Nothing here should be taken as financial advice.

All calculations are examples and probably kinda wrong.

This is me having fun, deal with it.

PoolTogether basics

If you are familiar with PoolTogether and how it works feel free to skip ahead to the next section. (So how does Andy use PoolTogether?)

If you are unfamiliar or want a refresher, read on.

PoolTogether aggregates each depositors assets (stable coin USDC) to earn yield on AAVE. That yield is divided at random for all users. The appeal is that you have a chance to earn more yield than you individually contribute.

Here’s a look at the prizes for each chain.

Although the prizes vary, each chain has pros & cons to consider. In short the frequency & size of prizes differ per chain. Polygon has more total prizes, but in smaller amounts than Optimism. An Optimism deposit also earns OP tokens until March 28 2023. With the recent jump in OP price that is currently 6.24% vAPR

For a comparison between each chain & the new large infrequent prizes check out this article posted by Leighton

For now let’s show the benefits of using PoolTogether. So let’s imagine you want to save some money in a safe & low risk way. We are choosing to lend USDC on AAVE. The current APY is 1.03%, a $1000 deposit would likely earn about $10.50 in a year. It’s safe but kind of boring.

What if you had the chance to earn more yield than $10.50 with the same amount of USDC? Using our nifty community deposit tool & plugging in $1000 on Optimism for 52 weeks (1 year) our estimated APR is 0.58% or ~$5.78

At first this reads as

“Why would I want 1 money when I can have 2 money”?

You are likely to win the 1 money ($5.78), but have the chance to win much more than that. If you want boring but guaranteed returns stick with lending USDC directly on AAVE. However, when you have the chance to win much more yield than you contribute, that’s where the fun begins.

Here are just a few examples of some lucky winners. I found these by clicking around random prize draws.

You can play around & search for some here on poolexplorer.win built by our community member underthesea & other contributors!

Now keep in mind there’s a chance you never win, and you miss out on the steady yield you could have earned on AAVE. You can check out the unluckiest players here
Finding out if luck is on your side is part of the fun though right?

I personally take the risk of a small chance for a large prize over a large chance for small yield. Either way I keep my initial (USDC) amount as the PoolTogether protocol is NO LOSS.

What that means is you do not lose your deposit regardless of wins or losses. A day, month, or year later doesn’t matter. Your deposit is yours and can be withdrawn at anytime without financial penalty. Deposit 100.42069 USDC and withdraw the same or more if you won.

Additionally… just for context you also would have earned those sweet OP tokens at 6.24% vAPR even without any wins.

Is there some kind of traditional finance example of PoolTogether?

Indeed there is. The PoolTogether Inc. team learned from traditional Prize Savings Accounts that are most popular in the United Kingdom of Great Britain and Northern Ireland (yes that’s the full name). The concept is the same, all the deposits are pooled(Together) 😉 and the interest earned is distributed to random winners monthly.

The TVL of premium bonds for NS&I which is one of the most popular services in the UK and has about £4.4 billion ($5.31 billion £119 billion ($144 billion) in deposits!

Premium Bonds are the UK's biggest savings product, with more than 21 million people saving more than £119 billion in them. (source)

That’s a whole lotta moneys! With that much money deposited it gives this company room for a very broad set of prizes, even creating 2 lucky millionaires a month!

Here is a good breakdown from another article written by Josh Patoka that gives a deeper dive than I present here on prize linked savings accounts.

In regards to the NS&I prizes, I’m excited to see PoolTogether grow to achieve similar, all on-chain and in a non-custodial way. If my 10 second research on defillama & memory is accurate, our peak TVL was $236m. This was a time when we were still using V3, pushing POOL liquidity mining & using less efficient prize distributions.

With the upcoming Hyperstructure remodel I think we are on a good path to revisit & surpass our previous TVL with the addition of larger infrequent prizes. Think weekly, monthly, semi-monthly & yearly prizes that grow in size until rewarded.

Now to quickly plug in the “why do we need blockchain for this if it already exists”?

I won’t downplay the power of the existing prize savings accounts, but what if we could have it with additional strengths?

• Transparent rewards & historical data

• Full control of funds (no waiting to withdraw etc.)

• Potential financial tooling of assets in other protocols

• The ability to adjust & influence the protocol through community collaboration

So how does Andy use PoolTogether?

During any market cycle

I use PoolTogether as my savings account. If I have unexpected expenses come up, I withdraw from the account. If I have unexpected gains, I deposit to the account. Pretty simple yeah? Well yes, but not really!

In between that there are many circumstances that changes how I use my deposit. Even though I leave my deposit parked I can adjust the parameters of where the win chances (and OP rewards) go through the power of ...

Delegation put simply let’s me keep my deposit but I let another wallet win the prizes & token incentives like Optimism tokens. PoolTogether as a whole utilizes this powerful tool all the time! Things like POAP raffles, game tournaments, feedback, content creation and probably much more that I’m forgetting. Users who participate in these events can earn a delegation!

Wrote a cool article? Well you can win a $10,000 delegation for 2 weeks on Optimism earning that sweet 6.24% vAPR.

Oh wait, this might be one of those articles 👀

With my deposit I also like to delegate to users from time to time. If I’m onboarding a friend to PoolTogether, right after their first deposit I delegate to them for some extra boost! I’ll also use it to reward community members on occasion, for example our member Shivansh reached an academic goal for their studies and was excited to share it with us! I took this as an opportunity to delegate to him for a week.

That’s the power of delegation. I can choose what to do with my deposit, when I want and how I want. To my understanding traditional prize savings accounts don’t offer this freedom as it’s a complicated process that blockchain taps into efficiently.

During a bear market

So when we are in a bear market cycle as we have been for some time where yields are low and pumps are harder to find people tend to be more careful with capital. During this time I use my PoolTogether savings account in a similar matter.

For the most part even though these are still my savings in a stable coin (USDC) I often lean towards using it as a way to Dollar Cost Average (DCA) into projects and tokens I have a strong conviction for and hope it pays off in a future bull market. These decisions are of course relevant to my overall financial health at the time. If I have to withdraw from savings more frequently to cover irl expenses there is less room to DCA.

I degen into very very little things, if any, during a bear market. This changes during a bull.

During a bull market

During a bull market cycle my strategies change. I’ve developed them from the mistakes & learnings of previous bull cycles or as I like to call them

whoopsie doodle trades

Most of these bad trades fit into at least one of these categories:

• Not taking profits

• Holding forever

• Spending profits on yet another new project/token

• Buying unsustainable junk

• Not sticking to the exit plan (yes you should have a plan!)

So what will I hopefully do different this time, and how does it relate to PoolTogether?

Creating a loose exit plan for each investment and trying to stick to it. Part of this is taking profits into USDC instead of Ethereum (I will DCA into it later). During a bull there is always room for a bit of degen-ing though.

Whether it’s staking rewards, simple buy/sells, NFT flips, airdrops or whatever new financial primitives we invent this time around, I will try to take profits into USDC and deposit them into PoolTogether. That way I have the chance to earn a healthy APR that outperforms low risk/reward alternatives like AAVE (AAVE is still great though!).

I prefer this over having USD sitting idle in my bank account. I’ll continue to use my PoolTogether savings account as… a savings account.

Will I make the perfect trades through this strategy?
Probably not. But I will feel at ease taking 25/50% etc of my “on paper” earnings into USDC to prepare myself for a potential return to bear!

From there I plan to simply repeat the bear → bull strategies I laid out above.

Using PoolTogether has also changed my entire investment strategy. In a more naïve time the goal was just:

“reach X amount of portfolio value and cash it all out to live off the rest of my life”

Using the above strategies it has turned more into the idea of

“cash out (into USDC) at X/Y/Z intervals for each investment and try to live off the stable coin yield”

We will see what happens this time around & if I can stick to what I write here but overall I have seen, and continue to see the powerful financial tooling that PoolTogether has built over the past few years. I am beyond excited for the growth flywheel we are likely to experience with the transition from PoolTogetherV4 to a Hyperstructure.

Here’s the basic comparison:

For a much much much more detailed breakdown of the benefits the Hyperstructure aims to bring you can read up on the topic on our governance forum (and give feedback!)

So yeah that’s just a basic rundown of what PoolTogether has to offer & how I use it personally. You aren’t guaranteed to win, but at least you’re not going to lose your savings!

This is my first article on Mirror.xyz to try out the collection feature. So if you made it this far and liked the article…the button to support me is just.. down there… it looks like that

not working? Okay try this one.

Ya almost got it! Alright, I had my fun. This time it really is one of the ones below.