Monthly Archives: November 2023

From Premium Bonds to PoolTogether: The New Era of Saving

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Note: As a member of the PoolTogether Growth Team, my insights are drawn from my direct involvement with the project. This article aims to provide educational content and is not intended as investment advice.

Introduction

The journey to financial freedom is as old as currency itself, with individuals and societies constantly seeking secure ways to save and grow their wealth. In the quest for a balance between security and opportunity, an intriguing concept has emerged in the form of prize-linked savings accounts (PLSA). These accounts blend the thrill of winning with the prudence of saving, offering the chance to win prizes simply by saving money. This concept, which has been exemplified by the UK’s Premium Bonds, has found a new expression in the digital age through PoolTogether—a platform that embodies the ethos of prize-linked savings on the Ethereum blockchain.

The Inspiration – UK Premium Bonds

The UK’s National Savings and Investments (NS&I) Premium Bonds program, launched in 1956, stands as one of the most successful applications of the PLS concept. Premium Bonds allow individuals to purchase bonds and enter a monthly draw for tax-free prizes instead of receiving interest. With over £100 billion invested and around 21 million people participating, the program has become a staple of the UK’s savings landscape. The largest prize is £1 million, with odds of winning for each £1 bond number at 21,000 to 1 as of November 2023.

From the NS&I Premium Bonds Webpage

The success of Premium Bonds lies in their risk-free savings model with a bonus chance for rewards. Unlike a lottery, where one spends money with no guarantee of return, Premium Bonds safeguard the principal amount while providing the excitement of a potential win. This model has inspired several iterations globally (including Walmart’s Prize Savings Program), each aiming to make saving an engaging and rewarding experience.

Walmart reports on the success of their Prize Savings Program

Transition to Digital – The PoolTogether Model

PoolTogether has harnessed the essence of Premium Bonds and repurposed it for the decentralized finance (DeFi) era. The platform is a blockchain-based protocol where users deposit cryptocurrency into a collective pool. This pool generates yield through other DeFi protocols, and instead of distributing this yield as interest, it is pooled and awarded as prizes in daily draws. This design ensures that even those who do not win retain their deposited funds, aligning with the foundational PLS principle of no-loss saving.

PoolTogether Homepage

The Hyperstructure Advantage

The latest iteration of the platform, PoolTogether V5, also known as the Hyperstructure, represents a significant leap forward. It is an immutable and autonomous protocol, ensuring that once deployed, its rules and operations remain unchanged and free from any central control. This upgrade extends the core principle of PLS into a system that is open, transparent, and trustless—qualities that are central to the blockchain ethos.

By integrating the POOL token as the unified prize asset, PoolTogether V5 ensures scalability, deep prize liquidity, and stakeholder alignment. This system allows for the integration of an unlimited number of assets and yield sources, making it a robust and inclusive platform for prize savings.

Looking Ahead – The Impact of PoolTogether

PoolTogether’s Hyperstructure is more than just a technological innovation; it is a financial inclusion tool. It democratizes access to prize-linked savings, allowing anyone with an internet connection and some cryptocurrency to participate. This accessibility can be particularly impactful in regions with limited banking infrastructure, providing a secure and fun way for individuals to save and potentially earn significant rewards.

Moreover, the protocol’s permissionless nature fosters a collaborative and innovative environment where developers and entrepreneurs can build upon and extend its capabilities. From creating new vaults for various assets to designing hooks that integrate with other DeFi protocols, the possibilities for growth and development are vast.

Final Thoughts

PoolTogether stands at the intersection of traditional financial wisdom and cutting-edge blockchain technology. It reimagines the time-honored concept of prize-linked savings for a new generation, offering a model that is both secure and exhilarating. As the platform continues to evolve, it holds the promise of expanding financial freedom and empowering savers worldwide. With its roots in the tried and tested model of the UK’s Premium Bonds, PoolTogether is poised to define the future of saving.

How to Deposit to PoolTogether

PoolTogether Links & Resources

What are Smart Contracts? Discover the New Cutting-Edge Tech

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This article aims to provide educational content and is not intended as investment advice.

Imagine standing in a never-ending line at the bank, the clock ticking away as you inch forward, just to get a simple transaction approved. There’s the cumbersome paperwork, the overworked bank staff, and the silent prayer that your request doesn’t get tangled up in bureaucratic red tape. We’ve all been there, entrusting our hard-earned money to institutions that require us to jump through hoops for every financial move.

Now, picture a world where these transactions happen almost magically, without the long lines, without the mountain of paperwork, and without the need to blindly trust an institution. Welcome to the world of smart contracts—a world where agreements execute themselves, trust is built into the code, and your digital wallet is your personal bank. Smart contracts are like having a banker, a lawyer, and a notary all rolled into one, working tirelessly for you 24/7, without the coffee breaks.

Traditional Contracts vs. Smart Contracts

Before diving into the digital realm, it’s crucial to appreciate what a contract, in its traditional form, represents. A contract is an agreement between two or more parties outlining specific actions and their associated conditions. Traditional contracts, while legally binding, often require third parties like lawyers or banks to ensure enforcement and validation. This not only adds to the complexity but also introduces additional costs and time delays. Smart contracts, by contrast, are self-executing contracts with the terms directly written into code.

Image from originstamp

Operating on a blockchain—a decentralized digital ledger—smart contracts execute themselves when predefined conditions are met. They are lines of code, deployed on a blockchain, that automatically enforce their terms, making third-party oversight or verification generally unnecessary.

A Closer Look: The Mechanics of Smart Contracts

Smart contracts function on “if-then” programming logic. In other words, if a certain condition is met, then the contract will automatically execute the agreed-upon action. This code resides on a blockchain, providing the benefits of transparency, immutability, and security. Most commonly, smart contracts operate on platforms like Ethereum, which offer robust programming languages capable of executing complex contracts.

Image from Techskill Brew

The Ethereum Ecosystem: A Smart Contract Haven

Ethereum, envisioned by Vitalik Buterin and launched in 2015, was designed not just as a cryptocurrency but as a platform for running smart contracts. While smart contracts can be deployed on various blockchains, Ethereum has become the most popular platform for them. Ethereum’s unique blockchain allows for the deployment of smart contracts via its Ethereum Virtual Machine (EVM), a global computational engine that ensures these contracts are executed precisely as coded.

Why Smart Contracts Outshine Traditional Agreements

  1. Autonomy and Trust: Smart contracts remove the need for intermediaries. Once deployed, they execute automatically, reducing the potential for manipulation or errors. This autonomy builds trust among parties, as the contract will run as agreed without the possibility of external influence.
  2. Efficiency and Speed: The automation of smart contracts significantly cuts down the time it takes to complete contractual processes. Transactions and agreements that typically take days can be executed in a matter of minutes.
  3. Security and Reduction in Fraud: Being part of the Ethereum blockchain, smart contracts are encrypted and distributed across multiple nodes. This makes them highly secure and immune to fraud compared to traditional paper-based contracts.
  4. Cost-Effectiveness: By eliminating the need for middlemen like lawyers or notaries, smart contracts reduce transactional and operational costs. This is particularly beneficial for small businesses and individual entrepreneurs.

Use Cases: From Finance to Governance

Smart contracts have a plethora of applications, extending beyond financial transactions. In decentralized finance (DeFi), they facilitate lending, borrowing, and asset exchange without a central authority. Outside of finance, they are revolutionizing sectors like supply chain management, digital identity, and even electoral systems, providing a more transparent and efficient way to manage complex processes.

Getting Started: How to Interact with Smart Contracts

Interacting with smart contracts generally requires a digital wallet and some amount of cryptocurrency, often Ether if you’re using the Ethereum platform. Users can trigger smart contracts through various interfaces, including decentralized applications (dApps). Given their self-executing nature, understanding the terms is imperative before engaging with a smart contract.

Navigating Pitfalls: Due Diligence is Key

While smart contracts offer efficiency and transparency, they are not infallible. Code can have vulnerabilities, and once a contract is deployed on a blockchain, altering it can be incredibly difficult. Therefore, conducting thorough research and possibly seeking expert advice are advisable steps before entering into a smart contract.

Conclusion

Smart contracts on Ethereum, in addition to being a technological innovation, represent a shift towards a more efficient and transparent way of executing and enforcing agreements. By automating contractual obligations and reducing dependency on intermediaries, they offer a level of efficiency and security unprecedented in traditional contracts.

As the Ethereum ecosystem continues to grow, so does the potential of smart contracts, making them an indispensable tool in the digital age. For those embarking on their Ethereum journey, understanding and harnessing the power of smart contracts is a step into a world of unprecedented digital empowerment.