Everything about PoolTogether: the crypto lottery where you never lose

by Mar 9, 2023Blockchain Technology0 comments

With the emergence of decentralized finance (DeFi), peer-to-peer financial solutions have been developed, allowing users to lend cryptocurrency to other users and stake money in liquidity pools to facilitate trading. However, this one does not make much sense at first. Everybody who buys a ticket for the PoolTogether lottery can win a hoard of cryptocurrency, but even if you don’t win, you don’t lose any of the money you paid to join. In actuality, your tickets keep entering the subsequent drawing repeatedly. You can’t lose money except for transaction costs you must pay to enter. Yet you could succeed. Maybe.

Users give up less potential income in exchange for a possible prize, combining traditional lottery systems and cryptocurrency staking. This is how it goes.

What is PoolTogether?

PoolTogether

Users may deposit money into pools on the Ethereum-based lottery platform PoolTogether to purchase tickets. The weekly drawing for each collection offers a prize pool of up to five winners, but your tickets remain valid after the picture. Instead, the tickets carry over to the following drawing, the one after that, and so on until a winner is declared or the pool money is withdrawn.

It’s a no-loss lottery: you might not win, but you can’t lose. In addition, PoolTogether refers to it as a “prize savings” strategy since you can be rewarded for keeping your cryptocurrency earnings rather than spending them elsewhere.

How does PoolTogether work?

A common feature of cryptocurrencies is staking, which enables users to lock up cash inside the network to provide liquidity in exchange for a staking incentive that resembles interest. This idea is applied on a wide scale as a lottery by PoolTogether. Users stake their money into the pools using the DeFi platform Compound, and the interest earned pays out in lottery prizes.

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Staking benefits differ depending on the currency, but when many players participate and keep their money pooled over time, it adds up to substantial jackpot amounts. Without any user intervention, automated smart contracts choose the winners and maintain everyone else’s enrollment in the most recent weekly lotteries.

What makes it so unique?

PoolTogether is giving the traditional lottery a modern makeover, just like DeFi has transformed other conventional financial services. But, the worst aspect of playing the lottery is eliminated: the steadily increasing money paid on single-use tickets.

As long as you maintain your money in the pool, you will continue to be entered in the weekly drawings despite having to pay transaction fees to enter and exit the pools.

How to begin using PoolTogether

PoolTogether

You may play without creating an account by going to the PoolTogether website and connecting your bitcoin wallet. Several well-known choices are supported by PoolTogether, including MetaMask, Coinbase Wallet, Trezor, Ledger, and Trust Wallet.

To contribute the desired coins, go to the Pools listing and click the Deposit option. At of this writing, PoolTogether provides several pools, each with its weekly reward given to the winner, including collections for Dollar Coin (USDC), DAI, SushiSwap (SUSHI), Compound (COMP), and Uniswap (UNI) (s).

You must authorize the transaction using your wallet and pay the transaction fee in ETH after entering the amount of the chosen cryptocurrency you intend to deposit. Users must maintain their money in a pool for at least ten days to avoid paying a charge for early withdrawals on PoolTogether.

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What drawbacks are there?

There are no known hazards because your money is secure, PoolTogether has been operating effectively for a while, and it is not a fraud. But, there are a few drawbacks to consider. Due to the high demand on the Ethereum network, transaction costs can be expensive. If you deposit a few dollars’ worths of cryptocurrency into a pool, paying the transaction fee can cost you more.

However, locking and leaving your bitcoin in a pool has an opportunity cost. Instead of using that money to make a little profit by staking them or providing liquidity through a decentralized exchange, you’re pooling them in the hopes of striking it rich. And last, purchasing more tickets dramatically increases your odds of winning, which may help the wealthy accumulate wealth. Anybody who participates, however, has a chance to win.

What does a POOL token mean?

POOL, a governance token introduced in February 2021, enables holders to vote on ideas influencing PoolTogether’s development. Voting by users may change how prizes are given out, which pools the website runs, and how POOL is distributed in the future to users. During its debut, the website airdropped POOL tokens to early users, and POOL was subsequently given out to PoolTogether users.

Where can one purchase POOL?

You may buy POOL from a few exchanges and earn POOL by using PoolTogether. The well-known decentralized exchange Uniswap allows you to trade Ethereum-based tokens for it, while businesses like Gate.io and 1inch let you purchase it. But, it is not generally accessible.

Here’s an illustration of how to buy POOL on Uniswap. You will have to exchange ETH or another token based on Ethereum for it. Choose the quantity of POOL you would like to purchase, and the website will calculate your required payment according to the current exchange rate. You should be good to go after clicking swap, approving the transaction in your wallet, and paying the transaction fee.

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The future:

PoolTogether enabled token holders to vote on the site’s growth and evolution with the introduction of POOL, opening up future governance to the community. PoolTogether has partnered with companies like the well-known DEX SushiSwap and blockchain platform The Graph to build additional interfaces and pools. It has also hosted an auditing event to ensure its technology is secure.

Increasing Ethereum transaction costs is a potential issue since they may vary significantly and be highly substantial. In researching and writing this piece, we noticed transaction costs of between $5 and $35, and that was for an intended transaction that added just $5 worth of DAI to a pool.

Conclusion

The upcoming Ethereum 2.0 network update in London should help stabilize the costs, and as the network grows to handle more activity, Ethereum 2.0 might result in significantly cheaper fees.

An indication of future changes for the network may be the April 2021 launch of PoolTogether’s pool for the Ethereum sidechain Polygon (MATIC), which has substantially lower fees than the Ethereum mainnet pools.

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