Re-imagining The PowerPool

We propose a new design for PowerPool, built on top of an 8-token liquidity pool rather than a lending protocol. While this is certainly a major pivot so close to launch, we believe the potential benefits from this change could be worth it. Our team is excited to get feedback from the broader community and engage in an open discussion regarding the idea.

As a liquidity mined DeFi ETF with layer 2 meta-governance on top, PowerPool could be the incentivized fusion mechanism for the top DeFi projects in the space.


I would be FOR this,
Have been also thinking on ETF-like instrument, but rather on top of the lending protocol.

I validated a pretty similar idea with devs and they said it could take up to 2 months to develop.

This timeline is the main concern from my side.

For a proper ETF the MM formula should be more sophisticated than the one utilized in Balancer, and also there several critically important features required.

Anyway, would be happy to join the brainstorming process


From what I’ve seen, Balancer already has pretty good flexibility to accomplish this. The CVP community can vote on who the composite members are, what weights they should be, etc. The main PowerPool could be a public pool open for trading, while a private pool holds the permanent liquidity, restricting who can add or remove assets from it. Is there specific functionality you’re interested in that you think would be challenging to implement through this approach?


if we simplify it this way - just launching a pool on Balancer, then its definitely doable.
But what will be CVP in this case? literally another pool on Balancer with UX/UI and some simple nice features on top of it, right?

Btw, similar pools on Balancer don’t perform well

Though this is not the only available ETF-like instrument on DeFi market.

So, simplifying the above:
We create a bit more advanced parallel (public+private) pools system on Balancer, but have better mechanism of bringing it to the market (comparing to the examples above)?

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If we are to pivot, we should def pivot before mainnet, and this seriously does seem to make a great deal of sense.

Governance is the key driver for all the projects, needless to say the priority strategy that Powerpool needs to deploy is a way to maximize user participation (on voting). In most projects nowadays, a significant amount of tokens will be deployed on LP’s rather than governance (cuz higher yield). That’s why even in such close communities like YFI, voting % is still pretty low. This proposal changes this, the voting process needs to be as easy as possible, let’s not also forget UI/UX, but that’s a separate proposal I guess.

In regards to the phase 2, I’m pretty sure everyone is familiar on how ETF’s have changed the concept of investing (Vanguard in the late 70s) for the retail sector. It’s the easiest (and cheapest) way for a retail investor to be exposed to a particular sector in a “passive” way. We are still in the early days of DeFi, and not all crypto enthusiasts have fell down this rabbit hole yet, due to the additional learning curve. I can def see the Vanguard moment of DeFi coming through this strategy.

The beauty of implementing a Yearn vault strategy is that you are basically incentivising holders not to dump their CVP, but instead to farm 7 DeFi tokens at the same time, with a pretty attractive yield. This itself can be a great attraction for new comers to buy CVP as it becomes a 1 stop shop for becoming a farmer with a diversified risk to the sector.

I vote yes for this.


  1. Enhances the community’s participation on Governance
  2. Creates an additional gateway for newcomers to be exposed to the DeFi sector through PowerPool’s pool
  3. In turn, creates DEMAND for CVP as it becomes the DeFi go-to ETF
  4. Additional revenue stream through trading and withdrawal fees (hint: YFI)

Appreciate all the feedback so far everyone! My partner Medio and I have spent a lot of time thinking about the proposal we’ve put forward and wanted to share a few notes of our discussions to help the community make an informed decision.

One hurdle that PowerPool and most projects are currently facing with all the attractive yield farming initiatives popping up every week are being able to develop a sticky base. For example, you could see a scenario where the attractive yield from CVP rewards does a great job of having a lot of the DeFi governance tokens chosen added to its pools while PowerPool is the farm of the week. That being said, once rewards inevitably go down and are not as attractive as a new farm that pops up, some liquidity providers would most likely pull their assets from the pool to farm with.

If the liquidity for those governance tokens gets pulled, PowerPool’s influence can severely diminish, if not disappear entirely. Given how fluid we’ve seen liquidity be, as people chase the hot new yield farm each week, this is a serious concern.

This is a difficult thing to combat for the long term so Medio and I started brainstorming ways we could protect / hedge against this. Here are a few ideas below. These can be modified, combined, or even just leveraged as inspiration for what the community thinks will help PowerPool be successful long-term.

A Permanent Part of PowerPool

This is expanding on an idea from Medio’s original proposal for PowerPool two weeks ago.

Let’s face it. In the near term, the fees from trading leveraging PowerPool will be negligible. For the near term, most LPs for PowerPool will not be providing liquidity for the fees. They’ll be providing it for the rewards. ~80% of the total CVP supply is set to be distributed during their liquidity mining program (something we’ll comment on later). This should be more than enough yield to attract deposits even with no fees being paid out.

Rather than paying out the fees generated by the trading from the PowerPool, why not redirect it to a reserve owned by PowerPool, with the key stipulation that the assets are never sold. This way even if people pull their liquidity in the future, PowerPool has some way to maintain its influence in perpetuity to some degree.

One thing that can also be done is to have a dynamic fee structure. Where for a certain amount of time while CVP rewards are enough to incentivize liquidity to stay in the PowerPool, 100% of fees are siphoned off to the Permanent Pool. If all of a sudden fees are generating some amount of value and the CVP rewards we’re paying out aren’t attractive enough, CVP holders could potentially vote to pay out a certain % of fees to help incentivize liquidity to stay. How would we adjust the fees paid to this PowerPool? This brings me to our next point.

Leveraging Balancer’s Smart Pools

One thing we’d probably want to leverage from Balancer are their smart pools. There’s the possibility that not enough people will want to trade in their exposure to a specific DeFi gov token they’re bullish on to an equal exposure to a portfolio of them. If that’s the case, perhaps the community can not only vote on which tokens are included - but once voted in, they can vote on what % of the pool each token is. For example, if YFI SNX AAVE are voted in. One of them could be voted as an outsized portion of the pool making adding liquidity to the pool an easier pill to swallow. Also, Smart Pools have other attractive features such as adding or removing tokens, pausing swaps, and of course adjustable weights/fees.

Another thing that potentially mitigates this concern is that there are definitely a lot of investors in the markets who probably hold popular DeFi governance tokens like YFI, LEND, SNX, etc. in their portfolios already. Now these investors can deposit them into the pool, receive similar exposure, and yield farm those assets.

If you want 100% YFI exposure and the pool is only 70% or less YFI - then you’ll either not participate, or use a smaller part of your portfolio for the yield. The good thing is that investors who choose not to participate will simply boost the APY investors who are okay with this exposure will receive from CVP.

In addition to the CVP rewards they’ll receive, farmers can now take part in fast, cheap governance proposals all in 1 place across their entire portfolio, boosting engagement that wasn’t there before.

With PowerPool, you can actually build cross protocol synergies and loyalty.

Accompanied With a yVault Strategy

In the current market environment, YFI’s importance can not be understated (full disclosure: Delphi holds $YFI). The protocol is able to send flows to essentially any project of its choosing which can help bootstrap supply / demand while potentially bringing a portion of its strong community with it.

Because of this, our team has been thinking of how we can use YFI’s influence to help bootstrap protocols launching. PowerPool particularly. Here’s a vault strategy we believe could be attractive for all three parties: YFI holders, PowerPool Liquidity Providers/Farmers, and long-term CVP holders.

As we mentioned before, trading fees generated become permanent liquidity in pool. So PowerPool should want to take in as much trading volume as it can - and we leverage our liquidity mining rewards to incentivize to direct volume towards it because of this.

Take the PowerPool LP shares which represents a pseudo DeFi ETF and throw it into a vault strategy farming PowerPool’s CVP. Yes, the vault strategy sells the CVP it earns, but you keep the permanent liquidity and the yield from the vault will only keep making it deeper over time also being reflexive.

Then you keep the assets in the pool, like with the yCurve strategy, but you get that yield from farming out the LP shares. Thus, the value generated from the vault strategy selling CVP = the amount of new permanent liquidity added to the PowerPool.

This is an example of really embracing the open-naturedness of these protocols as well as the composability that has been able to be established over the past few years.

Using CVP’s Current Distribution as an Advantage

To be clear, our team was not a big fan of the initial distribution between Alpha / Beta / Gamma rounds of CVP. But this was set before we got involved into the project, so the proposal we’re suggesting is essentially a thought exercise of how we could help PowerPool succeed despite this drawback while potentially allowing us to use that distribution as a benefit.

One advantage that their initial distribution has was that it has led to a small circulating supply of CVP in the market while ballooning the FD market cap. It’s circulating market cap sits just above $20M, while it’s fully diluted market cap is close to $500M. This is clearly a lot for an early stage project that hasn’t even really launched yet, but the value of a liquidity mined DeFi ETF with layer 2 meta-governance on top should not be underestimated. Anyway, I believe we can use that high FD market cap to CVP’s benefit.

The PowerPool idea has a reflexive mechanism built in where, if the scarce supply and 1/8th target threshold for fees keep driving price higher, APY from the liquidity mining rewards also rises with it, potentially allowing us to taper this longer over time.

If the community decides to move forward with our overall proposal, we’ll also allocate time to help design the liquidity mining program for CVP. One key focus for us here will be flexibility. With the ability for PowerPool to be able to offer LPs dynamic fees via Balancer’s Smart Pools, we believe it will be important to keep some of our ammo (CVP rewards) for events we can’t forecast at the moment.

Additionally, as Medio teased in our last post - there is the possibility of the project being able to spin up multiple PowerPools (maybe one for other sectors in the future). If that’s the case, we definitely want to have a good amount of ammo set aside for the future.

The Utilization of Governance Tokens

One big challenge we were curious to get the community’s thoughts around specifically was how to think through the utilization of these governance tokens while they were in the pool.

You could lock the pool leading up to votes or use a reserve ratio type mechanism to lock a portion of tokens for longer periods of time if necessary for them to vote (e.g. x% of pool). CVP stakers can be locked for governance so that could also be counted too if the protocols were receptive and saw the benefits from the layer 2 scalability of the platform. The pool is designed for all the projects to benefit from their inclusion so perhaps certain exceptions could be granted? Strong partnerships with key projects could help PowerPool develop a stronger moat over time.

Either way, we believe time-based voting will become more and more prevalent across governance for these protocols so some further work here is needed. If anyone has any thoughts or insights here, feel free to reply here!

An Important Requirement: Strong Integrations

Lastly, getting the proper integrations in place will be key. Fortunately, PowerPool’s team has been able to execute better than most food-based meme coins on this end so far. They’ve already formed a strong partnership with Boardroom as well as xDAI for their Layer-2 capabilities.

More integrations are necessary though to really help PowerPool gain enough traction to make the move from exciting experiment to an innovative project with a lasting impact on the space.

An integration with exchange aggregators such as 1inch, Debank, and Dex.Ag could end up funneling some meaningful volume to PowerPool if it’s pools attract the depth some of these farming initiatives initially have in the past.

On the flip side, getting integrations with popular interfaces like Zapper, Frontier, and Debank will also be important. You could see a situation where if Zapper implements support for zapping in and out of the pool, PowerPool could get a liquidity boost without a major imbalance in a few assets.

“For example, I can go to Zapper and enter the PowerPool with an equal mix of all 8 tokens. But instead of individually purchasing them, I just tell Zapper how much ETH/DAI i want to sell to get into the pool and it sells my ETH for an equal amount of the 8 tokens. Extra points if Zapper can make it so i can choose any mix of the 1-8 tokens. This could skew deposits towards assets in the PowerPool that are lower than their target weight.” (cheers to one of our readers Ashwath for this suggestion btw)

Hope all these thoughts help, looking forward to hearing what everyone thinks and working together with the community to help make PowerPool as successful as possible!


As always I look forward to your insights. Would you be able to create a proposal for an ETF instrument on top of the lending protocol? I find this more interesting than a complete transition to a liquidity pool.

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@DeFi Thanks for your kind words:)

This is a very sophisticated topic. I ll revert in coming days.

I actually invested in CVP because I understood that with their previous idea they will quickly realise they have a great set up to launch an ETF-like product.
I believe that ETF instrument will be one of the biggest things on the markets

There are many ETF-like products already, but the key here is execution. This is why the topics we are discussing above need time to think over

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Initial distribution between Alpha / Beta / Gamma rounds of CVP really looks strange. Reward is big and lock period is small. We should look at yfi or coda (with 4 years lock)
If testers going to hold tokens they wouldn’t be against vesting period Increase.
Chart becomes looking like another kimchi\defi shitcoin. Its definitely not good for the project

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We will do it using our own Balancer fork. We made several upgrades to it:

  1. The function to vote using pooled GTs (for example, all pooled COMP will vote on COMP proposals in the way decided by CVP holders)
  2. The function of changing composition of the pool via CVP governance (users will be able to remove tokens from the index, add a new ones, change shares of each token)
  3. Governance is integrated in the current PowerPool governance system, including L2 integrations, Beta/Gamma vesting contracts, etc. Also, holders of ETF share (BPT token of this index pool, or how we named it - PWPT token) also will participate in governance. So, if you pool COMP liquidity into the pool you will get this PWPT token, and also participate in the governance of PowerPool. Votes will be re-calculated according to number of CVP tokens in the pool.
  4. The brand new UI/UX, developed especially for the purpose of this index
  5. A lot of minor changes

And most important - it is already developed. We will launch Baby Power Pool (the test MVP version of it) soon

I do love the idea in general, it was actually similar to an idea I wanted to propose to yearn but I never had the skills to sum it up or to put it in writing. totally in for that :+1:

I had a a bit of a different idea regarding the following part though just hear me out:

As the Balancer Pool design includes exchange fees, it is proposed to collect these fees into a special treasury contract, which will hold them (a portfolio containing tokens of the Power Index) infinitely

Instead of storing it infinitely in the portfolio I’d really love to see a system where people could burn their CVP to claim the same percentage of the portfolio (or exchange but I think burn is better).

How? lets say Alice owns 0.5% of the total CVP in existance. This would automatically give alice right to claim 0.5% of the CVP treasury. Once Alice does her claim, CVP that she used for claim are burned or redistributed to the LP’s (I’d personally prefer burn for obvious reasons like someone writing a while loop to clear the treasury ^^ so if there is a re-distribution, there should be a time lock or sth…).

some of benefits that comes to mind:

  • Having CVP backed by projects that we all invest in makes total sense and in the mean time makes the CVP the real Defi Index. possibly a true power power house in defi which is additional value…
  • CVP value should and will grow as the treasury grows. but instead of people looking at TVL, P/E ratio arguing and speculating about the future growth we’d provide a direct base value on what CVP worth you can call it additional utility or something. and let them speculate on the future growth of
    • the treasury
    • the protocol as a whole…
    • weak hands who’ll cash out
    • or whatever the speculators speculate on while we focus on figuring out how to bring more value…
  • Burning mechanism makes CVP more scarce and will most probably free us from the short term investors and on the plus side % share of the long term investors will grow. Simple game theory mechanics there…

Additionally (might not really be a good idea but just wanted to idea dump there); once we reach a certain amount of value locked in treasury, we could add a new feature where people could mint CVP by providing gov tokens into treasury. Being in xDAI actually makes the calculations of # of CVP to mint quite possible…

As an ant I am currently holding 400 CVP so if you guys have an internal discussion regarding this proposal and think it is a good idea, just ping me so that I can top up my investment to a total of 1000… Need to accumulate those CVP’s, they are gonna worth quite a lot as the treasury grows :wink:

Guys you have obviously done a great job on the ideation of the new concept for CVP. Thanks for that.

What really scares me though is that this is still quite a raw concept and it contradicts itself at a number of points. At the same time, looks like @powerpoolAdmin the CVP team is already implementing this concept to pivot the project.

It is even hard to revert with specific suggestions because at the current stage we need to finalize the ideation, for a concise high-concept, work on details and then start polishing it and then start implementing it.

Not a problem launching another Balancer pool as an MVP, but think about risks. If we quickly launch MVP (which is the right way in most cases) and just get another non-performing small Balancer pool, the whole CVP project will be ruined. Believe me, non-Alpha/beta/gammas will cash out even with losses in this case.

Some examples of contradictions:

  1. “The good thing is that investors who choose not to participate will simply boost the APY investors who are okay with this exposure will receive from CVP” - I believe the weight of profit from the investors who choose to participate is waaay higher than APY boost for the LPs

  2. Everything related to Yearn vault - at it is currently proposed it will destroy CVP price.

  3. ETF voting etc.
    This is an obvious thing to engage the community to vote for the tokens to be included into the index and the proportions. But lets put it in real life. How do you think a community member X will make such decisions?
    This should be not only data driven, but also based on quite a heavy analysis
    If you propose to build the ETF based on community voting, the procedure for this should be quite complex.

Put all comments from my side here

Sergey, not for “pivot the project” but to add it as an additional product. GT Money Market will still exist, and will be used first of all to create money markets for ETF Shares (PWPT tokens). Note that there can be several indexes in the future, not just one

We can define first composition on the Power Index via simple CVP token holders vote. Once it is established, it can be changed at any time (for example, there can be a vote to replace one token with another one). If we want to make such index, we need to make it fast - timing is very important in Defi now.


We already made test index in original Balancer, and only after that decide to fork it and implement a lot of new functions (voting using pooled tokens, changing pool composition by means of CVP governance, etc)

Hey, after reading the most recent post on this topic (the Team Announcement), some of my previous points became not relevant.

I am especially happy that the money market part will be launched and the ETF will be a fork of Balancer not just a pool on Balancer.

Lets continue the discussion here Power Index Proposal: Team Statement