I’ve been thinking about this a lot as I have been struggling with the valuation mechanic on the Pool Token itself. Specifically, I have been asking myself why would anyone want to own a Pool token. Sure it provides governance over the platform, but to what end? People buy and hold goods because it provides them some sort of utility.
Either consumption utility, like they can get access to something they value and can consume. Or Return Utility, the token will provide them either yield, or a higher price in the future because there is greater demand for the token.
My hypothesis is that the underlying driver of Pool token price is multiple on the expected value of a future yield. What I mean specifically, is that the majority of people are buying and holding Pool, because they believe that one of two things will occur:
- At some future state they will be able to distribute a % of the yield generated by TVL back to Pool Token Holders
or
- At some future state, there will be another DAO or corporate entity that will see benefit in a controlling interest in the PT protocol and want to purchase a 51% share of Pool Tokens driving up the price and thus, future return.
I see Tuna’s proposal as a version of pursuing option 1 immediately. Whether the money is taken from the treasury or the money is taken as a percentage of yield, the idea is simply, provide an ability for PT holders to generate some form of immediate expected return on their holding.
By doing this, all you are really doing is changing the equation on Pool Value from:
Pool(Value)= XE(future yield) + YE(future control interest) + e
to
Pool(Value)= W*(P(winning yield lottery) + XE(future yield) + YE(future control interest) + e
So long as the P(winning yield lottery) > P (winning USDC lottery), W will be > 0
X would be some multiple on expectations (it would technically be some function on the expectations for future yield to stay…but this is getting too technical)
Y would be some multiple on the expected return from an outside party expressing a controlling interest
e would be a random error
So this is a long winded way of me saying…I think the idea of taking a % of the yield generated from TVL and putting it towards a POOL lottery, even though the cross-chain lottery is operating in a loss position, does make sense ONLY if the probability of winning the POOL lottery is greater than the probability of winning the USDC lottery.