Founders & Origins4 min readDai (DAI)

PoolTogether: Where the Prize Money Comes From

PoolTogether launched in 2019 with an unusual lottery idea: pool the interest instead of spending the deposits on prizes. Its early design reveals both the attraction of prize-linked savings and the limits of the phrase “no loss”.

PoolTogether: Where the Prize Money Comes From

3-Minute Fast Briefing

  • The ParadoxPoolTogether launched on June 24, 2019, using Ethereum and DAI to turn pooled interest into prizes.
  • The Turning PointThe early v2 design supplied deposits to Compound and assigned winning chances in proportion to eligible deposits, rather than equally per person.
  • The LegacyLosing a draw was not designed to consume the deposit. Smart-contract and underlying-protocol risks still meant that “no loss” was not a guarantee.

Chronological Timeline

June 24, 2019A savings-based draw launches

Leighton Cusack introduces PoolTogether and its interest-funded prize model.

August 30, 2019The v2 design is published

Brendan Asselstine explains rolling draws, automatic re-entry and deposits supplied to Compound.

January 22, 2020The team details retained powers

An audit disclosure describes administrators’ roles and the team-controlled upgrade mechanism.

A ticket that leaves a deposit behind

On June 24, 2019, Leighton Cusack introduced PoolTogether with a proposition that sounded at odds with a lottery: take part, fail to win, and keep your deposit. The project used DAI on Ethereum. Its launch post placed it in the older tradition of prize-linked savings, where the attraction of a possible prize is attached to money set aside rather than to a ticket that is spent.[1]

The prize had to come from somewhere. PoolTogether’s answer was the interest earned on the pooled money. Participants gave up receiving their own portion of that interest directly in exchange for a chance at the combined prize. A draw could therefore leave a non-winner’s deposit intact while awarding the pooled return elsewhere. The opportunity cost was still real: an individual’s share of the yield went into the game.[1]

A pool has a calendar

The v2 design published that August made participation repeatable. Deposits were supplied to Compound to earn interest, while the Pool contract tracked each user’s claim. Funds were not sitting idle in a digital box. Open and committed draw periods overlapped, each lasting a week; fresh deposits entered the open period before becoming eligible. Existing eligible deposits could remain in subsequent draws without buying a new ticket each time.[2]

Eligibility also determined the odds. The developer’s example gave 100 DAI out of 1,000 eligible DAI a 10% chance; another 40 DAI still in the open period did not count. The weighting followed money committed to the draw, not the number of people. Weekly prizes did not mean every new deposit could win immediately, and a shared pool did not mean equal chances for unequal deposits.[2]

Who opens the next draw?

The early system still had operators. In a January 2020 disclosure, the team explained that administrators alone could open draws and award prizes, and contributed the secret used for winner selection. Contract upgrades required approval from two members of the founding team. These were disclosed powers of that version, not a description of every later PoolTogether deployment. Putting the accounting on Ethereum had not made all operational decisions disappear.[4]

The same disclosure explained another allocation rule: a draw could assign a fraction of the interest to a specified beneficiary before paying the winner. It said the initial 10% redirected to the pool had been reduced to zero in December. That history matters when describing the prize. Interest was its source, but the amount reaching a winner depended on the rules in effect for that draw.[4]

What “no loss” described

PoolTogether’s risk documentation makes clear that deposits could still be lost through failures in the protocol or its dependencies. The deposited asset, Ethereum and the lending service were all part of the arrangement, alongside PoolTogether’s own contracts. Leaving the principal out of the prize calculation did not insure it against those failures. A non-winning ticket and an unrecoverable deposit were different kinds of loss.[3]

The experiment moved the suspense. Instead of asking someone to spend a stake that would disappear on losing, it asked them to let their savings generate a shared, uncertain reward. The product’s appeal rested on that choice, not on creating money for nothing. To understand the original idea, follow both balances: the deposit a participant was meant to retain, and the interest they agreed to place within reach of somebody else.[1][3]

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Sources & References

  1. [1]Source 1: PoolTogether’s launch announcementLeighton Cusack / PoolTogether · 2019-06-24Accessed 2026-09-20
  2. [2]Source 2: The early v2 design and draw sequenceBrendan Asselstine / PoolTogether · 2019-08-30Accessed 2026-09-20
  3. [3]Source 3: Official risk documentationPoolTogether user documentationAccessed 2026-09-20
  4. [4]Source 4: The team’s January 2020 audit disclosureBrendan Asselstine / PoolTogether · 2020-01-22Accessed 2026-09-20
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