on PoolTogether.com the core team has that privilege before it is transferred fully to the community.

These caps were designed as an option to improve security during testing by making it impossible for prize pools to get too big. However, they can also serve a dual purpose of helping to keep the prize awarding fair!

As discussed in the post on “fairness parameters” due to 1) the very high value of external prizes added to this week’s prize and 2) the relatively small total pool size. It is economically viable for someone with $1,000,000+ to have a good chance of winning the prize without contributing fair value in return. To prevent this, we can place a temporary capital cap on the pool.

Concretely, I’d propose that we do not want anyone to be able to get a greater than 10% chance of winning within 12 hours of the prize being awarded. As of right now, the total pool size is $522,000 so that would mean setting a cap $52,000 higher.

If the pool grows between now and 12 hours before the prize it should be set based on the total pool value then. Once the prize has been awarded, the cap can be removed and only re-instated if a similar situation happens in the future.

[MarkOSullivan94]

Think this temporary pool size cap is a brilliant idea for the first V3 prize and I’m glad the team have decided to implement it

@leighton

It is economically viable for someone with $1,000,000+ to have a good chance of winning the prize without contributing fair value in return.

What about having separate credit rates which are dependent on the size of the deposit? The higher your deposit, the longer you have to accept it’s locked or else you pay a higher fee than someone who is depositing a small amount.

In this case of the user depositing $1M right before the prize and having a 69% chance of winning is great but what if this would result in both a lower credit rate & higher exit fee.

This would help ensure they keep their funds in the pool & reduce the chance of people trying to game the system by depositing straight before the prize is rewarded and then taking their deposit out immediately after but also protect those who are depositing a smaller amount who aren’t trying to game the system

I guess you could argue than this could maybe result in the whale using many different wallets to deposit the funds but with the gas fees incurred for each transaction, each deposit will make it less and less profitable for the person trying to game the system.

[leighton]

Yes! Good thoughts here…

Unfortunately given the current code this is not possible. The credit limit and credit rate are parameters that apply evenly to all deposits in the pool.

Longer term, I think this issue should solve itself. The only reason this week’s prize is gameable is because of how large the total prize value is compared to the amount of deposits. As the pool gets larger it should become economically unfeasible to game it.

[Brendan]

Tracking anything per-user tends to make fungibility much harder.

For example, if one user had a lower credit rate than another, they could simply transfer all of their tickets to an account that has a higher rate.

The credit system is simple because it allows for high fungibility and no advantage is gained through sybil attacks or token transfers.

[ska]

@leighton

Concretely, I’d propose that we do not want anyone to be able to get a greater than 10% chance of winning within 12 hours of the prize being awarded. As of right now, the total pool size is $522,000 so that would mean setting a cap $52,000 higher.

As a permanent idea…
If someone has more than 10% chance of wining at 12 hr left mark, we refund them tickets back so that for the last 12 hours the best chance anyone (regardless of when they entered) could have is 10%.

This would be fair to whales because they can still get their drip rewards for most of the week (just not the last 12 hours) but then it would also be more fair to non-whales for the actual drawing chances.

This would also put the burden on the number one entry (that is now at 10%) to re-enter with the refunded tickets (with a new address).

[sirkato]

I suggested this in the discord. Glad its being implemented so quickly. Fuck ya !

[Frankz]

@ska This is not fair to a whale that is in Pooltogether long-term. They’d be generating >10% of the interest, but not be eligible to win accordingly.

In general, I don’t think a ticket limit 12 hours before a prize accomplishes much. An informed whale can just deposit 13 hours before, as it’s public knowledge that the limit is applied 12h beforehand. It doesn’t solve the problem, it merely pushes it backward a bit.

[Praneeth]

In agreement with this. Fairness is a notion that can have different flavours - and the idea should be to encourage as much deposits as possible for this to even out in the long run - and not nip this in the bud by imposing caps. Further the 10% number is something that can be up for debate and see what people think - but I don’t think that capping makes sense right now for this pool. Other pool builders should have the capability to create these pools with different distribution/fairness strategies - and use these to express this!