Grant to PoolTogether for Launch of Tether Prize Saving Pool

PoolTogether is a protocol for no loss prize savings built on Compound. The protocol is one of the very first, largest, and longest running protocols to be built on top of Compound. PoolTogether was launched in June of 2019 and has been providing supply side capital and users to Compound continuously since then (at one point there were more unique depositors using Compound via PoolTogether than Compound directly). Currently PoolTogether supplies ~$220 million of supply side assets to Compound.

In addition, PoolTogether has been an exceptionally value positive actor in the Compound ecosystem. Since the COMP governance token launched PoolTogether has never sold any COMP. All COMP accrued has either been stored with PoolTogether governance or given away to depositors. PoolTogether has also not participated in any recursive yield farming activities with COMP. Meaning relative to other depositors with the same size of deposits, COMP accrued as been much less.

All this leads me to my ask :slight_smile:

PoolTogether has deployed a new prize savings pool for the Tether asset type. Because of the nature of the protocol, PoolTogether is uniquely reflexive in growth. Larger prizes lead to more deposits, more deposits create larger prizes. This creates a bootstrapping problem for new prize pools to attract large amounts of capital.

I’m asking for a 1,000 COMP grant to help bootstrap the Tether prize pool and ultimately bring more capital into the Compound protocol. At current market prices 1,000 COMP is $475,000. This COMP would not be sold but rather given out over the first 10 weeks of the new Tether prize pool as prizes. This means the Tether prize pool would be bootstrapped to an initial ~$47,500 weekly savings prize for the first 10 weeks. This would make the prize closer to the current Dai and USDC prize pools.

Ultimately this proposal is good for Compound as it will bring even more depositors and users to the protocol via a third party interface. It also shows Compound’s appreciation and valuing of its longest term integration partner. It’s good for PoolTogether has it bootstraps network effects needed to help more people save money.

That’s it! I’m open to any questions.

P.S.
As I am a reviewer on the grants committee I will not be participating in this decision due to conflict of interests.

11 Likes

I think this is a fantastic idea that would clearly benefit Compound!

That said, the size of the requested grant ($475k) strikes me as too large to be provided by the Compound Grants Program. Our grants budget is $2mm in total, and allocating ~24% of that sum towards one grant doesn’t feel like it would be in the spirit of the program.

For a grant of this size, I think it makes sense to go directly through governance. To that end, I’d recommend starting a CAP to solicit votes from the community.

Very curious to hear what others think of this approach as well!

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While I think this is generally a good idea, I feel that the cost is too high for the benefit it brings to Compound. PoolTogether can switch the yield source through governance so there’s not necessarily a long term value capture to Compound from a big USDT prize pool.

I think it could make more sense for Compound to use funds from the USDT reserves to sponsor the new pool for a certain period of time. This would create larger pool prizes, help incentivize deposits and the virtuous cycle of growing pool reserves, but at a much lower cost - Compound can retrieve the USDT in the future once the prize pool has grown sufficiently large.

8 Likes

I actually meant to include this!

PoolTogether actually can’t change the yield source on any of the Compound prize pools (or any prize pools for that matter). By design, we prioritized security so the prize pool contracts are not upgradeable. That means for this prize pool + all the others compound is guaranteed to always be the yield source.

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Ah, thank you for clarification! Can the pool reserves be removed by governance?

Pool reserves can be. If you look here: PoolTogether Vote

Choose “reserve contract” then function “withdraw reserve”.

The prize strategy is upgradeable by governance so new prize strategies can be implemented. But the prize pool that stores deposited funds and manages interaction to the yield source can’t be changed.

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The Compound protocol is already distributing COMP to a future USDT PoolTogether pool, through the standard COMP Distribution.

Increasing the distribution to one particular application does not strike me as scalable, or fair in this case, and I am against this proposal.

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with all due respect to the PoolTogether project and an interesting and innovative approach to the DeFi sector, I think that the proposal should not be considered at all.
I understand that everyone has a different perspective when it comes to DeFi but would love to see more initiatives for progress in the Layer2 area, oracle, protection from liquidations, move to decentralized governance etc.
I think lottery isnt a priority

This isn’t zero sum. Certainly would be great to see people working on the things you mentioned but giving a grant to an existing and proven integration to fund expansion doesn’t preclude what you mentioned.

It’s a strange precedent to only give grants to new ideas but not help support the proven ones that have been working the longest and bringing the largest amount of value to the protocol.

I think for the reasons noted in my post there is a very solid rationale for the protocol to offer additional support and incentives beyond the uniform COMP distribution.

That doesn’t have to take the form of a COMP grant but thus far that has been the primary mechanism for the protocol to support projects.

I’m open to any ideas and certainly not set on this taking the form of a COMP grant. I’d just love to get some support in scaling this as it will be mutually beneficial.

given the COMP maximum supply it is a zero sum game.
I may be wrong, but I think certain problems that users have with the protocol need to be addressed first.
Don’t get me wrong, I think PoolTogether deserves a grant, but there are issues that are ignored for months and are existentially significant to certain users.
It’s just a priority question

1 Like

I am going to try to attack this from another angle. I think an investment or compound liquidity program can fit this bill.