PoolTogether - Leighton Cusack | Meet the Nation

Bankless Nation, meet PoolTogether and its founder, Leighton Cusack. PoolTogether is a DeFi protocol offering a no-loss lottery generated by its pooled interest. ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/ 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ 🎖 CLAIM YOUR BADGE: https://newsletter.banklesshq.com/p/-guide-2-using-the-bankless-badge ------ BANKLESS SPONSOR TOOLS: 💰 GEMINI | FIAT & CRYPTO EXCHANGE https://bankless.cc/go-gemini 🔀 BALANCER | EXCHANGE & POOL ASSETS https://bankless.cc/balancer 👻 AAVE | LEND & BORROW ASSETS https://bankless.cc/aave 🦄 UNISWAP | DECENTRALIZED FUNDING http://bankless.cc/uniswap ------ 📣 DHARMA | From Dollars to DeFi in a Tap! https://bankless.cc/dharma ------ Meet the Nation: PoolTogether Guest: Leighton Cusack PoolTogether is one of the oldest DeFi Protocols, having been around for about two years. It offers users access to no-loss lotteries; founder Leighton Cusack describes it as a savings account, and the interest generated by the collective deposits are combined into randomly selected lotteries. Like most DeFi project, it is permissionless, trustless, and powered by smart contracts. Unlike legacy lotteries, which require purchasing tickets, access to PoolTogether lotteries only requires depositing funds which can be pulled out in full at any time. There are currently $225 Million in assets deposited in PoolTogether, earning the interest that becomes rewards for the PoolTogether community. PoolTogether also has a reserve, which contributes to an increasing treasury. These sponsorships are deposits that are not eligible to win prizes. Instead, these returns are circled back to the pool to yield further interest. This is a perpetual growth mechanism for increasing the reward sizes over time. PoolTogether recently decentralized with its POOL governance token, and POOL was retroactively airdropped to all users earlier this year. It is also distributed to everyone who deposits in one of the lottery pools. The POOL token controls the protocol by managing the reserves, the number of winners announced weekly, integrations and new pools, and the distribution mechanism of the remaining POOL. ------ Resources: PoolTogether https://pooltogether.com/ PoolTogether Discord https://discord.gg/hxPhPDW PoolTogether on Twitter https://twitter.com/PoolTogether_ Leighton on Twitter https://twitter.com/lay2000lbs?s=20 ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:04David Hoffman?

  Hey Bankless Nation, I'm excited to bring you my conversation with Leighton Cusack, who is the founder of Pool Together. And for those that don't know, Pool Together is a prize-linked, no-loss lottery. And basically, what that means is that when you come to Pool Together, you come and deposit your stable coins, your crypto dollars, but also now DeFi tokens as well, or into the future, many more. But what it does is it's kind of like depositing your money into Compound or into AVE, and you get a yield. But instead of getting your interest, the interest goes up for a lottery, right? So you actually don't get the interest unless you win. But if you win, you not only get your interest, but you get everyone's interest. And

• 0:45David Hoffman?

  so it's a way to get outsized, high-risk, outsized value capture of many people's yields, right? And so it's a little bit of a gamification, and it's a really interesting app. And just a number of weeks ago, they released the pool token, which helps govern over the protocol. We go into all of these details and more in this episode with Leighton, this Meet the Nation episode. Before we do, though, we want to take a moment to talk about some of these fantastic sponsors that make this show possible. Bankless is proud to be supported by Uniswap. Uniswap is a new paradigm in asset exchange infrastructure. Instead of a cumbersome order book system where trades are matched with other humans, Uniswap is an autonomous piece of software on Ethereum, which is what Ryan and

• 1:28David Hoffman?

  I call a money robot. No human counterparties or centralized intermediaries, just autonomous code on Ethereum. Input the token you want to sell and receive the token you want to buy. Something brand new in the Uniswap ecosystem is the Uniswap Grants Program is now accepting applications for grants. We have been saying this for a while, and we'll say it again. DAOs have money, and they are in need of labor. If you think that you have something to contribute to the Uniswap DAO, apply for a grant to Uniswap. Just look at the size of the Uniswap Treasury. It's almost $3 billion. This mountain of capital is looking for labor. Do you have something of value to contribute to the Uniswap DAO, no matter how big or small your idea?

• 2:10David Hoffman?

  Idea is you can apply for a UniGrant at unigrants.org and help steer Uniswap in the direction that you think it should go. That's exactly what we did to get Uniswap to be a sponsor for Bankless and you can do the same for your project. Thank you Uniswap for sponsoring Bankless. Gemini is the world's most trusted cryptocurrency exchange. I've been a customer of Gemini since I first got into crypto in 2017 and it's been my main exchange of choice to make my crypto buys and sells. Gemini is available in all 50 states and in over 50 countries worldwide and on Gemini there are markets for over 30 various different crypto assets, including many of the hot DeFi tokens and it's one of the few exchanges that has liquid die markets. Gemini just launched their

• 2:51David Hoffman?

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• 3:34David Hoffman?

  days after signup, you'll be gifted a free $15 Bitcoin bonus. Check them out at gemini.com/goBankless. Alright guys, I'm here with Leighton Cusack of Pool Together. I actually met Leighton in person in Tel Aviv in 2019, I think. And so, one of the few people that I actually met in person before I met online. But now, as we all know, now there's very much an online world and so, good to see my good friend Leighton Cusack here. And Leighton, tell us about Pool Together and how it came to be and also what it is.

• 4:08Speaker 01

  Yeah, yeah, for sure. Well, thanks for having me. And yeah, like you said, it's funny because we've known each other for a long time. And you know, I've done some stuff with bankless. I wrote a, I wrote a newsletter for you guys a couple, about a year and a half ago. But it's, it's funny because there's so many new people in DeFi now that we have people all the time who are like, hey, when are you guys going to go on bankless? When are you going to do bankless? And I thought maybe that means it's time for, for another round. So yeah, so pulled together, it's actually one of the, one of the oldest DeFi protocols. It was started about two years ago. And the basic idea is it's a protocol for on-chain prize savings, otherwise known as no loss lotteries. And so it's a really cool concept. Basically, it's a savings account. You deposit your money. You can withdraw it whenever you want to.

• 4:51Speaker 01

  But while your money is deposited, all of the interest from everyone's money is, is essentially grouped together and then randomly distributed. And so basically you have a chance to win, to win really large prizes as opposed to winning like, as opposed to earning like a small amount of interest. So right now there's like $225 million deposited. That generates around like $200,000 a week in these no loss prizes. That all you have to do to be eligible to win them is just deposit your money. So it's a really, it's a really powerful concept. It's a really important financial primitive for specifically for people who don't necessarily have a ton of money, right? Like if you're yield farming with $10 million, then, then, you know, maybe it makes sense to earn

• 5:32Speaker 01

  10% APR on your money. But if you only have $10,000 or something like that, then it's much more compelling to have a chance to win like really large prizes than to just, you know, get incremental returns on your money.

• 5:45David Hoffman?

  The reason why I really like pulled together is that it's one part like psychological trick and one part really good, sound, responsible money management where like, we, we know that the lottery, the legacy lottery has product market fit. We know this because people keep on buying lottery tickets all the time. Yes, we also know that the lottery as a financial investment, as a place to put your savings is not the best thing to do. Mainly because the odds of you winning and the risk adjusted odds of you winning just don't play. Way out in your favor. It's basically a tax on gambling. Uh, and the nice thing about pooled together is that you put in your money and you never ever lose your money.

• 6:27David Hoffman?

  And so you will always get your money back, but it does satisfy people's DGEN sides, right? Like if they, if they want to, you know, you try and like input fifty dollars and receive back fifty thousand. Pooled together can serve that need for you.

• 6:44Speaker 01

  Right, right. Yeah. And that, and that's the thing. There's, there's a lot of people who, uh, who need that financial tool, right? And actually, so this is a fun little stat because our luckiest winner so far, uh, they deposited seventy-four dollars and they won forty-three thousand dollars. And so they've never, they, they deposited that money. They could have taken it out. It wasn't, it's not like buying a lottery ticket where you lose that money. The, the, mathematically speaking, the key thing with like prize savings versus a lottery, a prize savings is always expected value positive. Mathematically speaking, using a lottery is always expected value negative. So what you're, what you're saying is totally correct. It has like, it basically takes the, the psychology of like, of, of randomness and that being fun.

• 7:25Speaker 01

  And it also combines it with actually a healthy behavior, which is saving money and puts those two things together. And so, um, yeah, it's, and it's, it's a lot of people are like, oh, this is, this is a brand new idea. It's never been done before. And it actually is very well known in certain parts of the world, not so much in the United States, although, um, it was, because it was only legalized in the United States in like twenty fourteen. So it's fairly recent thing in the United States, but, um, but internationally, it's very well known and, uh, it is, um, it's, it's, it's, it's, there's hundreds of billions of dollars in prize savings accounts all over the world. And so doing it on Ethereum, obviously is just like a hundred times better.

• 7:59David Hoffman?

  Right. Now we have the global digital version of that where, which everyone could access, which is probably, uh, maybe you don't do, maybe you have some stats perhaps available where you, maybe you could compare pooled together versus historical prize link savings accounts. So do you have that off the top of your head by chance?

• 8:16Speaker 01

  Well, I mean, we're, I can tell you that we're just, we're just scratching the surface. So like, the, the, just, so just in the UK, right, uh, prize savings right now is there's a hundred billion dollars deposited into prize savings accounts. And as I mentioned, there's like 225 million in pooled together. So we're not even at 1% of like, of what prize savings are in just one country. So it's definitely a lot, a lot bigger. Um, and you know, in the UK, you know, a hundred billion dollars, they're paying out, um, you know, a hundred million dollars a month in, in, in prizes. Obviously on Ethereum with higher capital efficiency, higher rates of return, that could be a billion dollars a month in prizes, which would be pretty amazing.

• 8:57Speaker 01

  That, that, that's, that's the, we, uh, the community has kind of a big goal right now to get to 1 million in no loss, uh, prizes per week. And right now, as I mentioned, we're at about 200,000, 250,000, depending on interest rates. So we're almost, you know, we're almost there.

• 9:11David Hoffman?

  Yeah, yeah. The, in the world of crypto, the difference between a quarter million and 1 million actually doesn't really seem all that big. It's kind of, kind of weird.

• 9:18Speaker 01

  Well, yeah, yeah, yeah. It's growing fast. It's, it's, it's coming, it's coming quickly.

• 9:22David Hoffman?

  So Leighton, uh, say I'm a new crypto user and I've just discovered that APYs on Ethereum are really, really awesome. And so I want to take my $20,000 in savings and I want to go and deposit into Compound to go get that yield. Uh, pitch to me why I should instead perhaps deposit it into Pool Together.

• 9:43Speaker 01

  Yeah, yeah, for sure. Well, so, so a couple of things. First is I, I probably would say do both. Like, most people who use Pool Together are also using Compound or Aave. Most people who are using Compound or Aave are also using Pool Together. So it's not binary. But, um, I think, I think it, you, so there's two ways to look at it. You can look at it mathematically and say, look, if I have a certain, if I have a certain deposit size, I actually mathematically am going to have a better return by going into Pool Together than by going into Compound directly. And we can talk a little bit about why that works with the, the sponsorship and the reserve, which is an idea that we talked about a while ago. But, long story short, depositing in Pool Together has a higher expected, um, Return than using the underlying yield source directly.

• 10:28Speaker 01

  So you have a mathematical way you can make, you can look at that way. The other way to look at it, though, is if you have $20,000, you know, which is a sizable amount of money.

• 10:38Speaker 01

  And you're saying i- i- if you want to put, say, you want to split that in half and put 10,000 to pool together. That's going to give you a chance to win $100,000 every week. Versus, you know, even at 10% APR, $10,000 is $1,000 a year. That's less than $100 a month. That's not really, for a lot of people, like earning an extra $100 a month isn't going to make a meaningful difference in their finances. But having a chance to win $100,000 every week for a year potentially makes a way more meaningful difference. And that's actually like a more important financial tool. So anyways, I guess I'm rambling, but like I, I, there, there, there's basically two ways you can kind of use it. You can certainly do like the math on it and actually get a better return.

• 11:22Speaker 01

  Or you can just say like, hey, for me personally, having an extra small interest rate isn't going to make a meaningful difference. So I'm going for a life-changing amount of money.

• 11:32David Hoffman?

  Yeah, when, when people are seeing their like interest rates in their savings accounts or even in compounds, like they're not, the, the interest rates that they're getting from compound. They're not daydreaming about any like villa in some like exotic part of the world, right? But like they, if with their winnings from pool together, perhaps they actually could do that. But actually to, to me, what, what is interesting to me is the mathematical reason as to why it's actually on a risk-adjusted level. Why it's beneficial to, if you are ready to commit to pool together for the long term. It actually makes more sense as to why you should deposit into pool together. So why, why is it, i- is it true that you can actually get a better return on investment with pool together over the long term?

• 12:13Speaker 01

  Yeah, so there's, there's two, there's a really interesting mechanism called the reserve. So basically what happens is a portion of every prize gets actually redeposited back into the prize pool. And that, what that does is then sits in there, contributes interest to the prizes, all future prizes, but it's not eligible to win. So like, for example, right now in the USDC prize pool. There's about $550,000 of this, what we call sponsorship. That basically is money that's sitting there that's eligible to win, but is, is, or sorry, is not eligible to win and is contributing interest to the prize. And so what that does is it effectively, it affects, it raises the effective APR.

• 12:53Speaker 01

  Because you have, you have more money, more money contributing interest to the prizes than there is eligible to win the prizes. And so that, and that just keeps compounding week by week by week. So just like today, the USDC prize was awarded and like $60,000 was added to the reserve. And, you know, uh, next week it'll be like another 50 or $60,000. And so, you know, you could do the math over the course of a year, that's going to be millions of dollars that that's going in there. So it's a really cool perpetual growth mechanism that basically raises the, the yield to always be higher. On top of that, which we haven't actually talked about too, uh, at least right now, all depositors into, into pool together are also receiving the pool token,

• 13:35Speaker 01

  which governs a protocol. They get that for free as well. And so that's actually kind of changes it, the economics even more.

• 13:41David Hoffman?

  Right. So the, the reserve or the, or the, yeah, is it the reserve or the sponsors? Yeah, the reserve.

• 13:47Speaker 01

  We, we, we call it, it's the reserve rate, the reserve rate creates the sponsorship. Yeah.

• 13:51David Hoffman?

  Right. To, to me, that is like the, the magic perpetual motion of the pool together system, right? Because it basically guarantees that there should always be interested parties depositing DAI or USDC into pool together, because it is rational over the long term, because what this is, is like you guys have generated a money robot, a contract on Ethereum, which we don't, we don't have to reward, we don't have to reward that contract. And in, in fact, we can make it reward us. That contract rewards the, the participants. And so what's happening is that there is a, like, how much did you say? Like one third of the DAI inside of, uh, uh, inside of a, a lottery is actually just, uh,

• 14:35David Hoffman?

  part of the, uh, the reserve.

• 14:38Speaker 01

  Well, I was, I was talking about the, the USDC prize pool.

• 14:41David Hoffman?

  Oh, okay.

• 14:42Speaker 01

  So like, as of today, that has like a half, a little over a half million dollars in the reserve.

• 14:46David Hoffman?

  So it's, it's like, it's like having like a half a million of your competition not be relevant, right? Like, all of a sudden, your competition actually is just actually in your favor, right? Uh, and so, and, and this is why when you, you can look at the compound APY, and you can add on a percentage upon, on top of that as well, proportional to the size of the reserve, because you know that, that size of the reserve is only, is actually your ally, not your enemy, when it comes to fighting over this lottery winnings.

• 15:18Speaker 01

  Yeah, yeah, and it, like you said, it's really cool, because it is, it's this perpetual growth machine, and it runs on its own, which is amazing, like, it just keeps going, like, it will, it will keep going forever, because even if every single person took their money out of pool together, there would still be a prize, because they wouldn't take, that reserve would still be there, that would still be contributing interest, and so, um, so no one will, you know, people won't, will never take all their money out, because that would, well, it would be very economically irrational to do that.

• 15:47David Hoffman?

  Right, because if everyone took all of their money out, then, and if there was only, if no one was there, you could immediately receive free money by depositing $1 into Pool Together, and then claim all of the interest of the reserve, which is growing pretty damn fast.

• 16:03Speaker 01

  $50,000, yeah, and now it's growing, yeah, which, you know, in a few months, millions of dollars. So you would be effectively earning the interest on all that money, yeah.

• 16:10David Hoffman?

  For free, yeah, for free. How fast has that grown? What was the reserve size like just a few months ago?

• 16:16Speaker 01

  Well, it's, I mean, it's grown fast, um, so, so this is actually something that Governance just activated, like, literally, a couple, a few weeks ago, and so, um, right now, right now, across the protocol, it's growing, um, a little over $100,000 a week, um, and, like, so in most sets in the stablecoins, like the DAI and the USDC, so like I said, just today, the USDC grew by $64,000, and DAI is on track to grow by like $50,000 this week, so, you know, yeah, let's, let's just call it $100,000 a week right now. So we're looking at, you know, $5 million a year.

• 16:57David Hoffman?

  That's really awesome. That's really awesome. So let's talk about the pool token. So where did the idea, talk about the genesis of the idea of the pool token and also when did the pool token come about? It was sometime recently, right?

• 17:10Speaker 01

  Yeah, it's very recent and that's another thing, right? So pooled together has been around for a long time, but the token is only in the last like 12 weeks. There's probably less, less than 12 weeks, maybe 10 weeks. It's been a bit of a whirlwind. But yeah, but from the beginning, we always had the plan to build a decentralized protocol that a lot of people could integrate with and that pooled together Inc. The company could then build on top of. And so this was always a plan, but we really wanted to work really hard to make sure that before we decentralized it, that we had, you know, the security of the contracts was really solid. The audits were, the audits were good, et cetera.

• 17:49Speaker 01

  We also wanted to make sure that the economics, like just the way the whole system works made sense and was well balanced and all that. And so we, and make sure the protocol was built in such a way where it's very modular so that it could be easily plugged in. And so we took a long time to kind of get those things right. And, and when we felt like it was in a good place where it could sustain itself without us needing to contribute to it. That's when we decentralized with the pool token. And so that was about 12 weeks ago. And yeah, we, we did a large retroactive airdrop that went to everyone who had ever used the protocol. And additionally started a, an initial pool distribution to all depositors. So we really love this idea of user ownership, obviously.

• 18:32Speaker 01

  And I think it's really cool, this concept of like, if you deposit into pooled together, you automatically become an owner. And there's no, so that's how it works. If you deposit into any of the prize pools, you automatically immediately start getting the pool token. You don't have to do any, anything else. You don't have to do any staking or any like crazy stuff. And so, um, that's been a big catalyst for growth. Yeah, you do have to claim it. Yes. But you, you, um, yeah, yeah. Yeah, but you don't, you just, any, any, any regular deposit will start earning the, the pool token. And so that's live right now.

• 19:04David Hoffman?

  That's even an additional reward on top of the already slightly juice reward from the pooled together lottery. So you also are getting the token, right? And the token comes to you no matter what, just a very stable, not, not stable, but like a weekly distribution rather than a lottery mechanism, right? There's no, there's no lottery mechanism for the winner.

• 19:25Speaker 01

  Correct, correct, correct, correct. Yeah, yeah. So I think it's like since we've been, since we've launched the, the like effective like APR has been like 20 in the 20 to 40% range on like the stablecoin pools for the last like 12 weeks. But the, you know, they, but as, as more capital goes in, that obviously kind of evens out.

• 19:44David Hoffman?

  And so in its current form, what does the pool token actually govern over?

• 19:49Speaker 01

  Well, I mean, it controls, it controls the protocol. So basically, you know, and that's sort of like an abstract way to say it, but there's, there's sort of three main things. One is it controls the price pool. So there's like this reserve rate I was talking about. It controls the reserves. It sets the reserve rate, how much, how much of each price should go back into the reserve. It, it controls the, the price pools in terms of like, how many winners are there per week? How often are prizes awarded? The governance can change those parameters.

• 20:19Speaker 01

  It also controls about half of the total pool token supply is still, is undistributed and it's under the control of the pool token holders. So the holders control future distributions of that with the idea being that it should go to the people who are helping to build the protocol. So anyway, so I kind of said two things. The first thing is like it controls the existing no loss price pools. It controls the further distribution of the pool token. And then it also controls new no loss price pools. So there's a lot of new yield sources being integrated, new asset types, deploying on new, new networks, L2s. And so that's the other thing that the pool token holders also control.

• 20:59David Hoffman?

  And so where, where, let's talk about the integrations there. If, if, just to make sure we check that box is where does yield actually come from, from pulled, for pulled together?

• 21:10Speaker 01

  So the, the four, the four no loss price pools you see right now, if you go to the website, those are all compound. They use compound as the old source. But there's a lot of new yield sources that are being integrated right now. So Ave actually is launching this week. So there'll be Ave as a yield source, Yarn, what Iron Finance integration is, is being audited right now.

• 21:34Speaker 01

  There's a, there's an integration with like X Sushi. So you can actually like the sushi staking mechanism. Basically, any yield source, you can think of pool together as a game, like a no loss gamification layer on top of yield generation. And so any yield source on Ethereum, whether it's Compound, Ave, you know, a staking one, Rari, there's all sorts of them.

• 21:57Speaker 01

  It can be integrated with any of those yield sources. So people can then create their own no loss price pools using that yield source.

• 22:05David Hoffman?

  And so the, the, the reserve, there's one reserve for every single yield source as well, right? Or is it for every single asset?

• 22:13Speaker 01

  It's for every, the reserve is set at the prize pool level. So each prize pool has its own reserve rate and it's set and that, that's how that works.

• 22:25David Hoffman?

  Okay. So there will be many, many different reserves that the pool token governs over all of them collectively?

• 22:31Speaker 01

  Correct, correct. Yeah. So that's actually kind of a cool thing, too. So like right now, the, the, the primary no loss price pools are DAI, USDC, Comp and Uni. And so the reserve is accruing all of those tokens. It's accruing DAI, USDC, Comp and Uni. It accrues whatever the native token being generated is. And so as like a sushi pool comes online, or a rat Bitcoin, or an Ethereum pool, et cetera, the reserve is accruing all these different tokens. And so essentially, you know, holding the pool token is you're holding all these different tokens.

• 23:03David Hoffman?

  Right. Okay. And so this is where I get really, really bullish, right? Because the reserve can be across many, many different yields, yield sources, and also many, many different assets. And in theory, the pool token just governs over the growing pool, right? And the, the, the nice thing about pool together in my mind is, it's both actually a relatively simple app to build. And I say that as somebody who doesn't know how to code. So take that with a grain of salt. But it's like a relatively simple app to build. And also, it's relatively simple to have some sort of valuation on because you can look on chain and see the growing pools, the growing reserves of many different asset types.

• 23:45David Hoffman?

  And you can see, you can see how big they are and how fast they are growing. And to me, to evaluate pull together, it actually be relatively simple, it's a relatively simple calculation that is some sort of premium on top of yield, aggregate yield inside of DeFi. And so in theory, pull together, pull to pull token owners, maybe they just want to say, call it quits one day and just like empty all the reserves and like, I don't, I don't, I don't think this is ever going to happen, but this is a metaphor to illustrate why the pool token has value is that the pool token owners could just like, say, hey, like, I want to liquidate. I want my share of every single asset that has been accruing for the last like X years and I, and I just want them. And in theory, that is possible to do by

• 24:30David Hoffman?

  pool token owners. And so the pool token is probably evaluated by something, some, some, the, the, the net assets under management by the pool system, plus the future cash flows of the system, plus future growth. I think it's really cool.

• 24:46Speaker 01

  Yes. Yeah, for sure. So, I mean, you know, anyone who hangs out in our discord knows that, you know, especially as being someone who was involved in the creation of the project, I don't, I don't speculate on, on, on future valuations or anything like that.

• 24:58David Hoffman?

  But I do.

• 25:00Speaker 01

  But you do. But, um, but in theory, you're correct. I mean, at the end of the day, the, the honest reality is the, the pool token holders do control this protocol. And, you know, we've had six governance proposals at this point and I, I still haven't even voted in any of them. And so, um, which is a great thing. And so, uh, yeah, in, in theory, all this is, all this is possible. And, um, there's something else I wanted to say about that. Oh, well, I do, I do certainly think it, I view it sort of, sort of like an endowment where, um, the idea is that, you know, we, we, the governance could also say like, once, let's say, once these reserves get to 10 million or 20 million, the governance could also say like, oh, let's actually allocate these into different protocols or allocate these into like, do other things to generate yield with them.

• 25:44Speaker 01

  And then, you know, bring that back to, um, to, to, to create the, the no loss savings prizes. But, um, there's a lot of, yeah, there's a lot of interesting things you can do with, uh, with, um, once you have like a, a large amount of capital, it's sort of just there to generate yield.

• 26:01David Hoffman?

  Right, there's, I can't remember who said this line, I think it was like Chris Bernuski, but like at maturity, all DeFi apps turns into, into on-chain like VC funds or, or not hedge funds, hedge funds.

• 26:11Speaker 01

  Yeah. Kind of true. I mean, that's kind of what Urn is for sure, right? And, and it's actually interesting with Urn too, because like Urn deposits into Pool Together, but then we also, Pool Together also uses Urn as a yield source, or is going to use Urn with this integration. And so there's, um, yeah, there, there's, there's definitely an interesting, I think, I think that's pretty true.

• 26:32David Hoffman?

  Yeah. So what else does Pool Together have in its roadmap? What do you guys have lined up next?

• 26:38Speaker 01

  Well, I mean, there's a lot of people working on a lot of different things. I'm privileged to, uh, to be, you know, I definitely get to hear about them. So, um, the one thing that I wanted to mention, because it's launching, um, today, which I'm super excited about, is, uh, Dharma, the Dharma app, which some of your viewers probably have heard of. It's a really awesome app, basically makes it really easy to go from your bank account into DeFi. They're launching a direct integration, so you can deposit directly from your bank account into Pool Together, um, for people who are in the United States. And so, um, that's something I'm really, really excited about. So everyone, once you download Dharma app, try it out. And that sort of fits into like broad categories. I would say the main things that people are working on in the ecosystem right now is, um, like integrations that make it easier

• 27:23Speaker 01

  to get into, easier to deposit and/or cheaper to deposit. Gas fees are obviously a huge problem. So there's, um, there's a lot of people who are working on, like, like Dharma's an example of that. There's also this thing called Pods, which is launching, another really cool thing where basically it groups people's tickets together, which lowers gas costs to deposit, but also lets them split the prize if they win. So basically, anyone can become a whale, which is kind of cool. Um, so that, that's on the front end. Those are some of the big things. And then on the back end, it's, it's mostly integration into new yield sources, uh, launching new prize pools with new asset types and deploying to new,

• 28:00Speaker 01

  uh, new like layer twos. So those are sort of the main, the main, uh, things going on.

• 28:05David Hoffman?

  Right, and those on-ramps are critically important, right? Because just aligned with a pull-together simplicity is like, all you have to do is deposit. Like, that's basically the only thing you have to do. And when we were talking earlier about the magnitude of prize-linked savings accounts like elsewhere in the legacy world, like, that's massive. And all we need to do to help export the, what the strong premiums that Pull Together is offering comparative to those things is by building off-ramps, right? So we can get more capital into Pull Together. I think Dharma is going to be the thing that satisfies the demand of retail season, in my mind. I think retail season is coming, and retail is going to expect a user experience

• 28:49David Hoffman?

  that is comparable to what they are coming from, which is things like Robinhood or their brokerage. And I haven't found any other application other than Dharma that offers that sort of experience. So I'm perhaps very optimistic about, like, cash flows into Pull Together just coming from Dharma.

• 29:05Speaker 01

  Yeah, yeah, I mean, it's definitely a different, you know, it's not the whales, it's gonna be more the mass adoption. But I do think, I think, you know, like you said, Pull Together is very simple. And so I think it is an ideal on-ramp for new people into DeFi, for like a first DeFi protocol to try out. Because you don't have to put in, you can put in a hundred dollars and it still makes sense. And so I'm really, really excited for the Dharma integration.

• 29:28David Hoffman?

  Ding, that was a nice pun that you just made on, I don't know if you caught that one.

• 29:31Speaker 01

  Did I? I don't think I did.

• 29:33David Hoffman?

  You put in a hundred dollars and it still makes sense.

• 29:36Speaker 01

  Yeah, okay, now I get it. You're thinking faster than I am.

• 29:42Speaker 01

  But, uh, but yeah, anyways, agreed that retail is definitely coming. And I am so happy to be able to get to a place where I can tell my friends and family, like, hey, you can actually just do this one thing and you don't have to jump through a hundred hoops.

• 29:56David Hoffman?

  Hey guys, I hope you're enjoying the interview with Leighton so far. We get into the subject of POTS and how POTS allow users of Pull Together to pick their own risk spectrum, which Leighton calls the reward spectrum. Really, it lets you, do you want to put in a little bit of money and have a very low chance of receiving a lot of money? Or do you want to put in a little money amongst a big group of people and have a very high chance of receiving a much lower amount of money? POTS are super cool. We also talk about L2s and also future innovations coming out of the Pull Together app. So, don't go anywhere, we have so much more to talk about in this interview, but first, we're going to talk about some of these fantastic sponsors that make this show possible. Aave is a borrowing and lending protocol on Ethereum and just recently released Aave

• 30:38David Hoffman?

  version 2, which has a ton of cool new features that makes using Aave even more powerful. With Aave, you can leverage the full power of DeFi, MoneyLegos, Yield and Composability all in one application. On Aave, there are a ton of assets that you can deposit in order to gain yield and all of those same assets can also be borrowed from the protocol if you have deposited collateral. Here you can see me getting a 200 USDC loan against my portfolio of a number of different DeFi tokens and ETH. I'll choose a variable interest rate because it's a lower rate than the stable interest rate option, but I could choose the stable interest rate option if I wanted to lock that interest rate in permanently. One of Aave's V2 features is the ability to swap collateral without having to withdraw your assets, trade them on Uniswap and then deposit them back into Aave.

• 31:23David Hoffman?

  Aave does all of this for you, all in one seamless transaction, so you don't have to repay loans in order to change the collateral you have backing them. Check out the power of Aave at ave.com, that's A-A-V-E dot com. Balancer is DeFi's most powerful automated market maker. Typical AMMs just have two tokens inside of one liquidity pool, which can lead to fractured liquidity across the many pairs in DeFi. With Balancer, you can access the full power of multiple tokens inside of one single AMM, which unlocks an entirely new playing field of possibility. This makes Balancer an awesome building block for so many different use cases. Balancer pools can make asset indexes, but instead of paying fees to portfolio managers, Balancer lets you collect fees from traders who use your portfolio for liquidity. Additionally, Balancer's

• 32:05David Hoffman?

  Pools can be programmed to have properties that change according to predetermined rules, such as changing the swap fee based on market conditions, or even liquidity bootstrapping pools, which can help you launch and distribute your token with day one liquidity. At Bankless, we used a liquidity bootstrapping pool to sell our BAP t-shirts to much success. Balancer V2 brings powerful new features that makes your money work even harder for you. In V2, idle tokens are capable of generating yield in DeFi without sacrificing liquidity in the pool. To top things off, Balancer is reimbursing all gas costs with BAV rewards, meaning that all your gas costs are returned to your wallet with the Balancer Governance Token. Balancer's mission is to become the primary source of liquidity in DeFi by providing the most flexible and powerful platform for asset management and decentralized exchange.

• 32:48David Hoffman?

  Dive into the Balancer pools at pools-balancer exchange. Let's go into the pods a little bit more. So me, I got a chat with me and some college buddies and we all like to play around in DeFi. Say we wanted to pool our money together, how would we use pods to get that done?

• 33:08Speaker 01

  Yeah, so pod serves two functions. Like I said, one is it batches deposits, which is lowers transaction costs. So it lowers transaction costs to deposit by about like 80%. But the other function, which is really fun, is basically if you deposit into a pod and any of the deposits in that pod win, that prize is automatically split among all the people who are deposited. So if you and your friends wanted, so say, you know, a common, a lot of people say like, oh, I feel like I don't really have a chance to win. I only have a thousand dollars. So what you can do is you can say, oh, get with 10 of your friends. Or if you want to be more aggressive, you could say, get with like a thousand of your friends and then you'll have a million dollars and then you'll have a way higher chance to win. Obviously, the prize relatively will be smaller,

• 33:53Speaker 01

  but that actually also gets really interesting to you when we think about the interest return being higher than the underlying asset, because then you could really, like hypothetically, if everyone was in one pod, you would just be earning an interest rate that's higher than the underlying yield source. Just it just distributed not every second, but instead like once a week. And so there's a lot of interesting things there, but yeah, that's, that's the idea of pod. So I'm really excited about that. I think it introduces like a cool social dimension to it too. And that, those should also be going live this week too. There's been a developer, Kames, who's been working on that.

• 34:29Speaker 01

  And he's been working for several weeks and I think he's almost done.

• 34:32David Hoffman?

  To me, the cool thing about pods is that it allows depositors to really choose their risks, risk spectrum, right? So they say, like what you just said, like, well, if they're, if they have money in every single pod, well, then they are just aggregating, they are just getting an aggregate of all pooled together yield everywhere. And so there's actually no risk, right? Because they are receiving all dividends anywhere, from anywhere, or they are just doing solo, which is like, or one pod, just a pod of one, and you're taking maximum risk where like you are highly likely to receive nothing, but perhaps, perhaps in a very unlikely scenario, able to receive a lot.

• 35:13David Hoffman?

  And pods kind of let you go through the whole gamut of that full range, depending on how many pods and what sizes of pods you want to get into.

• 35:21Speaker 01

  Yeah, yeah. And I love that. And I, yeah, I say it's a reward spectrum, right? Because there's, I would like to say there's no risk, right? Because regardless, you're not, you're not losing your money, but you can essentially choose, you can choose the return profile you want. Do you want a return profile that basically offers exponential returns on your deposit, but with a low probability? Or do you want a return profile that offers slightly higher than normal yield with a high probability? And you can basically just choose your own adventure on what you want.

• 35:51David Hoffman?

  Do you have any opinions or ideas as to who is really going to use pods first? Or what type of other, maybe other DeFi apps or cohorts of individuals that would really find pods useful?

• 36:04Speaker 01

  I mean, I think, I think we're, gas prices have definitely priced out a lot of people who want to use pool together. And like, we can see that reflected in our stats. There's a 100% correlation between gas costs and number of deposits. And so I think the first, the first big market is people who are in DeFi who want to use pool together, but don't have a million dollars, you know, or even $10,000. Maybe they have, you know, and pool, pool together is very popular and like, like China is the number two country for traffic to pool together. South America is really popular as well. And so there's a lot, I think the main target audience right now is basically people who are in DeFi, but just don't, they're priced out because of gas.

• 36:45David Hoffman?

  Right.

• 36:45Speaker 01

  And this will be helping them have a way to, to get access to a better yield.

• 36:51David Hoffman?

  Is there a layer two conversation to be had with pool together?

• 36:55Speaker 01

  Yeah, well, we're already deployed on, we're deployed on Polygon and that's, that's going to be launching with integrations to the Ave deployment on Polygon. And so that will also be, obviously we lower transaction costs, planning to use Optimism when that launches. So our, the basic strategy is sort of like deploy it on all of the EVM compatible blockchains out there.

• 37:18David Hoffman?

  And then see which one, I'm assuming not all of them will stick and some of them will stick and that'll just be how the cards settle.

• 37:24Speaker 01

  Right, right. Yeah, yeah. Let people, let, yeah, make sure it's there for people to use. And I think, you know, right now though, you know, I think Polygon's gotten a lot of traction, especially with this new Ave campaign. And, you know, there's a lot of excitement for Optimism, but there's also, there's just a lot, there's a lot of great stuff. I'm feeling good about, let's call it scalability summer.

• 37:48David Hoffman?

  I was just gonna call it DeFi summer round two, but I do like scalability summer. That does roll off the tongue.

• 37:54Speaker 01

  I would like DeFi summer round two as well. Either way, those both sound fun.

• 37:58David Hoffman?

  Layton, is there any future thing coming out of pool together that we haven't yet talked about, or did we just cover all the bases?

• 38:05Speaker 01

  Um, that's a good question. I think we've covered most bases. Like I said, there's so many people working on different aspects now. It's really cool, you know, now like I mentioned, you know, we're not even working on the pods, like someone else is doing that and Dharma is doing the app. And so I'm sure there's other stuff that I don't even know about that's being done, which is the beauty, once you decentralize a protocol, that you have more people working on it. But, um, I think that's the main thing. And, um, yeah, yeah, I think, I think, I think we covered the, the, the big points.

• 38:32David Hoffman?

  Do you have people in the pool together, like find a pool together Discord, trying to find each other to make a pod together?

• 38:39Speaker 01

  You haven't seen that yet? Yeah, I think we'll probably see that when it officially launches, because it's officially.

• 38:43David Hoffman?

  That's right, that's right. It hasn't launched yet.

• 38:44Speaker 01

  Just one pod and then, but then people are free to obviously create their own. And so it will be, it'll be curious, I'm very curious to see how it plays out. Like, do we end up with one really big one or do we end up with like, you know, a hundred small ones? It will probably be somewhat aggregated because of, just because gas costs.

• 39:00David Hoffman?

  Sure. I'm excited to see how people use pods in ways that we can't really think of right now. Because I would imagine that there are a bunch of, because really to me, a pod is just like a, it's another version of like a DAO. It's like a pull-together DAO that's dedicated for pull-together only. Like, there's, there's something there that I don't know what it could be, but some creative minds, I think, could really take that into a very interesting logical conclusion.

• 39:25Speaker 01

  Right, right. Yeah, for sure. I mean, there's been a lot of people have been interested in like, winnings that go to nonprofits or things like that. And so you could do that too. Where it's like, okay, set up, set up a pod and then like the, the, if it wins, all the money is given away. Stuff like that is also, I think, really interesting. No lot, no lost donations.

• 39:45David Hoffman?

  Hmm, right. Yes, yes, yes. Uh, here's one thing that we haven't actually talked about. Uh, what is PL-DIE?

• 39:51Speaker 01

  PL-DIE? Well, okay. Uh, it's basically you're tokenized. If you, when you deposit into Pool Together, you get back a token that represents your deposit. And it trades, it's obviously one-to-one to DIE because you're, it's no loss. And so, um, it's, uh, actually the ticker technically is now PT-DIE. It was PL-DIE previously.

• 40:10David Hoffman?

  Oh, now it's PT-DIE?

• 40:12Speaker 01

  PG-DIE, yeah. But, um, so PT-DIE is your tokenized balance in Pool Together. And so you can transfer that or do whatever you want.

• 40:21David Hoffman?

  Is that fungible with other people's PT-DIE? Because how, how do we claim? Okay, so how, how does the winnings work with PT-DIE?

• 40:30Speaker 01

  The winnings are actually, they're literally, they're sent to you, literally. So like, if you win, your wallet balance will just go up that day.

• 40:38David Hoffman?

  Okay. Is it, and PT-DIE is transferable, right?

• 40:42Speaker 01

  Right.

• 40:43David Hoffman?

  So if I transfer the PT-DIE,

• 40:47David Hoffman?

  then how do I get the winnings? Because I've given away my, my deposit.

• 40:51Speaker 01

  Oh, so you're talking about like with a pod?

• 40:54David Hoffman?

  Uh, no, no, I'm just, so like, say, I come in, I deposit 100 DIE and I get 100, 100 get 100 PT-DIE back. And then I send that PT-DIE to my friend. Right. Uh, who, who has the claim on the deposits? My friend does, right?

• 41:06Speaker 01

  Your friend does. Yeah, yeah.

• 41:07David Hoffman?

  Right. And so if, if, and so my friend now would say, say that the, the deposits win the lottery. And, but now my friend gets to, gets the winnings, right? Whoever I sent that PT-DIE to?

• 41:22Speaker 01

  Right.

• 41:23David Hoffman?

  And so how does, how does he or she?

• 41:25Speaker 01

  Your friend would get that money.

• 41:27David Hoffman?

  How is the winnings actually associated with specific PT die out there if every, if all the PT die out, out there is fungible?

• 41:36David Hoffman?

  Or is it just to the Ethereum address that holds PT die? Is that how the lottery winners?

• 41:41Speaker 01

  Right, so. Right, so when you, when you transfer, when you transfer, if you transfer that PT die, when doing that transfer will update the eligibility structure in the protocol to say this address now holds this, this deposit. And so when the, um, when the winner is chosen, which is done, it's done using the random number generated by chain link. When the winner is chosen using that random number generated by chain link, if, if it, if, if the index, if the number of the index falls on that deposit, that's how the protocol knows who to award the, um, the accrued interest to. And it's awarded, it's literally, it transfers, the, the action of awarding the prize, that transaction actually sends that out to all the people who won.

• 42:26David Hoffman?

  Okay, okay, so what if, what if I have my PT die like collateralized inside of Maker Dow? And then like, then if you guys sent the winnings there, I wouldn't be able to go get that.

• 42:39Speaker 01

  Right, right, so that's actually, yeah, that's actually a very good observation. And that is like a, a, a problem to be solved really. And that's, that's part of what actually POTS does though, is POTS is a solution to that because it makes it, POTS operates in a different way where, if the pod wins, the exchange rate changes and your balance stays the same. And so that's actually fully fungible in that sense. Whereas the PT die, you're right, that's why like, you don't really want to deposit it on Uniswap because, uh, Uniswap would win if, if, if those won. And so there are a few things that, uh, we're looking at in terms of like, you could be able to like wrap them or, or, or things like that to be able to get like,

• 43:21Speaker 01

  use them as collateral, but that's definitely a outstanding problem to be solved.

• 43:26David Hoffman?

  Yeah, perhaps a call to the community to help.

• 43:29Speaker 01

  For sure, for sure. Well, I mean, I sent a tweet out a little while ago. I was like, if anyone can figure this out, they'll immediately have like $200 million of deposits on their on their platform. Right. Because there's so many people who have deposits who pulled together and right now they're not using that as collateral anywhere. And so that's definitely a call to the community to say, hey, if you can figure this out, you can get a lot of a lot of deposits.

• 43:52David Hoffman?

  Right, right. Yeah, the more and more capital efficient that pulled together becomes the more capital will be deposited there. Really, really interesting.

• 43:59Speaker 01

  Right.

• 43:59David Hoffman?

  Leighton, this is a pool together has always been one of my favorite DeFi apps. So thank you for coming on Bankless Meet the Nation to tell us all about it. If any Bankless listener has wants to know more about pool together, where should they go?

• 44:14Speaker 01

  Best place, I mean, go to our website and there you can link to our Discord. That's definitely the best place. We have a really awesome community. Many people have said it's the nicest community in DeFi. Hopefully that's true.

• 44:24David Hoffman?

  Whoa, big words.

• 44:25Speaker 01

  But I don't know, we'll see. There's a lot of nice communities in DeFi, but anyways, yeah, I would say Discord is like the best place. And you know, follow, follow us, follow pool together. There's a couple of different accounts on Twitter that the community run. And so it would be awesome to stay in touch that way, too.

• 44:42David Hoffman?

  Cool. And if you have ever used pool together before and you have not claimed the airdrop, definitely go do that because there's a pool together airdrop for you.

• 44:50Speaker 01

  Yes, that's a great point. Yeah. And start participating in governance. It's a very active, very active governance. So it'd be awesome to do that.

• 45:00David Hoffman?

  Awesome. Leighton, well, thanks for coming on Bankless. If people want to find out more about you specifically, where should they go? Do you have a Twitter account? I believe you do.

• 45:10Speaker 01

  I do, I do. It's Layton, Lay 2000 pounds, L A Y two zero zero zero L B S. So that's kind of the play on words there. So yeah, you can definitely reach out. And then obviously I'm on Discord all the time, too. So if you pop in our Discord, feel free to DM me or just message me and I'm definitely happy to chat.

• 45:28David Hoffman?

  Awesome. And all those links will be in the show notes. All right. Thanks everyone for tuning into this Bankless and Meet the Nation. We hope you enjoyed the video. If you did, head over to Bankless HQ right now to develop your crypto investing skills and learn how to free yourself from banks and gain your financial independence. We recommend joining our daily newsletter, podcasts and community as a Bankless Premium subscriber to get the most out of your Bankless experience. You'll get access to our market analysis, our alpha leaks and exclusive content and even the Bankless token for airdrops, raffles and unlocks. If you're interested in crypto, the Bankless community is where you want to be. Click the link in the description to become a Bankless Premium subscriber today.

• 46:11David Hoffman?

  Also, don't forget to subscribe to the channel for in-depth interviews with industry leaders, Ask Me Anythings and weekly rollups where we summarize the week in crypto and other fantastic content. Thanks everyone for watching and being on the journey as we build out the Bankless Nation.