PoolTogether - an Ethereum based lottery app backed by the MakerDAO foundation - allows you to participate in a lottery without risking your money!
The only risk you’re taking is that you don’t win. In the (probably highly likely event) that you don’t win, you will get your money back, though!
How does it work in a nutshell?
- Participants deposit DAI in a pool
- One person wins
- Everyone else gets their principal back
How is that possible?
- Participants buy "savings tickets"
- All the money from the tickets goes into a smart contract where it gets stored in an interest earning account
- The interest comes from lending contracts through the Compound platform over a couple of weeks
- At the end of the lending period, everybody gets their money back, PLUS one winner takes all the interest home
Pretty cool, isn't it?
"PoolTogether turns the most popular money losing game in the world into a savings game."
What’s the minimum and the chances of winning?
The minimum is only 1 DAI ($1) which sounds good, however if we look at the chances it appears that they would be very low with just 1 DAI:
“The likelihood of winning is determined on a pro-rata basis: a user that owns 20% of outstanding tickets will have a 20% chance of being selected.”
I guess it’s like with regular lotteries - the more tickets you buy, the higher your chances.
On the other hand it's safe to say that "the pool" is much smaller here than in traditional lotteries. So that makes your chances of winning a lot better than in traditional lotteries.
PLUS, regular lotteries keep your principal if you don't win. PoolTogether will give it back to you. There is literally nothing to lose (except maybe a little bit of gas to send your DAI on the Ethereum blockchain).
You can also automatically reinvest your principle in future lottery rounds and basically play with your initial 1DAI forever!
How to get started?
There's a handy guide for absolute beginners on the PoolTogether blog here.
Also do not skip the FAQs on the PoolTogether site before you join, so you are aware of the risks. Yes, even though the lottery concept is built in a way that you won't lose, there is of course the security of your funds to consider, when it comes to such a new project and technology.
I will definitely check this out!
Anja Schuetz helps absolute beginners to become confident crypto investors and create a Plan B for their financial future. She is the author of How To Stay Safe in the Crypto Space and offers - a crypto safety guide for beginners - and has lots of free educational crypto resources on her website.
She also consults as a Customer Communication & Operations Manager for blockchain start-ups.