The Ones in the Arena: PoolTogether
“The most powerful protocol is one that encourages network effects.” — Brendan Asselstine, CTO & Co-founder, PoolTogether
Confession: I was raised in a staunchly anti-lottery household. My mom grew up poor — the kind of poor where she didn’t have electricity or indoor plumbing, and where there was never enough money to pay all of the bills, all of the time. She was also amazing with money, and could sniff out a scam a mile away.
So when I was a kid and I discovered the concept of lotteries, she sat me down and gave me an unforgettable lesson in statistical odds, that concluded with, “Lotteries are funded by poor people who can’t really afford the cost of the tickets, and who will likely never get back what they put into it.”
It sure took the fun out of the scratch-and-win. But I never forgot it. And ever since, I’ve been skeptical of anything that purports to offer “free” payouts, and cautiously following the money to figure out who’s losing out while the winner takes all.
I share all this because PoolTogether is a lottery I can get behind.
PoolTogether is a clever combination of savings funds and lotteries that lets you hold onto the money you put in, and disburses the interest as prize money. It’s ingenious — and, well, FUN. I think even my mom would approve of a lottery that lets you save your stablecoins, pool them together with other folks, and potentially earn big payouts.
V4 of PoolTogether’s protocol launches in a few days, and while Code4rena’s wardens inspect the codebase, I asked their CTO and co-founder Brendan Asselstine to tell us what’s new in this version, and to weigh in on the current state of security in DeFi.
What are you building, and what sets it apart from similar offerings in the space?
PoolTogether makes saving fun. Users deposit into our protocol, and each week the yield is distributed as prizes. This turns weekly interest into an exciting, no-loss game. It also promotes financial security by getting people to hold onto their money.
PoolTogether is a simple concept that immediately resonates with users, so it’s a great product to on-board people to DeFi. It’s also extremely safe, so they won’t get burned. We want to on-board the next million users into DeFi.
What’s your vision for your project? What are you building towards in the longer view?
The end-goal for PoolTogether is to become the largest prize savings system in the world, available across any blockchain and with bridges from fiat.
PoolTogether V4 sets us up to accomplish that goal. This version establishes the protocol as a prize savings network, which means that we can combine liquidity across prize pools, even across chains into a single massive prize. Our new system allows us to split this prize into an arbitrary number of non-uniform prizes, so we can be sure that everyone has a strong chance to win.
Forking is encouraged; and the new design means that forks are incentivized to join the network to bootstrap their prize.
What’s the most innovative idea in your protocol?
There is a lot to be excited about. In particular:
- Our new prize distribution algorithm can easily mirror a prize distribution across any EVM chain. This allows the protocol to functionally span multiple chains.
- We’ve eliminated exit fees while keeping the system fair using an approach we call Time Weighted Average Balances. TWAB adopts the Uniswap Time-Weighted Average Price oracle algorithm and applies it to token balances, so that we can precisely measure a user’s liquidity contribution between two timestamps.
- However, our most important innovation is our shift to a network. Like many DeFi projects, we’ve been forked a number of times. Literal copies of our code. Some projects faded away, others have grown to $90m+ TVL. Our new design allows prize pools to pool their prizes together, so our vision is that the forks will join together and combine liquidity to form the biggest prize ever. The most powerful protocol is one that encourages network effects.
“Longer term, I think the strongest protocols will naturally survive because they’ll have the largest number of integrations.”
It takes courage to undergo a public audit by a swarm of anonymous security researchers. It also says a lot about how much you prioritize security. What advice would you give to those on the fence?
The code is going to be publicly scrutinized either way. It’s best to have it done in a controlled environment to fix any errors, rather than test in prod.
Security has become an increasingly vital topic in DeFi. How do you think the ecosystem needs to evolve in order to rise to the challenge?
Given the censorship-resistance of the tech, the community is going to have to regulate itself. Projects like https://defisafety.com/ help raise awareness of the security profile of a project.
Longer term, I think the strongest protocols will naturally survive because they’ll have the largest number of integrations.
What gets you most excited about DeFi?
Seeing the creative ways people use and combine protocols!
Complete the following sentence: “I wish more DeFi projects would…”
Better publish their smart contracts, ABIs, and provide APIs.
What DeFi project name do you wish you’d thought of first?
Compound :) So simple, so accurate.
What do you geek out about, beyond DeFi?
🚴 Bikes! I love building and riding them.
Learn more about PoolTogether:
- Website: PoolTogether.com
- Medium: medium.com/PoolTogether
- Twitter: PoolTogether_
PoolTogether V4’s $105K security audit contest opened October 7, 2021, and runs for one week. Details at code4rena.com.
The Ones in the Arena spotlights emerging and established DeFi projects and their founders, with an eye to celebrating and learning from them. The series’ name is inspired in part by Teddy Roosevelt’s famous quote, which has a central place in Code4rena’s philosophy.
