"How to make everyone rich: the future of no-loss prize games" - Leighton Cusack

in cusack from pool together he's going to be talking to us about how to make everyone rich the future of no loss prize games leighton i'll let you take it away awesome just let me get my screen share going here um so yeah thank you so much for having me and shout out to all the people bloody global uh it's such an awesome event and for those of you who may not know for uh pool together which is a protocol that i spend a lot of time working on um it actually started at any global event so i hope everyone's inspired and i'm really excited about what's going to come out of out of this event um so this talk is going to be about how to make everyone rich the future of no law surprise games um i'm really excited about it i spent a lot of time trying to prepare it for you so hopefully it's good um i'm going to talk about three main points in this presentation the first is going to be basically just defining what are no loss prize games sort of a weird term and i want to talk about what it is the second is going to be making the argument for why no loss prize games are actually a incredibly differentiated and really important economic tool to make everyone rich um and the third is going to be talking about the current state of no loss prize games on ethereum specifically and it's going to be more of a call to action really to the community on this call to um to kind of show showcase what is possible and um uh yeah showcase what is possible and what we can do uh with with no less kids on ethereum so um with that in mind let me jump in to this first part of the presentation what are no loss prize games and this is a pretty simple uh definition i have for you which is they are no loss savings accounts offering the chance to win prizes so a typical savings account right you deposit money and it has a couple attributes you don't lose that money you deposit and you can take that money out whenever you want to it also has a third attribute which is that you earn some form of return on your money if you're in typical legacy finance that's going to be less than one percent and if you're in d5 maybe that's a bit more and if you're in yield for me maybe it's even greater but that's that's sort of what a savings account is um what a uh what a prize game is it is it has the same characteristics as a savings account in the sense of you have no loss and you can withdraw your money at any time but instead of earning an interest return that's just applied in the capital you have a chance to win prizes and those prizes are derived from the interest that accrues on everyone's deposit to capital which means the prices can actually be in hundreds of thousands millions even billions of dollars is realistic um because there's so much capital that's that's accruing accruing money so that's the the simple definition of what no loss prize games are and i want to talk about why i believe these are uniquely suited to make help make people wealthy um i think a lot of people when they first hear no lost prize games they kind of think that's like a cool concept it's sort of like nifty it's maybe gimmicky would be a word you used to describe it so it sounds interesting but it also doesn't necessarily sound super important and this is the argument i'm going to try and make to you right now is that it actually is the very important and highly differentiated um financial tool um that we need a lot more of so to make that argument let's first look at this this is the typical risk return profile right so the number one rule of investing you go to investing 101 it's that the more risk you take on the more potential return you have the less risk you take on the lower potential return so at the very bottom you have like a savings account right that's super low risk you should never lose your money super low return as you go up you have like your front startup which would be a much higher risk and much higher return so this is um you know what all financial products there's only a few things listed here but you could map all financial products on this risk return curve what's really interesting about no loss price games is they actually break this fundamental rule of investing because it's a product that has again no loss as a risk profile that's the same as a savings account but it has a return potential that is um exponentially higher it's it's actually like investing in your friend's startup or investing in even like a normal lottery right that's like what the return potential is now obviously the caveat here it has higher variance right so you don't win every time but it does have a return potential so the point i want to make is that these products these financial products that are on this line right savings accounts bonds stocks those products work really well if you're already rich and if you want to be richer that's who those products are designed for um so for example right let's look at a savings account if you're earning five percent apr and a million dollars that's 50 000 a year that's pretty cool that actually is going to be meaningful to you you could live off that but if you only have a thousand dollars in savings and you're earning five percent a year that's only fifty dollars a year it's not going to really meaningfully move the needle on your financial picture so these so a savings account works well if you're already wealthy it works well for compound wealth it does not work well if you're not already wealthy um going up to like the other extreme example investing in a startup right if you're wealthy this works well why because you don't need instant access to your capital if you have a flat tire you don't need to liquidate your stocks to pay to fix that flat tire right so you have long-term time horizons with um an ability to lock capital for a long time um in in conversely though if you're if you're poor again right you don't have that opportunity because you need even your your the capital that you have essentially is your savings your investing capital your savings capital or the same bucket and so you can't lock money away because what happens if you do get a flat tire you have a medical emergency you need access to that capital right away so most financial products are built for people who are already wealthy they're built to make help rich people get richer and that's i don't say that in a bad way like that probably sounds really bad but i just think it's a statement of fact right if you look at like what are prep what are the preferences for people who already have a lot of money and what are products built to these people these people can tolerate loss right long-term time horizons they don't need instant access to their capital and they want compounding returns if you already have a lot of money you're just looking to grow your money right you you're just trying to go from a million to 1.1 1.2 etc people who have very little cash they have a totally different need matrix right totally different preferences they need no loss because their cash again their cash investments are their savings so you can't risk it they need instant liquidity they can't lock it up for a long time and compounding returns just don't work if you only have a thousand dollars if you only have 100 if you only have ten dollars it doesn't matter what your compounding rate is it will not work you need an opportunity for outsized returns so this is all the economic argument for why no loss prize games are actually a very highly differentiated um financial product from an economic perspective and why they are so important to help people create wealth once people create wealth obviously they can graduate into other traditional financial products that help rich people get more wealth but um but this is the economic perspective on it so that's one half of the argument the other half i want to just touch on a bit more briefly is the psychological side right so why are no lost prize games really important psychologically so psychologically speaking uh the financial tools we have in our world broadly fall in two categories right you have ones that are fun but destroy your wealth so that would be like lotteries gambling sports bettings you could think of this mathematically as like negative expected value financial activities but they're very enjoyable because they take human psychology seriously they're built around human psychology and then you have products that are designed by economists right every economist will tell you or a financial advisor will tell you just put your money in a 401k put it in an index fund you'll be fine obviously if you're on this call you probably already ignore that advice but um you have products that are very boring they don't take human psychology seriously but they're helpful for wealth creation they're economically sensible there's very few things that bridge this divide because economics typically or financial products typically don't take psychology very seriously and um and these fun wealthy destroying products don't take economics very seriously and so no loss prizes games really sit at a very interesting intersection where it is both fun and wealth creating it's using the elements that make wealth destroying activities fun which is chance variance unpredictability the the opportunity for outsize meaningful returns and it's combining that with a action a behavior that's actually healthy um one example of this from um from a no loss price game that's on the blockchain right now is a user who deposited ten dollars had it for 30 days in in the prize pool they could remove it at any time and they won 1600 right so there's no other financial product that offers that opportunity right what else could that user have done sure they could have maybe bought bought a token that potentially would accrue that much value over that time frame but you would still have that the risk of loss so for these two reasons there's an economic reason the psychological reason i think no loss prize games are actually a very highly differentiated and very important economic primitive and it's one that does exist in the real world um although it hasn't been fully i don't think built out to what it could be and it exists in the blockchain world a little bit but not very much so i want to talk about now transition talking about where we're at with no lost price games on on ethereum um so pool together is a protocol for no loss price games on ethereum it was launched about one year ago and it's a protocol to really help developers and users explore this design space this really highly segmented space of high potential return high variance low risk financial products um and this you know i wanted to kind of give a summary of where we're at right now and pooled together as it's currently um instantiated has found a decent level of success in the ethereum space there's 12 000 users of the protocol which if you um compare that to you know that's more than synthetics or instadap or some other of these very awesome and well established protocols 33 000 and prizes have been given out by the protocol and it has a very large global popularity footprint um particularly actually outside of like western english-speaking markets it's actually it's actually much more popular outside of english-speaking countries um so that's kind of where we're at right now um but the the problem is that we're really only only scratching the surface of what's possible with no lost prize games and that's why i'm here talking to hopefully a bunch of engineers and developers and and creators who are interested in pushing the space forward so right now there's only two no loss prize games on the protocol one is a die prize pool that's weekly and has one single winner and one is a usdc prize pool that's daily and has one single winner so what i'm really excited to talk to you guys about today is pool together v3 which is the new version of the protocol it open that is designed to open the universe for pro no loss uh prize games and it's actually launching in conjunction it's gonna be on main launching next week but uh there's actually already some hackers uh who maybe are on this call who are in east global we have some bounties who are who are hacking on the protocol right now so i want to talk a little bit now just about v3 what what's now possible with no lost prize games and um and yeah that's pretty actually pretty much what i want to talk about um so the v3 enables a whole new world of different prize game varieties so i mentioned right now right there's these two prize games there's one that's in die one that's in usdc they're both single a single winner one has a weekly time frame one has a daily time frame with the v3 what it does is it enables developers to create their own prize games and um developers can uh manipulate these three kind of core parameters which sound very simple but there's a lot of room for creativity here so the first is frequency this is maybe the most simple one how often is the price triggered right it could be every minute it could be every hour it could be every day it could be every year so you can choose you can choose that the second is yield sources um thus far the protocol has only been using compound but the um the v3 of the pull together protocol is already integrated with both compound and also y-iron volts and also um we're obviously working on a lot more integrations will be integrated with ave and um and a lot of other yield sources so the idea here is that the pools again the protocol sits as really this no loss gamification layer on top of all these yield sources so yield source is another way developers can um can change things the final thing here is the place that has the most room for um really interesting creativity prize distribution so this refers to basically both how many how much people win how many winners there are and how winners are determined right so you can imagine a prize pool like we have right now has one random winner a week or you could have one that has 100 random winners a week or you could have one where everyone wins um a one percent return and one person wins you know all the rest or you could have one where um half of the money goes to a community managed dao and half the money goes to a random winner or half the money goes to bitcoin grants and half the money goes to a winner so there's all sorts of prize game varieties that can now be created with the pool together v3 protocol so this is kind of the playground for developers to work with the other thing i want to touch on is the v3 protocol also really upgrades the actual prize pool experience for the user so there's a few uh major new features here that i just wanted to highlight um one is um prize the prize games can have the um the the the way it's designed is the the prize pool is a non-custodial contract you'll see that at the bottom there are no admin keys so people deposit their funds into this contract it's not upgradable which is awesome makes it much more decentralized and secure but um the price strategy which determines how winnings are distributed is a contract that is upgradable so what can happen then is people can you know change the parameters of how prices are distributed via community vote um once a prize game has already been established so those are both two those are kind of the first and bottom those are both really awesome new features of the prize pools we've also built in what i'm most excited about referral rewards and deposit rewards into the prize pools themselves um so that's awesome obviously that's a huge part of growth in any type of financial product in the legacy system so it makes sense that we would replicate that in in in on a blockchain enabled financial product and so that's actually built in at the protocol lever level level sorry and uh improved randomness functionality with chain link sorry so lose my voice there a little bit um okay so that is the that's where we're at with um with the v3 and where we're at with no loss price games on ethereum so hopefully what you've gotten from this talk is that no law surprise games are very important and that um you now have an amazing tool to bring these to the world and i think that there's a lot of creativity that's been unexplored even in just replicating what's already existing in the mainstream financial system but also in using these tools to create something that's far far better so that's uh that's the conclusion of my talk here and i want to open it up for um any questions uh thank you so much lane for for that amazing talk i think uh you kind of did a really good overview of how people can take advantage of this thing um so we have a couple questions coming in but also given our delay here i'll also encourage everybody who's uh going to hear this thing in 30 seconds to post more questions in the chat um so we can cue them up as well one of the first questions that i have for you is uh uh can the interest be distributed back into uh back to all the the players playing uh in edi or or any other token and kind of how does that work yeah so it can um technically not a die just because they we haven't integrated with avi yet but we will um that'll be done soon i actually think someone at the hackathon is working on it right now but you could do it with um the other real sorry i'm really losing my voice the other yield sources that we've we've done so that is technically possible awesome so i think we're compiling the list of some of the other ones i'm really i need to break i'm having a hard time having a hard time i guess i'm used to quarantine i don't talk too much don't worry so let's see so one question kind of we're seeing is uh maybe an equivalent of like a free writer problem um and this this is defined interestingly which is if you're going to put money into the pool uh late uh you still get the same chances to to win and it's still like the equal probability uh that goes on for that uh participant so can have you given thought about sort of waiting or giving some more tickets to the early depositors or kind of like just making it uh sort of like an unfair game to the advantage people were actually in in first yeah so i mean we haven't thought about that too much but i think that's the beauty of like this v3 is all of those types of things can be implemented via a custom via the prize strategy and so what if that's what the community wants they can come and say hey let's let's update the prize strategy to to have this sort of special waiting or this sort of special selection mechanism and that can all be done and um so personally i haven't given a thought to that but i think that's a really exciting idea and and and now that's actually possible to build um it's it's a really big playground that's why i mean when you hear like those three parameters it doesn't sound like that much but it actually is like there's a lot you can do with that no it's amazing i think this is kind of uh the perfect answer to that the platform lets you do that even though pulled together as the app the way team designs it is not prioritizing it uh so that's awesome another question we have is uh uh obviously we're uh defy's uh kind of uh known for the money lego uh yeah the theme here um and then you were kind of leveraging a lot of these uh building blocks from other protocols to offer these returns right now pull together uses a compound um kind of how do you think about integrating other sort of protocols uh to either get anyone from our safety to a bigger reward for the participants and sort of what kind of goes into these types of decisions as you think about it yeah so um i mean the main decision obviously is like is risk right if you're doing no loss you're going to try and minimize risk but um i should say the v3 protocol does have already wired vaults integrated into it so as compound and wiring as a two um so we're mostly looking at risk we're looking at differentiation in terms of like assets that are offered and also we're looking at returns obviously that's the obvious one so those are the i i i do think we're hoping that um i think when it comes to like community and governance that yield sources and like what yield sources are approved to be used by the pool builder will be like one of the main points of that um because i see it as a you know parallel to if ave or if compound is like adding a new um a new collateral type that's a really important decision for that platform if we pull together adding a new yield source is like equally equivalent in importance and i think we want to make sure it's no loss like that's the only non-negotiable and then right beyond we're looking at those other factors and in a way it's battle tested uh because you have to uh think about it from the security standpoint uh that makes a lot of sense yeah again i think it's just uh another question is sort of on the central line so maybe if you have any additional lines to comments on that'll be great but if not i think you sort of answered it already but sort of like when you are making these types of decisions like how do you think about uh you as the pull together team making these integrations work versus sort of just opening it up for anybody else to plug in and to having uh that be uh the way other liquidity providers coming and come into to interface with the the protocol yeah um well i mean it is open right in the sense like it's open-source software anyone can do it i do think that what we we would like to have a we would like to build a community around the around the protocol that does um gatekeep to some degree the yield sources because the yield sources is the number one risk right for people if people deposit into a yield source that doesn't secure their money it's no longer no loss so yes people can come and obviously take the code and and and hook it up to whatever source they want but i do think it's important to steward a community around the pool together protocol that does say yes we want to be as open as possible but also we're going to try and safeguard users users funds now absolutely um and kind of one of the things that i really like about pull together is that you've effectively sort of unlocked a whole new different part of the audience uh that ideally would not jump into crypto uh first because of the risks or just that the lack of sort of deep know-how on how to how do these things work so uh what's going to be in your experience like uh sort of making pool together and and sort of putting in front of people who may not necessarily understand crypto or really realize kind of how old this thing works in the background but overall get the the point of no loss uh lottery yeah well it's been super fun i mean i think people people love it right i mean it's a very intuitive idea and um it's been really really i love educating people and so i i love it and like it's been cool with obviously the coolest thing that's happened in space in like last six weeks is you just swapped right with the token and like it was really cool because a bunch of people had used unit swap solely in a white label fashion on pool together's website and so like we got to go back like through all those emails with all those people who are like i have no idea what i just did and tell them like hey now you have this you swap airdrop so um i don't know that's just a fun little anecdote but like it's really fun to bring people into the space and help them understand like how cool this is any any uh other surprises you've seen from uh just what uh your users react to uh surprise um sorry to put you on the spot but how long people keep their money in the pool like people it's like 80 percent of people who have deposited and pulled together have never withdrawn and sure like yes the gas speeds are a factor there but that was even before gas fees so it is really interesting how sticky the capital is and i think that does point to like right now google together isn't probably reaching like the the the deep id10 so much right it's reaching more like the urgent wallet users or the people who just are like crypto curious and it's it's more that so i think i think um i guess maybe my encouragement to like the builders to turn it around a little bit is is that um remember that like crypto twitter is not your it means nothing like it's it's a cool thing but like there's a lot of people who are not on it and there's a lot of ideas that get recycled and recycled and recycled because we're all hearing the same thing don't be afraid to like come up with a different idea and appeal to a different audience and like maybe you won't get as many like twitter followers but it might still be really rewarding i would trade uh providing value to people over twitter followers any day and on that note please follow leighton and myself on twitter um it was a wonderful uh wonderful message to end on and i wanted to