Liquidity providers deposit funds into PoolTogether and receive a return on investment in lottery winnings (supply-side fees).

PoolTogether is an asset management (no-loss lottery) protocol built on Ethereum and other adjacent blockchains. PoolTogether was founded by Leighton Cusack and launched in 2019.

POOL tokenholders own and govern the protocol. They currently do not take a cut of the total return on investment paid by liquidity providers (revenue). PoolTogether’s investors include IDEO CoLab Ventures, DTC Capital, ConsenSys Ventures, etc.

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PoolTogether

# PoolTogether Earnings Methodology

## 1. Overview

PoolTogether earnings represent the protocol's net financial performance, calculated as revenue minus expenses. Since PoolTogether operates as a no-loss prize game where users don't pay fees to participate, revenue is zero and earnings equal the negative value of token incentives distributed to users. This metric answers how much the protocol spends on user incentives, representing the cost of user acquisition and retention through POOL token rewards.

## 2. Data sources

The calculation uses the following raw data sources:

- **PoolTogether V4 contract events**: Parsed blockchain events from PoolTogether V4 smart contracts deployed across Ethereum, Polygon, Avalanche, and Optimism networks
- **Prize distribution events**: `ClaimedDraw` events from `PrizeDistributor` contracts on Ethereum, Avalanche, and Optimism, plus `RewardDistributor` events on Polygon, representing user prize claims
- **Token incentive events**: `Claimed` events from `TokenFaucet` and `TokenFaucetV2` contracts, plus `RewardsClaimed` events from `TwabRewards` contracts, representing POOL token reward distributions
- **Token price feeds**: End-of-day token price feeds for USD conversion of POOL tokens and other reward tokens
- **Token metadata**: Token decimal information for proper amount calculations

## 3. Step-by-step calculation

### Component A: Draw claim fee collection

- **Purpose**: Identifies prize claim events that could represent protocol fees, though these are ultimately not used as revenue
- **Logic**: Collects `ClaimedDraw` events from prize distribution contracts across four chains. Events are filtered to distinct occurrences based on transaction hash and log index. Each event includes the payout amount, recipient address, and token address (USDC on Ethereum and Avalanche, USDC on Polygon, USDC on Optimism). All events are classified under asset management business line and yield aggregator segment.
- **Key fields**: Event timestamp (`block_timestamp`), recipient address (`address`), payout amount (`payout`), and token contract address

### Component B: Token incentive collection

- **Purpose**: Captures all POOL token rewards distributed to users as protocol incentives
- **Logic**: Aggregates token reward claim events from multiple contract types across chains. Includes `TokenFaucet` claims from Ethereum and Polygon, `TokenFaucetV2` claims from Ethereum, and `TwabRewards` claims from Optimism. Events capture when users claim accumulated POOL token rewards. Each event records the amount claimed and recipient address.
- **Key fields**: Event timestamp (`block_timestamp`), recipient address (`address`), reward amount (`newTokens` or `amount`), and POOL token address

### Component C: Fee processing (revenue component)

- **Purpose**: Processes draw claim fees for potential revenue calculation
- **Logic**: Takes draw claim events and truncates timestamps to daily boundaries. Converts token amounts to USD using end-of-day price feeds and corrects for token decimal places. However, these amounts are ultimately set to zero in the revenue calculation since PoolTogether doesn't charge user fees.
- **Key fields**: Daily timestamp (`timestamp`), chain identifier (`chain_id`), and fee amount converted to USD

### Component D: Token incentive processing (expense component)

- **Purpose**: Converts token incentive claims into daily expense amounts
- **Logic**: Aggregates token incentive events by day, converting raw token amounts to USD values using end-of-day price feeds. Corrects for POOL token decimals (18 decimal places). Groups by timestamp, chain, and product to create daily expense totals representing the cost of user incentives.
- **Key fields**: Daily timestamp (`timestamp`), chain identifier (`chain_id`), and incentive amount in USD (`token_incentives`)

### Component E: Revenue calculation

- **Purpose**: Establishes protocol revenue (which is zero for PoolTogether)
- **Logic**: Creates a revenue metric by taking the structure from the fees data but setting all revenue values to zero. This reflects PoolTogether's business model where users don't pay fees to participate in the prize game.
- **Key fields**: Daily timestamp (`timestamp`), chain identifier (`chain_id`), and revenue amount (always zero)

### Component F: Expense calculation

- **Purpose**: Converts token incentives into protocol expenses
- **Logic**: Takes the processed token incentive amounts and reclassifies them as expenses. This represents the cost the protocol incurs to incentivize user participation through POOL token rewards.
- **Key fields**: Daily timestamp (`timestamp`), chain identifier (`chain_id`), and expense amount in USD

### Final aggregation

- **Combining components**: The earnings calculation uses the standard formula of revenue minus expenses. Revenue is always zero, and expenses equal the USD value of token incentives distributed, resulting in negative earnings
- **Currency conversion**: All token amounts are converted to USD using end-of-day price feeds, with proper decimal correction applied based on each token's decimal places
- **Time aggregation**: Data is aggregated to daily boundaries using timestamp truncation, with all events within a 24-hour period grouped together
- **Final calculation**: Earnings equals zero (revenue) minus token incentive expenses, producing negative earnings that represent the protocol's cost of user acquisition and retention through token rewards

The final metric represents PoolTogether's daily spending on user incentives across all supported chains, expressed as negative earnings since the protocol operates without collecting user fees.

*This methodology was automatically generated by Token Terminal's methodology analyzer.*

Net profit (also profits, net income, profitability) — revenue remaining after subtracting expenses.

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