What is PoolTogether?

Did you know that the chances of winning the lottery are 1 in 292,201,338? By comparison, you are more likely to win an Olympic medal or hit a hole in one in golf. Yet, Americans spent $105B yearly on lottery tickets, hoping they get lucky. The adrenaline rush and daydreaming of becoming an overnight millionaire are what draws us into playing the lottery. But if you are a numbers person, you realize the $1 lottery ticket is just a poor man's game.

PoolTogether started out from the concept of a lottery, except you don't lose. Before we explain PoolTogether, let's recap how traditional lotteries work: people buy tickets, the sum of the tickets help fund the jackpot, the jackpot goes to one lucky winner. In other words, one person lands the big prize while millions of players go home with nothing. This is how lotteries worked since the beginning, until now...

In 2019, a team of crypto enthusiasts came up with the idea of a no-loss lottery. But how could could they ensure people got their money back, and who will fund the jackpot? The answer was DeFi. It was the early days of DeFi when the team had realized they can leverage existing protocols to make PoolTogether a reality.

Think about it. Potentially millions of users pooling funds into a liquidity pool that each day distributes prizes to one lucky winner. It could go on forever, and the prizes can keep going up. Sounds too good to be true? Why didn't traditional lotteries apply such mechanism if it's so cool?

For one, PoolTogether is a decentralized protocol. This means no central authority has control over users' funds. Participants approve a smart contract that routes their crypto into liquidity pools on DeFi protocols to earn interest. With PoolTogether you don't have to worry about your privacy (no KYC is required) or foul plays.

Due to the open nature of the PoolTogether protocol, all the operations (eg. funds routing, yields accrued, winner selection) are done transparently. The proof is posted on-chain, where anyone can see who and why he/she won. Moreover, PoolTogether relies on the ChainLink VRF (Verifiably Random Function) to select the winner in a provable neutral manner.

How does PoolTogether work?

PoolTogether is a perfect blend between a lottery and a savings protocol. As a savings protocol, deposited funds are routed towards yield earning platforms such as Aave, where the interest is then distributed to one lucky winner.

Pool Together uses a blend of traditional lotteries and liquidity provision to turn saving into a change for all to win. The concept is extremely simple, which is why it's so effective.

Ideally, Pool Together will have reached escape velocity when:

Prizes have are large enough to organically attract new depositors and depositor consistently win enough small prizes to remain engaged and economically better off than a traditional savings account.

However, the protocol has a "cold start" problem. Large prizes come as a result of more users depositing, but there won't be enough deposits unless the prizes are worth the effort.

POOL Token

Pool Together has added the POOL token in the mix to ensure the protocol can achieve escape velocity.

At the early stages, the distribution of the POOL token serves as an additional incentive to deposit into the protocol when prizes are not yet large enough to achieve escape velocity. People initially deposit primarily to receive the POOL token but these deposits create larger prizes and grow the reserve. Larger prizes begin to trigger organic growth. As organic growth increases and becomes self-sustaining the distribution of the POOL token can be reduced.

The protocol keeps a percent of every prize in a "Reserve" that is managed by the POOL token holders. Funds diverted to the Reserve make the prizes larger without diluting the odds of winning. Prizes in turn contribute to a larger reserve. This creates a perpetual growth cycle and mathematically speaking, increases the expected value of a deposit into PoolTogether. 

How to make money on PoolTogether?

Do you feel lucky? With PoolTogether you don't need no lucky numbers or a rabbit's paw to win. All you have to do is deposit and you are in for the race to win the jackpot. 

To join PoolTogether, follow these steps:

1. Open the PoolTogether app

2. Deposit USDC

3. Participate in daily prize draws

4. Withdraw your deposit any time - even if you don't win!

You can think of PoolTogether as your piggy bank with an added bonus whenever you win. Many users choose to participate once for the fun of it, and then decide to stay with PoolTogether. It's fun, risk-free and transparent!

Price Prediction for PoolTogether — Can it hit $1000?

Buying and hodling POOL — the native token of PoolTogether— is one way of potentially making money on PoolTogether.

By looking at its current price, it’s natural to think about the chance of POOL hitting $1000 per token. This can happen sooner, or way in the future, and is determined by a couple of ever changing factors.

Let’s examine the potential growth of the POOL token by analyzing its tokenomics. POOL’s current market cap sits comfortably at ${MARKET_CAP}. With {CIRCULATING_SUPPLY} POOL tokens being in circulation today, that means a price of {PRICE} per POOL.

How did we come to that calculation? It’s quite easy, the price of an POOL token is equal to its current market cap divided by the number of tokens in circulation. Dividing ${MARKET_CAP} by {CIRCULATING_SUPPLY} gives us a result of {PRICE} for each POOL coin. 

By changing the order in the simple formula above we can use it to calculate other things as well. This helps us a lot because we can deduce the market cap of POOL at different token prices. Then, we can use the result to compare it to the current state of the network and see what would be required for POOL to hit that price.

At a price of $1000 per token, that means the current market cap of POOL would equal ${{CIRCULATING_SUPPLY} * 1000}. Remember that we arrived at this number by multiplying the amount of circulating tokens by $1000.

Now let’s shift our attention to the fully diluted market cap.

Some blockchains may have their tokenomics built in a way that only a small percentage of tokens are circulating at the beginning. This can be misleading because we don’t have the full picture and only take into account the current number of coins released in the market.

The fully diluted market cap represents the total value of a coin if all tokens were in circulation. POOL’s whole supply of tokens is {MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY} POOL which means that no more coins above that number will ever be created.

These tokens are not created at the discretion of a specific entity. They are created automatically by the network to reward different actors that keep it secure.

How does this impact the price of POOL? Taking into account the current price of an POOL token, that would result in a fully diluted market cap of ${MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY * PRICE}. POOL coins that have been burned are not taken into consideration because they have been permanently removed from circulation.

Whether it seems gigantic or not, the number we came to above only takes into account the current price of an POOL token. Doing the same calculation but with a price of $1000 gives us a result of ${{MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY} * 1000} for the POOL protocol fully diluted market cap.

These are all crucial details to know when calculating if POOL can reach the price of $1000 per token. If the diluted market capitalization is way too high, the token has little room left to grow. Blockchains in general have no cap on the value they can reach, whether that number seems possible it’s totally up to you.

The future of POOL depends solely on its growth as a network used by tens and hundreds of millions of users.

If you’re looking to add some POOL to your portfolio, the most trusted places to get some are Binance and Coinbase.