Hey friends 👋
If you’ve been following along with the blog you’ll know I’m a big fan of decentralized finance (DeFi) and the way it opens up the doors for everyday people to participate in the formerly classist, elitist, and, let’s not forget opaque (≠ transparent) world of finance 🏦
Everything from the way we trade, remit, lend and borrow, save, and invest are being entirely rebuilt on the principles of open source and stakeholder value 🤝 But it doesn’t end at finance. Blockchain technology opens to the doors to new ways of connecting. We can connect ownership (including history of ownership) to everything from global currencies (stablecoins); art, collectibles, and in-game items (NFTs); even voting share of an organization (governance tokens) 🗳
That last one is what we’re going to be talking about today. You see, one of the ideas pushing forward the world of decentralized finance is the idea of the DAO.
Decentralized. Autonomous. Organization.
The name says it all. DAOs aim to remove hierarchical structure and thus centralized risk (read consolidation of power). They are, in essence, an evolution of the cooperative.
Here’s an excerpt from Ethereum.org that I think succinctly defines the concept of a DAO:
DAOs are an effective and safe way to work with like-minded folks around the globe.
Think of them like an internet-native business that’s collectively owned and managed by its members. They have built-in treasuries that no one has the authority to access without the approval of the group. Decisions are governed by proposals and voting to ensure everyone in the organisation has a voice.
There’s no CEO who can authorise spending based on their own whims and no chance of a dodgy CFO manipulating the books. Everything is out in the open and the rules around spending are baked into the DAO via its code.
But who gets to vote? 🧐
The most common method of gaining votes is to own governance tokens. You can buy the tokens on the market, or earn them through the protocol. You may also earn them by working for the DAO and earning some form of compensation or grant 💰
Here’s another excerpt from Ethereum.org:
Token-based membership Usually fully permissionless, depending on the token used. Mostly these governance tokens can be traded for permissionlessly on a decentralized exchange. Others must be earned through providing liquidity or some other ‘proof of work’. Either way, simply holding the token grants access to voting.
Typically used for more closer-knit, human-centric organizations like charities, worker collectives, and investment clubs. Can also govern protocols and tokens as well.
Now this is far from a perfect system, and Vitalik Buterin, Ethereum’s cofounder has recently been promoting the idea that innovations are needed to further decentralize and democratize governance 💡 But there is an upside to token voting which is that one has to be invested in the project enough to feel that the tokens they bought will remain worthwhile, hence, buying a huge amount of tokens just to vote for a proposal that cripples the protocol will likely tank the value of the tokens. Not exactly in their best interest if you ask me 🧐
And besides, for the time being, it’s the best solution we’ve come up with.
Maker’s DAOzen
One of the most famous DAOs is MakerDAO, the creators of the Dai stablecoin, which I’ve written about before. MakerDAO is governed by the MKR governance token. If you’d like to learn about how governance at MakerDAO works, there’s plenty of fantastic information available here. But the key takeaway is that the fourth largest stablecoin by market cap and the only decentralized stablecoin amongst those four, is governed entirely via this DAO 🙌
(Source: Ethereum.org)
That’s pretty cool if you ask me.
But this post is not about MakerDAO. In fact, I don’t even hold MKR — except in within my DeFi Pulse Index ($DPI) tokens — but I do hold one governance token: POOL.
Pooling Together
If you’ve been following along with the blog then you probably already know a bit about PoolTogtether, as it is literally my favourite DeFi protocol. Built on one of the best ideas of all time — Prize Linked Savings Accounts — PoolTogether allows people to participate in a sort of no-loss lottery where just for saving their money, they have a chance to win prizes 🎰
This works a lot like a regular savings account. Only instead of each depositor receiving a small amount of interest, all of the yield from the deposits is pooled to pay out weekly (or in some cases daily) prizes. Everyone keeps their original deposit, plus any winnings they may have 💰
But why are the prizes so big?
Whether or not you realize this, when you deposit money in a bank, they don’t just hold it there. Instead they lend your money to others (or in some cases invest it), to earn interest. Then they keep the majority of that interest and pay you usually well under 1%
As I’ve written about before, DeFi protocols strip away these greedy middlemen, leaving you with far higher returns. In fact DeFi protocols like Compound or Aave can regularly return 3–5% or more on stablecoins 💵 Apply these kinds of returns, to large pools of deposits, and the prizes can be really impressive.
Oh and by the way, a new version of PoolTogether is rolling out now that makes the system even better, with more prizes, across multiple blockchains, and mechanisms to prevent large depositors from winning too frequently. But I’m going to do a post all about that 🌊🏆
For today, let’s get back to talking about Governance.
Participating in PoolTogether Policy
PoolTogether is an open-source and decentralized protocol or what many would describe as a DAO (although that term is used to describe many differing models). Essentially this means that the users govern the protocol and vote on changes 🗳
Here’s how PoolTogether’s co-founder Leighton Cusack describes the structure:
Control of the PoolTogether Protocol rests solely in the hands of the community holding the POOL tokens. This is a revolutionary new way of organizing and it takes some education.
[…]
Changes to the protocol are submitted as governance proposals. Anyone who either holds 10,000 POOL tokens (0.1% of total supply) OR has 10,000 POOL tokens delegated to them can submit a governance proposal. Once submitted governance proposals are voted on for five days. After five days, if the majority of votes are in favor AND at least 100,000 votes have been cast in favor, the proposal will pass. There is a two day “timelock” before the proposal is actually implemented.
You can check out the post this quote is from, titled Governance 101, here.
So that’s the governance, but what about the voting?
Well as you can imagine, POOL holders are the ones who vote on proposals. Only unlike the proposal creation, there is no minimum required to vote beyond that you must hold more than zero.
Token holders have a couple of ways to vote. They can vote on-chain via Sybil provided that they hold POOL tokens in an Ethereum wallet. The downside of this is that it will cost a small transaction fee to sign each vote ⛽️ Alternatively, they can vote gas free, using SnapShot, but in order to do so, they need to hold PPOOL tokens.
POOL, PPOOL, POOL Pool 🎶
PPOOL tokens are acquired by depositing into the POOL Pool. Like the other prize-linked savings pools, this comes with the chance to win a weekly prize — actually one of five prizes often valued in the hundreds of dollars.
It also comes with the bonus of receiving weekly rewards paid in POOL tokens. So participating in this one pool gives you three bonuses. To recap those are:
1️⃣ Chance to win weekly prizes2️⃣ Rewards paid in POOL (currently around 7.35%)3️⃣ Ability to vote gas-free on governance proposals.
How to Join the Fun
If you think you might be interested in participating more directly in PoolTogether, the best place to get started is on either the Reddit (r/PoolTogether) or on the Discord. I’m a big fan of the Discord especially. The community around PoolTogether is great and on discord, they offer help, discuss governance proposals, chat about what’s going on in the world of crypto, and more 🤓
In fact, by joining the discord, you may find yourself with an opportunity to earn some POOL tokens. That’s because the community uses a popular Discord bot called Collabland to tip members who contribute. You might create a funny meme, translate an article, or create a youtube video. You might offer some help or share some really relevant news. It’s up to the users who they want to tip and when, and it’s not uncommon to see generosity aimed at bringing more people into the community 💖
Another cool feature of this tipping bot is that you can unlock a gated area of the discord. Simply by proving that you hold POOL, PPOOL, mPOOL (Pool on Polygon), or the POOL-ETH LP tokens (for providing liquidity on UniSwap), you get access to the HODLers Hangout. This is a general chat area when users talk about whatever, but also sometimes host games like trivia or little contests where users can earn more POOL 🎉
The Discord is also where the weekly Community Calls take place. Every Friday, anyone with a discord account can listen in, and even contribute to the dialogue. During the calls there’s both a live chat thread and a period of the call called Swim Meet where people can ask questions 🙋♀️
Proof of Attendance
Speaking of community calls; those who tune in to these weekly events gain access to another unique form of reward, a Proof of Attendance Protocol or POAP 🎖 POAPs are NFT badges that show that you participated in an event. They can be seen as collectibles or even as a sort of blockchain CV. However you view them, collecting them can become a bit of an addiction.
How does it work?
Each week during the call — usually near the end — a POAP code is issued that anyone who was present can enter to receive their POAP. Since these NFTs are issued on the xDAI sidechain there is no fee for minting 🆓
POAPs can be used in really interesting ways, like to unlock special content or rewards like raffles or airdrops. For more on the value proposition of POAPs, read this.
For the moment, in the context of PoolTogether, POAPs are like concert ticket stubs. You only get one shot ever to collect a particular one (even those who diligently listen to the recordings of the community calls won’t be able to retroactively claim them). So if you wanna be one of the cool kids, you’ll need to participate.
I have a few so far
Coordination Station
I can’t speak for all protocols or DAOs, but one thing I’ve noticed with PoolTogether since the early days is just how motivated everyone is to building a great community. In my newsletter, I once wrote about an incident that took place that I found very heartening.
Here is that excerpt in its entirety for those who missed it:
The internet can be so tribal and aggressive at times, and I like to see examples of positivity 💖 And by the way, that doesn’t mean everyone agrees all the time. Just that they’re respectful and try to find solutions to the underlying problems being addressed. Everyone coming together to make something that is greater than the sum of its parts is one of the strengths of decentralized autonomous organizations (DAOs) 🙌
And that’s exactly what I saw recently, when I logged in and witnessed a conversation happening live. A very active member of the community who goes by the screen name Oops was talking about how his laptop had died, and so he wasn’t able to upload the recordings he’d done of the community calls 😓
Oops is an integral member of PoolTogether community — even though he doesn’t yet have a formal title or compensation — and everyone in the Discord knows it. Even the people at Fortune Magazine know it, given that they featured Oops prominently in a recent article 🔥
So when the subject of the broken laptop came up, one of the community’s other most prominent members, rliriano didn’t hesitate, offering almost instantly to help fund a new Macbook Pro for Oops.
A few other members also stepped up, including CEO Leighton Cusack, and within a few hours, the laptop was ordered
So often, when we see others struggling, we shrug it off as their own responsibility. But when we look at how hard people work and how much they contribute to our communities, sometimes it’s obvious that they deserve our support 🤝
I think everyone in that Discord knew that losing Oops would mean losing a part of what makes PoolTogether so great. They value the work that Oops does 💖 And not only did they manage to get the laptop ordered, within a few hours, they had sort everything our amongst themselves to settle up with each other. Talk about efficient! 👏
You hear me talk a lot about value if you follow my blog and twitter. I’m very fond of how the creator economy, for example, looks past traditional views of who is/what is valuable, and where/how we should support creators. There is a new approach being birthed as we speak that bridges the ideas of meritocracy and the value we place on contributions to culture and community 👏
I’ve written already about patronage, and I’m working on content around NFTs, and even quadratic funding, but this was none of those things. This was grassroots, love thy neighbour type support. A rising tide only lifts all boats as long as you bail out the ones who are sinking first. After all, this is what community looks like 💖
You can read that newsletter in its entirety here. Don’t forget to subscribe!
Since that event, the community has been trying out a new system for rewarding members called Coordinape. This is a really great tool where regular contributors are given an allocation of a faux-currency called GIVE which they can tip to anyone who participates in a given epoch. At the end of that epoch the GIVE received is converted to POOL at a predefined ratio.
As I wrote in my first ever Blog Income Update, the POOL I’ve received through Coordinape is one of my biggest sources of income in recent months. All this for doing work that I had already intended to do.
Interestingly, I myself had a moment a little like the Tale of Oops’ Macbook recently.
After releasing my video about the Celo blockchain and their campaign with PoolTogether, I got some feedback that the voiceover was a little quiet. I explained that I was still just using my MacBook’s built in microphone because as I’ve said before I’m a small fry 🍟
Quickly the community jumped in with a suggestion
And give they did! At the end of the epoch I had received around $230 worth of POOL tokens, which was enough to purchase a nice microphone on Amazon
In fact, if you watch the video that accompanies this post, you’ll get to hear me use that microphone for the very first time. Here’s hoping I get the hang of it quickly.
Tutorial Time
Speaking of a video, I wanted to show you all quickly how to participate in governance on PoolTogether. In this video, we’re going to see how to acquire some POOL, and deposit into the POOL pool, and then I’ll show you how to participate in SnapShot voting 👨🏫
So that’s that. In under a year I’ve gone from bearely understanding Bitcoin to a full on crypto convert! 😂 But it’s easy to see why. Like the internet, and perhaps even more so, blockchain is being built by a diverse, forward thinking community, and that is reflected throughout the many communities therein 🌎
At PoolTogether, I’ve found a tribe. One that cares about creating a new way of saving money that’s fun, that’s fair, and that favours the small fish as much as the whales 🐟 That’s something I want to be a part of, and thanks to the decentralized governance, and the open community, I can.
Until next time 👋
Thumbs Up
This post is brought to you thanks to a grant from PoolTogether
As always the opinions expressed are my own, I do not work with projects I don’t believe in, and I implore you to do your own research before investing.
Photo by VAZHNIK from Pexels Speech Bubble Vectors by Vecteezy
Pool Token vector via PoolTogether
