PoolTogether Review – Is This a Legit dApp or Another Scam?

By January 27, 2020 DApps
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pooltogether

PoolTogether is a no-loss, savings game built on top of Ethereum blockchain. It is prompting people to save money while adding randomness factor to it – Pool Together is a lossless lottery designed in such a way that there are no losers.

Each year, endless hope and a lot of money, over 80 billion dollars, are poured into the pockets of centralized entities organizing lotteries of different kind across USA and Canada. At the same time, 40% of US citizens do not have $400 of cash saved. PoolTogether aimes to change these economics by turning money spent into money saved.

But how can it be legit – there is no such thing as lottery with no losses?

Pool Together is built on Ethereum, and it makes use of the Dai stablecoin in combination with the Compound crypto lending system. So it is de-fi through and through.

How does PoolTogether work?

Well, the mechanism is simple and goes like this:

  • Join the Pool

You convert your ETH to DAI and then deposit Dai into the pool to get tickets which is, just like with regular lottery tickets, your chance to win weekly prizes! 1 Dai you deposit equals 1 ticket.

  • Interest builds

The PoolTogether contract then utilizes Compound, smart contract for lending DAI, to earn interest which is then used as the money for the prizes paid out to the winner.

  • Prizes awarded

At the end of the week one lucky lottery participant wins all of the interest that got accrued by the whole pool!

  • 4.Nobody loses!

If you are not the luck winner, you won’t be unlucky loser either as you get all of your money back if you don’t win! You can withdraw your savings and winnings at any time.

So where does the money for the winner come from?

It comes from the interest accrued by the lottery ticket owners pool of DAI.

Is PoolTogether secure and safe to use?

The smart contract is completely automated and the team behind the project claim that it also went through couple of independent smart contract audits by OpenZeppelin & Quantstamp. However, as with all early-stage products there are risks associated with using PoolTogether and the team advised caution and also transfers all responsibility to the users themselves.

So PoolTogether is legit?

The mechanism behind this smart contract is nothing short of genius. However, the service itself is unproven and there might be some technical glitch in the code of the contract (even though it was audited) that could still result in you losing your money.

Additionally, there is no minimum entrance barrier. Actually, there is – you have to spend at least 1 Dai (pegged to USD, so that means 1 USD is the minimum entry amount you will need to spend). What are my chances of winning?

Your chances of winning the PoolTogether lottery depend on how many savings tickets are sold before the Pool locks. The odds of winning are proportional to the number of tickets bought, which does functionally put the smaller buyers at a disadvantage.

How do I know if I won?

If you joined a Pool you can check if you’ve won by looking at your “account” page after a prize has been awarded that you were eligible for. You can also sign up for PoolTogether newsletter and they will let you know via good old email message.

Pooltogether does have some potential drawbacks in its design – most glaring is the fact that it will most probably make the rich even richer, while the poor will only serve as a tool, a leverage the rich will use to win bigger prizes. This is all consequence of the fact that chances of winning are proportional to your number of bought tickets. So for example, 1 rich guy buys 10k of tickets and another 10k poor guys buy 1 each. The chances that the rich guy wins are 10k:1 against each individual poor guy. But instead of getting interest on his 10k of DAI, he will now win interest on 20k of DAI (10k of his and 10k of the poor guys’ DAI).

Nevertheless, PoolTogether hints at the uncountable possibilities offered by the new money technology that emerging in front of our eyes. Digital assets will unleash the full creativity power of humans across the globe by smashing all the imaginary boundaries and administrative barriers that always hampered progress and harmed the society’s weakest layers of population.

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