Bankless - PoolTogether - Leighton Cusack | Meet the Nation

Starting point is 00:00:04 Hey, Bankless Nation, I'm excited to bring you my conversation with Layton Kusak, 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 defy tokens as well or into the future, many more. But what it does is it kind of like depositing your money into compound or into Avey 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.

Starting point is 00:00:45 And 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 Layton, 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 I call a money robot.

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Starting point is 00:02:28 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 crypto assets, including many of the hot defy tokens, and it's one of the few exchanges that has liquid dye markets. Gemini just launched their Earn Program where you can earn up to 7.4% interest on 26 various crypto assets. If you're tired of paying fees in Defi where you don't want to worry about defy exploits, but you still want to earn interest on your crypto assets, Gemini Earn is the product for you. Another product I'm stoked to get my hands on is the Gemini Crypto Back Credit Card, which gives you 3% cash back on all of your purchases, but paid to you in your preferred crypto asset.

Starting point is 00:03:17 When I get my Gemini credit card, I'm going to make sure that I get my cash back in ETH, so whenever I buy something, I get a little bit of ETH bonus back to me at the same time. You can open up a free account in under three minutes at gemini.com slash go bankless. And if you trade more than $100 within the first 30 days after sign up, you'll be gifted a free $15 Bitcoin bonus. Check them out at gemini.com slash go bankless. All right, guys, I'm here with Layton QSack of Pool Together. I actually met Layton in person in Tel Aviv in 2019, I think.

Starting point is 00:03:51 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, Layton Kusack here. And Layton, tell us about pulled together and how it came to be and also what it is. 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 bank lists.

Starting point is 00:04:17 I wrote a newsletter for you guys about a year and a half ago. But 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 bank list? When are you going to do bankless? And I thought maybe that means it's time for another round. So yeah, so pool together. It's actually one of the, one of the oldest DFI 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. but while your money is deposited, all the interest from everyone's money is essentially grouped together

Starting point is 00:04:57 and then randomly distributed. And so basically you have a chance 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. 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 10% APR on your money. But if you only have $10,000 or something like that, then it's much more

Starting point is 00:05:37 compelling to have a chance to win like really large prizes than to just, you know, get incremental returns in your money. The reason why I really like pull together is that it's one part like psychological trick and one part really good sound responsible money management where like we know 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 out in your favor. It's basically a tax on gambling. And the nice thing about pool together is that you put in your money and you never ever lose your money. And so you will

Starting point is 00:06:28 always get your money back. But it does satisfy people's DGEN sides. Right. Like if they, if they want to, you know, try and like input $50 and receive back $50,000, pool together can serve that need for you. Right. Right. Yeah. And that's the thing. There's a lot of people who need that financial tool, right? And actually, so this is a fun little stat, because our luckiest winner so far, they deposited $74, and they won $43,000. And so they never, they deposited that money. They could have taken it out. It's not like buying a lottery ticket where you lose that money. 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

Starting point is 00:07:16 negative. So what you're saying is totally correct. It has like, it basically takes the, the psychology of like, of randomness and that being fun. And it also combines it with actually a healthy behavior, which is saving money and puts those two things together. And so, 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 it was, because it was only legalized in the United States in like 2014. So it's fairly recent thing in the United States. But internationally, it's very well known.

Starting point is 00:07:49 And it is, there's hundreds of billions of dollars in price savings accounts all over the world. And so doing it on Ethereum, obviously, it's just like 100 times better. Right. Now we have the global digital version of that, which everyone could access, which is probably, maybe you don't do, maybe you have some stats perhaps available

Starting point is 00:08:09 where you maybe you could compare pool together versus historical prizing savings accounts. So do you have that off the top of your head by chance? Well, I mean, we're, I can tell you that we're just, we're just scratching the surface. So like, um, the just, so just in the UK, right, uh, prize savings right now is there's a hundred billion dollars deposited into price savings accounts. And as I mentioned, there's like 225 million and pooled together. So we're not even at one percent of like, of what price savings are in just one country. So it's definitely a lot, a lot bigger. And, you know, in the UK, you know, $100 billion, they're paying out, um, you know, $100 million 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 prices, which would be pretty amazing. That's, that's the, the community has kind of a big goal right now to get to one million in no loss prizes per week. And right now, as I mentioned, we're at about 200,000,

Starting point is 00:09:07 250,000 depending on interest rates. So we're almost, you know, we're almost there. Yeah, yeah. In the world of crypto, the difference between a quarter million and one million. Actually, it doesn't really seem all that big. It's kind of weird. Well, yeah, yeah. Yeah, it's growing fast. It's coming quickly. So, Layton, say I am a new crypto user, and I've just discovered that APYs on Ethereum are really, really awesome.

Starting point is 00:09:30 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. Pitch to me why I should instead perhaps deposit it into pool together. Yeah, yeah, for sure. Well, so a couple things. First is I probably would say do both. Like most people who use pool together are also using compound or Ave. Most people who are using compound or Ave are also using pool together. So it's not binary. But I think, I think you, so there's two ways to look at it. You can look at it mathematically and say, look at it mathematically. 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 sponsorship and the reserve, which is an idea that we talked about a while ago. But long story short, depositing and pooled together has a higher expected return than using the underlying yield source directly. So you have a mathematical way. You can make, you could look at it that way. The other way to look at it, though, is if you have $20,000, you know, which is a sizable

Starting point is 00:10:36 amount of money. And you're saying 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.

Starting point is 00:11:09 and that's actually like a more important financial tool. So anyways, I guess I'm rambling. But like I 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. 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. Yeah. When people are seeing their like interest rates and their savings accounts or even in compound, like they're not, the interest rates that are.

Starting point is 00:11:39 getting from compound, they're not daydreaming about any like villa in some like exotic part of the world, right? But like if with their winnings and pool together, perhaps they actually could do that. But actually to me, 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. That's so why you should deposit into pool together. So why is it true that you can actually get a better? return on investment with pool together over the long term. Yeah. So there's there's two, there's a really interesting mechanism called the reserve. So basically what happens is a

Starting point is 00:12:19 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 USC 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 is sorry it's not eligible to win and is contributing interest to the prize and so what that does is it effectively it raises the effective APR because you have you have 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

Starting point is 00:13:07 was added to the reserve. And, you know, next week it'll be like another 50 or 60,000 dollars. And so, you know, you can do the math over the course of a year. That's going to be millions of dollars that's going in there. So it's a really cool perpetual growth mechanism that basically raises the yield to always be higher. On top of that, which we haven't actually talked about too, at least right now, all depositors into pool together are also receiving the pool token, which governs a protocol. They get that for free. well. And so that's actually kind of changes it. The economics even more. Right. So the, the reserve or the, is it the reserve or the sponsors? Yeah, the reserve. It's the reserve rate.

Starting point is 00:13:49 The reserve rate creates the sponsorship. Yeah. Right. 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 Dye or USC 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 fact we can make it reward us that contract rewards the participants and so what's happening is that there is a like how much did you say like one third of the die inside of a a lottery is actually just part of the reserve or is that well I was I was talking about the

Starting point is 00:14:39 the USC price pool so like as of today that has like a half a little over a half million dollars in the reserve so it's like it's like having like 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 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 yeah yeah and like you said it's really cool because it is it's this perpetual

Starting point is 00:15:22 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 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 one dollar into pool together and then claim all of the interest of the reserve which is growing pretty pretty de-fests.

Starting point is 00:16:02 $5,000. Yeah. And now it's growing, yeah, which in a few months, millions of dollars. So you would be effectively earning the interest on all that money. Yeah. For free. Yeah, for free. How fast has that grown?

Starting point is 00:16:13 What was the reserve size like just a few months ago? Well, it's, I mean, it's grown fast. So this is actually something that governance just activated, like literally a couple, a few weeks ago. And so right now, right now across the protocol, it's growing a little over $100,000 a week. And so in most sets in the stable coins, like the dye and the USC. So like I said, just today, the USDA grew by $64,000.

Starting point is 00:16:45 And die is on track to grow about like $50,000 this week. So, you know, yeah, let's just call it $100,000 a week right now. So we're looking at, you know, $5 million a year. 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.

Starting point is 00:17:08 It was sometime recently, right? Yeah, it's very recent. And that's another thing, right? So pool together has been around for a long time, but the token is only in the last like 12 weeks. So 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

Starting point is 00:17:34 ink 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. 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 was 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 when we felt like it was in a good place where it could sustain itself without us needing to contribute to it,

Starting point is 00:18:12 that's when we decentralized with the pool token. And so that was about 12 weeks ago. And yeah, we did a large retroactive air drop that went to everyone who had ever used the protocol. And additionally started an initial pool distribution to all. depositors. So we really love this idea of user ownership, obviously. And I think it's really cool, this concept of like, if you deposit into pool 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 anything else. You don't do any staking or any, like crazy stuff. And so, um, you that's, that's been a big catalyst for growth. You, yeah, you do have

Starting point is 00:18:53 claim it, yes. But you do, um, yeah, yeah. But you don't, you just any, any, any regular deposit will start earning the pool token. And so that's live right now. That's even an additional reward on top of the already slightly juiced reward from the pooled together lottery. So you also are getting a token. Right. And the token comes to you no matter what, just a very stable, we're not not stable, but like a weekly distribution rather than a lottery mechanism, right? There's no the there's no lottery mechanism for the winner. Correct. Correct. Correct. Correct. Yeah. So I think since we've launched, the, like, effective, like, APR has been, like, 20 in the 20 to 40% range on, like, the stable coin pools for the last, like, 12 weeks. But, you know,

Starting point is 00:19:39 but as more capital goes in, that obviously kind of evens out. And so in its current form, what does the pool token actually govern over? 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 prize pool. So like this reserve rate I was talking about, it controls the reserves. It sets the reserve rate, how much of each prize should go back into the reserve. It controls the prize pools in terms of like how many winners are there per week, how often our prize is awarded. The governance can change those parameters. It also controls about half of the total pool token supply is still is undistributed and it's under the control of the pool

Starting point is 00:20:27 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 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 networks, L2s. And so that's the other thing that the pool token holders also control. And so where, let's talk about the integrations there. If, if, if, uh, just to make sure we check that box is where does yield actually come

Starting point is 00:21:07 from from pool to, uh, for pool together? So the, the four, the four no loss price pools you see right now, if you go to the, uh, website, those are all compound. They use compound as yield source, but, um, there's a lot of new yield sources that, uh, are being integrated right now. So AVE actually is launching this week. So, um, there'll be Avey as a yield. source, urn, iron finance integration is being audited right now. There's an integration with like

Starting point is 00:21:37 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, Avey, you know, a staking one, Rari, there's all sorts of them. It can be integrated with any of those yield sources so people can then create their own no loss prize pools using that yield source. And so the reserve, there's one reserve for every single yield source as well, right? Or is it for every single asset? 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's how that works. Okay. So there will be many, many, many,

Starting point is 00:22:27 different reserves that the pool token governs over all of them collectively? Correct, correct. Yeah. So that's actually kind of a cool thing too. So like right now, the the primary no loss prize pools are die USDC comp and uni. And so the reserve is accruing all of those tokens. It's accruing die USDC comp and uni. It accrues whatever the native token being generated is. And so as like a sushi pool comes online or 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.

Starting point is 00:23:03 Right. Okay. And so this is where Highgate 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 governed over the growing pool, right? And 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.

Starting point is 00:23:28 So take that with a grain of salt. But it's like a relatively simple app to build. Yeah. 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. And you can see how big they are and how fast they are growing. And to me, to evaluate pool together, it would actually be relatively simple. It's a relatively simple calculation that is some sort of premium on top of yield, aggregate yield inside of defy.

Starting point is 00:24:01 And so in theory, pool together, pool to pool 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 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,

Starting point is 00:24:18 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 just want them. And in theory, that is possible to do by 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.

Starting point is 00:24:46 Yes. Yeah, for sure. So, I mean, you know, anyone who hangs in out 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 future valuations or anything like that. But I do. But you do. But in theory, you're correct.

Starting point is 00:25:03 I mean, at the end of the day, the honest reality is the pool token holders do control this protocol. And, you know, we've had six governance proposals at this point. And I still haven't even voted in any of them. And so, which is a great thing. And so, yeah, in theory, all this is possible. And there's something else I wanted to say about. that. Well, I do, I do certainly think it, I view it sort of, sort of like an endowment where

Starting point is 00:25:27 the idea is that, you know, 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. And then, you know, bring that back to, 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, with, once you have like a large amount of capital, it's sort of just there to generate yield. Right. There's, I can't remember who said this line. I think it was like Chris Berniske, but like at maturity, all defy

Starting point is 00:26:05 apps turns into into on-chain like VC funds or or not hedge funds. Has funds. Yeah, it kind of is true. I mean, that's kind of what urine is for sure, right? And it's actually interesting with urine too, because like urine deposits into pool together, but then we also pooled together, also uses urine as a yield source or is going to use urine with this integration. And so there's, yeah, there's definitely an interesting, I think that's pretty true. Yeah. So what else has pulled together have in its roadmap? What do you guys have lined up next? Well, I mean, there's a lot of people working on a lot of different things. I'm privileged to be, you know, I definitely get to hear about them. So one thing that I wanted to mention, because it's launching today,

Starting point is 00:26:49 which I'm super excited about is 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 D5. They're launching a direct integration so you can deposit directly from your bank account into pool together for people who are in the United States. And so that's something I'm really, really excited about. So everyone should download a Dharma app and try it out.

Starting point is 00:27:13 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 like integrations that make it easier to get into, easier to deposit and or cheaper to deposit. Gas fees are obviously a huge problem. So there's a lot of people who are working on, like Daum was an example of that. There's also this thing called pods, which is launching. Another really cool thing where basically it groups people to take this 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. So that's on the front end.

Starting point is 00:27:47 Those are some of the big things. And then on the back, back end, it's mostly integration into new yield sources, launching new prize pools with new asset types, and deploying to new like layer twos. So those are sort of the main things going on. Right. And those on ramps are critically important, right? Because just aligned with a pooled 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 link savings accounts like elsewhere in the legacy world, like that's massive. And all we need to do to help export the strong premiums that pool together is offering comparative to those things. Right.

Starting point is 00:28:31 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 they in retail is going to expect a user experience that is comparable to what they are coming from, which is things like Robin Hood 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 pool together just coming from Dharma.

Starting point is 00:29:05 Yeah. Yeah. I mean, it's definitely a different, you know, it's not, it's not the whales. It's going to be more of the mass adoption. But I do think, I think, you know, what you said, pool together is very simple. And so I think it is an ideal on-ramp for new people into defy for like a first defy protocol to try out because you don't have to put in you can put in $100 and it still makes sense. And so I'm really, really excited for the Darwin integration. Ding.

Starting point is 00:29:28 That was a nice pun that you just made out. I don't know if you caught that one. Did I? I don't think I did. You put in $100 and it still makes sense. Yeah, okay. Now I get it. You're thinking faster than I am.

Starting point is 00:29:42 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 100 hoops. Hey guys, I hope you're enjoying the interview with Leighton so far. We get into the subject of pods and how pods allow users of pool 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? Paws are super cool. We also talk about L2s and also future innovations coming out of the pool together app.

Starting point is 00:30:27 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. AVE is a borrowing and lending protocol on Ethereum and just recently released AVE version 2, which has a ton of cool new features that makes using Avey. even more powerful. With AVE, you can leverage the full power of defy money Legos, yield, and composability all in one application. On AVE, 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

Starting point is 00:31:03 my portfolio of a number of different defy 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 AVE'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 AVE. AVE 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 AVE at AVE.com.

Starting point is 00:31:33 That's AAVE.AVE.com. Balancer is DFI's most powerful automated market maker. Typical AIMs just have two tokens inside of one liquidity pool, which can lead to fractured liquidity across the many pairs of the Depi. 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,

Starting point is 00:32:00 Balancer lets you collect fees from traders who use your portfolio for liquidity. Additionally, Balancer smart 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 BAPT 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 yielding defy without sacrificing liquidity in the pool. To top things off, Bouncer is reimbursing all gas costs with BAL rewards, meaning that all your gas costs are returned to your wallet with the Balancer governance token.

Starting point is 00:32:39 Balancer's mission is to become the primary source of liquidity in D5, by providing the most flexible and powerful platform for asset management and decentralized exchange. 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 DFI. Say we wanted to pool our money together. How would we use pods to get that done?

Starting point is 00:33:08 Yeah, so Pod serves two functions. like I said, one is it batches deposits, which is, um, lowers transaction costs. So it lowers transaction costs to deposit by about like 80%. Um, but the other function, which is really fun is basically if you deposit into a pod and any of the, any of the deposits in that pod win, uh, 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 thing, 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

Starting point is 00:33:45 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. 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. It just distributed, not every second, but instead like once a week. So there's a lot of interesting things there. But yeah, that's the idea of pods.

Starting point is 00:34:18 So I'm really excited about that. I think it introduces like a cool social dimension to it too. And those should also be going live this week too. There's been a developer, Kames, who's been working on that. And he's been working for several weeks. And I think he's almost done. to me the cool thing about pods is that it allows depositors to really choose their risk spectrum right so they say like what you just says like well if they're if they have money in every single pod well then they

Starting point is 00:34:47 are just aggregating they are just getting an aggregate of all pool 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 a solo which is like right or one point 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. 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. Yeah. Yeah. And I love that. And I, yeah, I say it's a reward spectrum, right?

Starting point is 00:35:25 Because there's, I would like to say there's no risk, right? Because regardless, 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. Do you have any opinions or ideas as to who is really going to use pods first

Starting point is 00:35:56 or what type of other, maybe other defy apps or cohorts of individuals? that would really find pods useful? I mean, 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 defy 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 together is very popular and like,

Starting point is 00:36:30 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 defy, but just don't, they're priced out because of gas. And this will be helping them have a way to get access to a better yield. Is there a layer two conversation to be had with pool together?

Starting point is 00:36:55 Yeah, well, we're already deployed on, we're deployed in Polygon, and that's going to be launching with integrations to the Ave deployment on Polygon. And so that will also be obviously lower transaction costs, plan to use optimism when that launches. So the basic strategy is sort of like deploy it on all of the EVM compatible blockchains out there. 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 card settle.

Starting point is 00:37:24 Right, right, yeah. Yeah, let people, let people, yeah, make sure it's there for people to use. And I think, you know, right now, though, you know, I think Polygons got a lot of traction, especially with this new ABE 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 skilled, let's call it scalability summer. I was just going to call it Defy Summer round two, but I do like scalability summer. That does roll off the tongue. I would like Defy summer round too as well. Either way, those both sound fun.

Starting point is 00:37:57 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? That's good question. I think we've covered most of the basis. 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.

Starting point is 00:38:19 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 I think that's the main thing. And yeah, yeah, I think I think we covered the big points. Do you have people in the pool together, like pull together Discord trying to find each other to make a pod together? Have you seen that? You haven't seen that.

Starting point is 00:38:40 Yeah, I think we'll probably see that one it officially launches because it's officially. Oh, that's right. That's right. It hasn't launched yet. 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.

Starting point is 00:38:52 Like, do we end up with one really big one or do we end up with like, you know, 100 small ones? Right. We'll probably be somewhat aggregated because of, just because gas costs. 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 Dow. It's like a pool together Dow that's dedicated for pool 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.

Starting point is 00:39:24 right right yeah for sure i mean there's been a lot of people have been interested in like um 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 all if it wins all the money is given away stuff like that is also i think really interesting no lot no loss donations right yes yes yes uh here's one thing that we haven't actually talked about uh what is pl l die well okay uh it's basically your token 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 it's no loss. And so it's actually the ticker technically is now PT die.

Starting point is 00:40:08 It was PL die. Oh, now is PT. PG die, yeah. But so PT die is your tokenized balance in pool together. And so you can transfer that or do whatever you want. Is that fungible with other people's PT die? Because how do we claim? Okay, so how does the winnings work with PT die?

Starting point is 00:40:30 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. Okay. Is it, and PT die is transferable, right? Right. So if I transfer the PT die, then how do I get the winnings? Because I've given away my deposit. Oh, so are you talking about like with a pod?

Starting point is 00:40:54 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. Right. And then I send that PT die to my friend. Right. Who has the claim on that deposits? My friend does, right? Your friend does, yeah, yeah.

Starting point is 00:41:07 Right. And so if, if, and so my friend now, say, say that the deposits win the lottery. And but now my friend gets to, gets the winnings, right? Whoever I sent that PT die to. Right. And so how does, how does he or she? to get that money. How is the winnings actually associated with specific PT die out there if all the

Starting point is 00:41:32 PT die out there is fungible? Or is it just to the Ethereum address that holds PT die? Is that how the lottery winners? Right. Right. So 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, when the winner is chosen, which is done, it's done using the

Starting point is 00:42:02 random number generated by chain link, when the winner's chosen using that random number generated by chain link, if it, if the index, if the number of the index falls on that deposit, that's how the protocol knows who to award the, the accrued interest to. And it's awarded, it's literally, it transfers the action of awarding the prize, that transaction actually sends that out to all the people who won. Okay. Okay. So what if what if I have my PT die like the collateralize inside of MakerDAO? And then like then if you guys sent the winnings there, I wouldn't be able to go get that. Right. Right. So that's actually yeah, that's actually a very good observation. And that is like a problem to be solved really. And that's that's part of what actually Pods does

Starting point is 00:42:49 though is positive solutions that because it makes it pods operates in a different way. And that's, 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 uniswap would win if those won. And so there are a few things that we're looking at in terms of like you could be able to like wrap them or things like that to be able to get like used them as collateral. but that's definitely an outstanding problem to be solved. Yeah, perhaps a call to the community to help solve such a problem.

Starting point is 00:43:30 For sure. For sure. Well, I mean, I sent a tweet out a little while ago and I was like, if anyone can figure this out, they'll immediately have like $200 million of deposits on their platform, right? Because there's so many people who have deposits and pooled together. 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 deposits. Right, right. Yeah, the more and more capital efficient that pool together becomes, the more capital will be deposited there. Really, really interesting. Layton, this is a pool together has always been one of my favorite defy apps.

Starting point is 00:44:03 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? 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 defy hopefully that's true but uh i don't know we'll see there's a lot of nice communities in defy but um anyways yeah i would say discord is like it's like the best place um and you know follow follow us pool together there's a couple different accounts on twitter that the community run and so um it would be

Starting point is 00:44:41 awesome to stay in touch that way too cool and if you have ever used pooled together before and you have not claimed the airdrop definitely go do that because there's There's a pool together air drop for you. Yes, that's a great point. Yeah, and start participating in the governance. It's a very active, very active governance. So it would be awesome to do that. Awesome.

Starting point is 00:45:01 Leighton. Well, thanks for coming on at 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. I do. It's lay ton, lay 2,000 pounds. L-A-Y-2-0-0-L-D-S.

Starting point is 00:45:17 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. Awesome. And all those links will be in at the show notes. All right.

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Bankless - PoolTogether - Leighton Cusack | Meet the Nation

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