- Former Elizabeth Warren staffer files class-action lawsuit against PoolTogether’s savings product.
- PoolTogether launches Pooly NFT to crowdfund legal fight.
It wasn’t long ago that non-fungible tokens (NFTs) were seen as gambling. Now, NFTs have seen yet another unique use case that wasn’t envisioned earlier. No longer can this tool of web3 be seen just as an investment, but also means to support a cause.
At the center of this is PoolTogether, a DeFi protocol with over $200 million in total value locked at the start of this month. In the last week, the protocol and its founder were served a class-action lawsuit claiming that it violated gambling laws. In order to fight the legal claims of the lawsuit, the protocol launched an NFT.
PoolTogether has a product, which represents a no-loss savings scheme. In this product, users can win prizes by depositing the funds on the platform. This is based on the protocol of borrowing their funds and earning a yield on them. The catch is, the yields earned are not fixed, in fact, they’re distributed to depositors on a lottery-like system.
This lottery distribution was the point of content for a Joe Kent, who previously served on the presidential campaign of US Senator Elizabeth Warren. Warren has been in strong opposition to cryptocurrencies, likening them to tools used to evade financial sanctions and assist in terror financing. It comes as no surprise that Kent, the plaintiff, in his complaint opposed crypto’s use of electricity, its role in the evasion of financial regulations, and the scams in the industry.
Kent even specifically filed his claim in a New York federal court as the state’s laws prohibited gambling.
In response to the claim, the PoolTogether team launched a unique set of NFTs called Pooly. This is essentially crowdfunding the legal campaign against Joe Kent using a represented certification of funding through NFTs. And it got a massive response from the crypto community.
Over $800,000 raised
Since launching the NFTs on May 24, over $800,000 has been raised in ETH. The average contribution has been close to 0.2 ETH per contributor. Currently, the DeFi protocol is 61% of its way through fundraising the entire amount expected to fight the lawsuit.
Pooly represents more than just a crowdfunding campaign. It shows how NFTs can be used and even possibly how fundraisers can be rewarded retrospectively.
In crypto, especially DeFi, retrospective airdrops are common. This is a way of rewarding users for past behavior. This was seen with Optimism rewarding users who used the layer-2 blockchain before June 2021, and Ethereum Name Service (ENS) who airdropped $ENS tokens to those who registered domains before November 2021.
Tokens can also be used to reward users who purchased NFTs for valuable causes. ConstitutionDAO did this by integrating the $PEOPLE token with a DAO that was tasked with owning a copy of the US constitution. However, the DAO was outbid. PoolTogether can be a way for NFTs to integrate with DeFi. A retrospective airdrop of either POOL tokens or another native or utility for Pooly holders would show a new use case of NFTs and integration with DeFi.
Regardless of how this lawsuit turns out, Poolys is a sign of a new form of NFTs. But can they be something more?