PoolTogether 101
PoolTogether is a global DeFi prize savings protocol! That sounds like a bunch of meaningless words so let’s explain!
What is a DeFi protocol?
DeFi stands for “decentralized finance”, it refers to protocols that are 1) decentralized and 2) offer financial services. A “protocol” is computer code that automates a service. So a “DeFi protocol” is computer code that runs on a blockchain and automates a financial service 😅. Stick with me!
Think of protocols like apps on your phone. Different apps serve different purposes but they all share commonalities because they are “phone apps”. DeFi protocols serve different purposes but they all share being decentralized and providing financial services.
What does “decentralized” mean?
A protocol being “decentralized” means no single person or company controls it. It is computer code that operates on its own and doesn’t stop running. 🤯
Decentralization can be a fuzzy concept but it’s key to understanding crypto. Bitcoin’s anonymous inventor wrote, “What is needed is a way to transact money without trusting a third party”. This is the key concept of decentralization — the ability to be used without trusting a third party (a
“third party” could be a person or a company).
Bitcoin is a decentralized protocol for value transfer. It continues to operate without the need for any specific person or company to take any action. It is decentralized.
Since Bitcoins invention, new protocols have been created that offer additional financial services in a similarly decentralized way.
What is PoolTogether?
PoolTogether is a global savings account with super powers. It’s a DeFi protocol enabling anyone to deposit and have the chance to win millions of dollars in prizes! Even if they don’t win, they keep all their money and can withdraw at any time. How is this possible?🧐
This is possible because PoolTogether is a decentralized protocol designed to help people save money. When someone deposits into the protocol their deposit is combined and used to generate yield on other DeFi protocols. The yield generated becomes the prizes! Everyone has a chance to win, and no one loses. The greater you deposit, the better chances you have to win the largest prizes.
Some prizes are small like $5 and won frequently, some prizes are large and won infrequently. So far, the luckiest depositor won $43,000 on a $76 deposit! The protocol is designed to help people save money and ultimately be financially rewarding to all depositors.
As of this writing, there is about $51 million deposited into the protocol from 22,000 unique depositors. There’s $25,000 in prizes every week and 2,211 unique depositors winning something.
Why does decentralization make PoolTogether better?
Remember, PoolTogether is a decentralized protocol, that means you can use it without needing to trust any person or company. The protocol runs automatically on the blockchain. The limited governance the protocol does have, is done via the $POOL governance token.
There are many benefits to this and fully unpacking them will be another article but to list a few quickly — the open source code means the protocol is independently audited for fairness and security. The automated nature means it can scale without it needing any external capital. It can be trusted to integrate with because the rules can’t be changed by any central party.
Finally, and most importantly, the governance it does have can be done by its own users with the POOL token!
PoolTogether is the best place to start with DeFi
The only way to truly understand DeFi protocols is to dive in and use them!
PoolTogether is the best place to get started, and right now the best blockchain to try PoolTogether on is the Ethereum layer 2 called “Optimism”. Even a small deposit receives a guaranteed yield in the form of $OP tokens plus the chance to win prizes everyday!
2️⃣ After you’ve setup your wallet, follow these directions to make your deposit.
An acronym in crypto is “DYOR”, it stands for “Do your own research”. DeFi is still early and you should start small and understand the risks of using them before depositing.
As the PoolTogether protocol is decentralized, there is no company offering support, however, you can join the Discord server to find a thriving community of like minded people ready to help.
Have fun in the pool!
