The Path to Becoming a Global Lottery Juggernaut

Last year, I examined how PoolTogether is building a sustainable lottery and discussed its upcoming V3 protocol that aimed to further decentralize the protocol. In the piece, I contemplated, “One likely scenario is that the team will eventually release some form of governance token - potentially underpinned by fees - that oversees the protocol.”

Well, a few months later, PoolTogether launched its native token, completed a retroactive token distribution, and started incentivizing liquidity for its no-loss lotteries. As a result, PoolTogether has witnessed impressive growth and now holds $134 million in total value locked, putting it ahead of Hegic and PieDAO.

As a quick refresher, the PoolTogether protocol enables no-loss prize games, with it’s flagship game being its “no-loss lottery.” The no-loss lottery works by putting the proceeds from lotto ticket sales (paid in Dai or another token) to work in a lending protocol like Compound where the funds earn interest. The winner collects the accrued interest and everyone else gets their contributions refunded. No one loses their initial capital. To date, the weekly prize for the DAI and USDC pools range from $60,000 to $90,000.

To date, PoolTogether V3 has garnered over 6,000 weekly lottery players which makes it one of the most utilized protocols in DeFi, excluding decentralized exchanges.

Breaking Down The Various Pools

The PoolTogether protocol currently has four pools (DAI, USDC, UNI, and COMP) which all get invested into the Compound protocol and earn interest. Additionally, some pools have Loot Boxes which range from additional tokens to NFTs that are added and rewarded to the winners of each lottery. Most of the prize pools reward the Grand prize to the winner and have 2-4 runner-up prizes that also receive a portion of the accrued interest.

While the current PoolTogether protocol vastly favors whales (individuals with the most capital) the protocol enables some novel solutions to help solve this problem over time including: