What is Powerpool (CVP)?
PowerPool (CVP) is a protocol to pool governance tokens (GT) such as COMP, BAL, LEND, YFI, BZRX, AKRO and more. Minority token holders can now extract minimal utility from such tokens for two reasons:
– they cannot influence votes
– a substantial portion of such tokens does not yield any income
As a result, the fundamental value of such tokens for minority holders is close to zero, and the protocols face the problem of voter indifference.
PowerPool is a protocol, provides a convenient solution to pooling governance tokens. It allows holders of tokens to lend, pool, borrow governance tokens, receive income from them, and accumulate governance power in Ethereum-based protocols. Power Pool’s mission is to expand the benefits of governance tokens to end-users and provide a new level of coordination in decision-making within the Defi ecosystem.
Advantages for the end-users and Defi protocols
Influence farming: Users can earn more GT from their holdings. As a result, the user’s stake continues to increase as interest is paid out in the same governance token.
Solution for the Voters Apathy: With yield and LM as the driving force, passive token holders will have an incentive to aggregate their GT in the Power Pool. With demand, these tokens will participate in voting, increasing the overall voting capitalization. With the lack of demand, the tokens can participate in voting even when no one borrows them at the discretion of the PowerPool token owner.
Accumulation of voting power: Voting power, previously distributed to thousands of minority token holders, is useless. It can now be centralized in one place via PowerPool and becomes a real force in managing protocols.
Roadmap and how to participate?
Currently, they have the project ready to be deployed on the testnet. Mainnet coming soon. There are three main stages to starting the protocol:
Testnet phase: Since their product is experimental, they need to test the functionality of key components in a safe testnet environment. They invited all Defi community members to test the protocol, find the bug, and try to hack it. It will last about a week.
Babynet phase: They are engineers trying to create a reliable and secure product, and they find it risky to draw large amounts of liquidity into an untested protocol. During the limited mainnet period, the Baby version of PowerPool will be launched with a liquidity limit of $ 50,000.
Mainnet phase: This phase is unrestricted and starts immediately after passing the security check and carefully examining all the features of the protocol. From this point on, PowerPool will evolve, attracting more and more liquidity to become a real force in the governance of community-controlled Defi protocols.
Protocol token specification
They introduced the native token of the Power Pool protocol – CVP (Centralized Voting Power). It will allow protocol administration (including code upgrades) to be passed on to the active community and liquidity providers. It is a governance token, which has a whole new function, that hasn’t been covered in any Defi protocol, governed by the token holder.
Token functions (vote for proposals related to protocol operation):
- List new liquidity pools in the Power Pool protocol and allocate the liquidity mining rewards to them
- Add and remove collateral types in the protocol
- Add new lending logic to the protocol (now we look at fixed term agreements and some others)
- Upgrade and maintain the source code of smart contracts
Additionally, CPV has a unique function that was not present in other loan protocols before. It depends on voting directly using the remaining GT (not confirmed by the borrower) in Power Pool loan contracts. Thus, the CVP captures value from its ability to self-regulate the Power Pool protocol and from the ability to decide how aggregated GTs should vote.
PowerPool is based on a simple lending model that closely resembles the Compound model at first glance. Every GT holder can provide liquidity to the contract and receive interest if the need arises. Anyone in the marketplace can borrow GT to place authorized digital assets as collateral. Currently, they plan to add ETH, wBTC, and DAI as collateral to borrow governance tokens. On the other hand, it has certain upgrades and a specific set of experiences developed to form a price feed of highly volatile assets like GT.