Since the inception of DeFi, numerous P2P products have been launched, allowing users to lend and stake cryptocurrencies for carrying out trade activities. Recently, crypto lotteries are attracting a massive number of investors and traders. Their transparency speaks louder as they are backed by blockchain technology. These lotteries work globally with a significant amount of payments that are effortlessly accessible.
These features have turned them into lucrative opportunities for conventional lottery aficionados. However, one specific lottery platform, PoolTogether, is making the lottery more desirable for investors. This Ethereum-based lottery never lets you lose your hard-earned money, even if you do not win the lottery a single time. There are many websites that can guide you on how to choose the best profitable lottery or even cryptocurrency trading in this time of crisis.
What Is PoolTogether?
It is a crypto-powered lottery platform that provides an opportunity for its users to win a huge weekly prize. PoolTogether enables users to purchase lottery tickets by depositing their digital currencies into a prize pool. The distinguishing point between a traditional lottery and PoolTogether is that your tickets in it have no expiry date. Every week, 5 winners get the prizes by the lottery pool. However, even if you are not among those five participants, your tickets are still useful. Since the tickets never expire, you can wait till the next withdrawal.
This process continues until you finally win or withdraw your money (Cryptocurrency). In this way, the chances of winning the prize are always equal, and you do not lose anything in it. Then where does the prize money come from? PoolTogether utilizes the interest received on the lottery pool for funding the awards. They explain it as a prize-savings mechanism in which you receive rewards for holding your digital currencies instead of spending them somewhere.
How Does PoolTogether Work?
PoolTogether is a blend of traditional lottery mechanisms and crypto staking. In crypto staking, users lock up their cryptos within the ecosystem to offer liquidity, and in return, they get rewards with an interest known as staking rewards. PoolTogether chooses this base and applies it on a large scale in the form of a lottery.
- First of all, PoolTogether accepts deposits from players in the form of digital currencies and transfers them into a pooling account. This pool usually accepts UNI, DAI, COMP, and USDC coins.
- The pooled currencies are staked through a Decentralized Finance lending platform; known as Compound Finance. This platform keeps the funds for seven days. Staking rewards differ by the staked tokens. These variations are conveniently balanced due to a large number of players.
- After every seven days, PoolTogether randomly selects five participants as winners. Interest received on the pooled currencies finances the lottery prize. As a result, the winner receives the major portion of the entire interest earned on the pooled funds along with his/her ticket amount. The ones who did not win only receive their ticket money. Smart Contracts automate the entire process, and you do not need to purchase the lottery tickets again.
- PoolTogether merges blockchains with Smart Contracts and DApps to develop a game that provides you massive gains while reducing the downsides. The downside contains transactional fees and opportunity costs (the benefit you decline for opting for the crypto lottery over secondary investment opportunities).
Specialty Of PoolTogether
Just as Decentralized Finance has transformed the entire financial system, PoolTogether appears with the latest spin on the conventional lottery. But the unpleasant part of playing the lottery – slowly building up money for single-use tickets, has been taken out of the game. You are required to pay transaction fees for stepping in and getting out of the pool, but the ownership of your cryptos remains with you, and you will automatically be the part of next drawings as long as your investment remains with the pool.
What Are The Downsides Of PoolTogether?
Apparently, there are no risks associated with PoolTogether, and your money is in safe hands because it is not a scam, but it has some downsides.
- You may need to pay higher transaction fees due to the requirement of the Ethereum network, and if you are investing only a few dollars worth of digital currencies into the pool, it will be more costly for you to pay the transactional fees.
- You have to bear the opportunity cost of staking or locking your crypto holdings in PoolTogether.
- More lottery tickets, more chances to win. Consequently, the rich get richer.