PoolTogether - Prize Linked Savings Account
Leighton Cusack shared the PoolTogether backstory starting from ETHDenver 2019 and told us about the future plans.
Hello! What’s your background, and what are you working on?
My name is Leighton Cusack, and I’m working on Ethereum applications that help promote economic mobility and financial health.
Right now, that’s PoolTogether – an Ethereum app designed to make saving money as fun as playing a game. PoolTogether is based on the concept of a “prize linked savings account”, you deposit Dai for a chance to win a prize, and even if you don’t win, you keep all your money!
This is possible because the prize is funded by the interest that accrues on all of the money deposited. Your chance to win is directly proportional to the amount of money you deposit. So depositing 100 Dai will give you 100 tickets. If there is 500,000 Dai in the pool, then you’ll have a 1 in 50,000 chance of winning the prize each time. As long as your money stays in the pool, you are eligible to win prizes, and you can remove your money whenever you want it.
The idea for prize-linked savings accounts has been around for a long time, but they’ve never been used on the blockchain before.
What’s Pooltogether backstory?
The idea for PoolTogether was the outcome of a research process. I spent a few months reading and researching different types of financial products and how they came into being (the stock market, the bond market, insurance, etc.). My goal in this research was to find financial products that can help increase economic mobility. In the course of this research, I read about the idea of prize-linked savings accounts and thought it was a brilliant idea that would work even better on the blockchain.
I went to ETHDenver in 2019 and pitched the idea there. I worked on the idea with two other people and then, at the happy hour at the end of the event, met my eventual co-founders. We initially self-funded and built a Rinkeby prototype of PoolTogether, and we used that to get a grant from Maker to take PoolTogether to mainnet, and then from there, we raised a small venture round.
We didn’t do much market validation because we already were aware of how successful the concept had been in the fiat world. We believed building it on Ethereum would only make it better.
What went into building the Pooltogether?
We’ve put a really heavy emphasis on maintaining security, simplicity, and speed of execution. We always felt it was mandatory to have a professional third-party security audit before going to mainnet. Fortunately, Maker funded this first one we needed, since that time we’ve done two more and security audits are the single thing we’ve spent the most money on.
With a product like PoolTogether, there are a ton of potential permutations (should prizes be daily or weekly or monthly? Should tickets be 1 Dai or 20 Dai or 100 Dai?). When confronted with these choices, we’ve always tried to listen to our users and keep the product simple. We think thus far, this has served us well. It can sometimes feel like we’re missing a lot of opportunities, but keeping a simple product is more valuable to us.
What’s your business model?
Right now, we don’t make any money. Our overall goal is to create as much value as we possibly can and trust that eventually, some of that value will return to us.
With that said, we think there are a few potential revenue options in the future. The most obvious one is capturing a small portion of the total interest earned on the pool. We see this happening in a decentralized process through a value capture/governance token model.
We believe in the coming years more crypto native monetization strategies will appear. We’re not sure exactly what those will look like, but we’re confident they are coming.
What’s your position on the regulatory landscape today?
We spend a lot of time and money on regulation. It’s a really difficult part of building a DeFi product as legal work is very expensive, and it can be tough to get concrete answers.
Our hope is that regulators will continue to see the benefits of DeFi and work collaboratively with the companies in the space to make sure their concerns are addressed while still delivering on the core value propositions of DeFi products.
What are your goals for the future?
We want millions of people to become financially secure using the decentralized and open-source PoolTogether protocol.
For this to happen, we need to make saving money with PoolTogether more fun than spending money in other places. We also need to remove elements of the protocol that are currently centralized and build an ecosystem around the protocol.
Our short term goal is to get 100 million Dai in the PoolTogether protocol, which will yield a weekly prize of over $100,000 Dai. We believe this will be a powerful tipping point to show the amazing value of DeFi and the power of money games.
What are your future thoughts for the DeFi market?
We couldn’t be more bullish on the future of DeFi. We think 2020 is going to be a big year for user adoption and growth across all Ethereum apps.
Where can we go to learn more?
And of course! Join the pool from our app. :)