PoolTogether (POOL)

Basics

• Based in:
• Started in 9-2019
• Mainnet release:
• A no loss lottery powered by DAI and Compound among other strategies.
• PoolTogether is flipping the concept of a lottery, to one where you lose money 99.9% of the time to one where you never lose money, and instead acts as a savings incentive. It works by pooling all of the lottery ticket sales into one big pool and investing all of that pool into interest-earning assets, and after a set period, everyone gets their money back - but one person also gets all of the interest.
• From this post by Token Tuesdays (22-1-2020):

"PoolTogether is non-custodial, meaning users can redeem their tickets from the pool at any time. The value of stablecoins always remains the same, meaning these raffles are truly “no loss lotteries”. Tickets are recycled week after week, meaning once capital has been deposited, users are eligible to win every week until they exit the pool.

Let’s take a look at some other notions that make PoolTogether “valuable”:

1. We’ve seen numerous parties “sponsor” PoolTogether, meaning their funds collect interest, without being eligible to win the drawing.
2. PoolTogether leverages a Uniswap front-end integration, a notion we’ve been very passionate about recommending for Ethereum products across the board.
3. The PoolTogether team recently announced their intentions for new features, all of which should gradually increase adoption of the product at large. (described in our conclusion)

In summary, PoolTogether allows users to *possibly* earn larger rewards than they would be able to on their own in an intuitive, exciting fashion. To give a clear example, it would take 11.2 years to earn the same amount of interest on 1000 DAI collecting the Dai Savings Rate for the same reward of this week’s prize (~$672)."

Audits & Exploits

• Bug bounty program can be found here. Max payout is $25,000 (29-6-2020).
• Open Zeppelin Audit Disclosures (1-2020)
• Open Zeppelin Audit Summary.
• Scored a 91% on DeFi Safety (14-9-2021):

"PoolTogether has undergone three external audits. Open Zeppelin has audited the protocol twice, and ditCraft has once - though no proof could be found for this third audit."

• Previously also scored a 91% (8-3-2021); "​PoolToghther has been audited by OpenZeppelin twice, with the last time being october 21st. PoolTogether has also been audited by DitCraft. PoolTogether was released January 7th." With the comment: "been a while since we had a 90+!  Excellent protocol all round, no loss indeed."

Governance

Admin Keys

• From DeFi Safety (14-9-2021):

"All Contracts are clearly labelled as non upgreadeable, AKA immutable. Pause controls are mentioned in the audits performed by OpenZeppelin, but no evidence or detail on capabilities of tests."

• V3 removed admin control (26-10-2020). Bellow information is about the previous situation.
• From DeFi Watch (9-3-2020):

"PoolTogether's protocol is upgradeable via a 2-of-N Gnosis multisig admin contract with no timelock. The key is capable of modifying critical parts of the smart contract ecosystem and can be used to drain funds if used maliciously."

• The following information comes from a spreadsheet (4-2-2020) created by Chris Blec.

"Current Admin Key Config- Time Lock: No

Current Admin Key Config- Multisig: 2-of-N (Gnosis)

Claimed Admin Key OpSec: None

Verified Admin Key OpSec: Unverifiable

Is security of deposited funds dependent on opsec of admin key?: Yes

Admin Key Address: Link

Documentation on Admin Key Powers: Open Zeppelin Audit Disclosure

Additional Info (if any)? Open Zeppelin Audit Summary"

Treasury

• PoolTogether makes money by directing 10% of the interest accrued to a team DAO.
• From Bankless (9-7-2021):

"While the interest generated on prize pools is paid out to lucky winners, the prize pool reserves also retain a percentage of the winnings earned through operations, and redeposited into the next prize pool. This increases the principal used to generate prizes, essentially adding capital into the prize pool which is ineligible to win any prizes. As this loop repeats, it creates a one-way flow of tokens into the reserves.

As of June 24, 2021, PoolTogether’s treasury is sitting close to $65 million. The majority of that consists of POOL tokens that were allocated to the treasury at the time of the token launch and are subject to a multi-year vesting schedule."

Token

Launch

• Started out without a token, but aidropped its governance token in February 2021.

Utility

• As a governance token, POOL is used to vote on how to deploy the protocol’s treasury.

Tech

• Whitepaper can be found here.
• Code can be viewed [insert here].

Different Implementations

• Built on: Ethereum and Polygon (29-4-2021).
• Is using Infura, according to their website (13-4-2020).

Fee Mechanism

• From Bankless (9-7-2021):

"While the interest generated on prize pools is paid out to lucky winners, the prize pool reserves also retain a percentage of the winnings earned through operations, and redeposited into the next prize pool. This increases the principal used to generate prizes, essentially adding capital into the prize pool which is ineligible to win any prizes. As this loop repeats, it creates a one-way flow of tokens into the reserves."

Upgrades

• From Week In Ethereum (26-10-2020):

"pooltogether v3 is live, removed admin control, randomness via VRF, rewards for deposits and referrals."

• From Bankless (9-7-2021):

"Showcasing the power of DAOs and DeFi, the community of POOL token holders have been the driving force behind some of the recent developments of PoolTogether, including the $500k PoolGrants fund aimed at expanding and improving the ecosystem and and the creation of a Rari Capital and PoolTogether lending market. The new lending market expands the protocol’s reach by allowing users to, if they choose to do so, borrow against their PoolTogether deposits. This is a game-changer for a DeFi protocol that is sitting on nearly ~$200m of assets, the majority of which are stablecoins. Users are now able to borrow and re-deposit those borrowed funds into PoolTogether prize pools, compounding their chances of winning. Users could also deploy the borrowed funds elsewhere in the DeFi ecosystem to earn yield or swap USDC for risk-on assets. "

Other Details

• "PoolTogether is the first subscriber (12-5-2020) to Chainlink’s VRF. PoolTogether will now switch from its centralized randomness selection method to Chainlink’s VRF for decentralized randomness."

Roadmap

• Can be found [Insert link here].

Usage and Whales

• From this post by Token Tuesdays (22-1-2020):

"The current prize pool for January 24th, 2020 is by far the largest in PoolTogether’s history. Nearly $500,000 is currently pooled by community members with another $132,000 from sponsored Dai. With that, there are currently 1,253 addresses all hoping to win this week’s pot featuring two major whales. Each of the two major addresses have a 24.88% and 18.69% chance of winning with the next biggest player only having a 3.57% chance. As of writing, contributing 1 DAI will give you a ~0.0002% chance of winning the lottery pool."

• From this tweet (27-1-2020):

"whales have bulk bought tickets. The top 5 players combined have a 58% chance of being the winner."

• From Bitcoin.com (31-1-2020):

"Creeping centralization doesn’t just manifest in defi protocols whose creators hold the master keys; it can also be seen in projects such as Pool Together, the lossless lottery platform, where whales have taken over. There is nothing illegal about major players gaming the system, nor does their doing so put user funds at risk. However, it serves to illustrate the ease with which the defi market can be manipulated – and how projects founded with good intentions can be hijacked by monopolies with little interest in fostering financial inclusion."

• PoolTogether is only distributing ~$140 for its weekly prize pool compared to the $1.1K prior to Black Thursday.
• From Our Network #7 (6-2-2020):

"Part of the growth in prize value is due to an increase in unique players (measured by unique Ethereum addresses in the pool). This has been increasing an average of 36% week over week. Part of the growth is also driven by an increase in the average deposit size. The later half of January saw more whales entering the pool driving up the average deposit size.

Total pool size broke $1 million Dai for the first time. Of this, ~$778,000 Dai is from player deposits and ~$250,000 Dai is sponsored."

• From Our Network #12 (12-3-2020):

"A major trend of 2020 is less tickets owned by whales and more tickets owned by smaller addresses. As of March 10th, 17% of all tickets are owned by accounts with less than 100 tickets. In contrast on January 31st only 5.44% of total tickets were owned by accounts with less than 100. During this period, the total pool size continued to increase."

• From Our Network (30-5-2020):

"The Argent Wallet recently launched a direct integration into the PoolTogether protocol. This provides a good data point in how improving ease of use can expand protocol usage. Net new users increased 240% in the 10 days after the launch of the Argent integration compared to the 14 days prior to the integration launch. This shows significant untapped demand once onboarding is improved."

• From Our Network #31 (25-7-2020):

"Despite lower yield rates creating smaller prizes, unique wallets has continued to grow and is just shy of 10,000."

• From Our Network #46 (6-11-2020):

"In the first 14 days, $1.4 million was deposited and $1.15 million is currently deposited. This is notably higher than the V2 protocol which never exceeded $900,000 in total user deposits. Total prizes awarded by the V3 protocol already exceed $13,000 in the first two weeks. In comparison, the V2 awarded $35,000 over the course of 14 months."

• From Our Network #66 (10-4-2021):

"The protocol currently has $155 million in total deposits. The largest prize pool is USDC with $63 million deposited followed by Dai with $52 million deposited."

Roadmap

• From this post by Token Tuesdays (22-1-2020):

"Additional Stablecoin Support
PoolTogether will soon incorporate prize pools for assets other than DAI including stablecoins like US Dollar Coin (USDC). USDC currently has 4x the market size of DAI, indicating there is a large opportunity for more capital to flow into PoolTogether pools. Similarly, USDC lending rates have been steadily rising, meaning more interest can be collected for prizes.

PoolTogether Pods
One of the few downsides to PoolTogether is that without significant capital, your chances at winning are fairly low. Pods would aid in this notion by allowing small groups to pool their tickets together, effectively increasing their chances at winning. In the event that a given Pod ticket were to win, the prize would be split pro-rate among all the Pod participants.

New Wallet Support
While PoolTogether supports most of the major Ethereum wallets (MetaMask, WalletConnect, Portis, Coinbase Wallet and Squarelink), it’s likely that additional wallet support opens new avenues for more pool participation. Similar to what we’re seeing with Multi-Collateral Dai’s integration with secondary exchanges like OKEx, it’s possible (custodian issues aside) that PoolTogether’s contracts *could* be leveraged by larger funds to further increase pool capacity."

Team, Funding, partners

Team

• Leighton Cusack — Co-founder and CEO

Funding

• "The pool was originally seeded with $150,000 in sponsored Dai back in late December upon the introduction of MCD."
• PoolTogether makes money by directing 10% of the interest accrued to a team DAO.

• "The company is announcing (3-2-2020) a $1.05 million investment round under a simple agreement for future equity. IDEO CoLab Ventures led the round; ConsenSys and DTC Capital also invested."
• From Paradigm (12-2020):

"PoolTogether closed a funding round led by ParaFi Capital with participation from Nascent, Robot Ventures, MetaCartel, The LAO, Houbi DeFi Labs, and additional angels."

• Stani Kulechov; investor (30-1-2021).

Partners

• Partnered (29-2-2020) with Our Network.
• Partners with BarnBridge (11-2-2021).

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