❓Frequently Asked Questions

FAQ for HoneyPool V1

General

Where does the prize money come from?

Prizes are generated on the interest earned on deposited funds.

When a deposit is made into HoneyPool that deposit is automatically routed to other decentralized finance protocols like Aave to begin earning interest. Protocols like Aave are "fully liquid" meaning deposits can be withdrawn at any time. Additionally, interest accrues every ~15 seconds. Anyone who borrows from Aave must deposit collateral that is greater in value than what they are borrowing. This ensures that loans are never defaulted on.

HoneyPool is a non-custodial protocol. That means no one has the ability to control the funds deposited. All deposits and withdraws are conducted automatically by the smart contracts making up the HoneyPool protocol.

Do I have to enter for each prize?

No! By depositing you are automatically eligible for all future prizes until you withdraw!

Is there any penalty to withdraw?

No! You can add to or withdraw your deposit whenever you desire! However, your chances to win are based on your average deposit size over the prize period.

For example, say you have $100 deposited for a full 24 hour prize period. That would mean your average balance for the prize period is $100. Someone else might deposit $200 halfway through the prize period. Their average balance for the prize period day prize period would be $100, even though they deposited more than you, their chance to win would be the same.

How are winners chosen? How is it fair?

The HoneyPool protocol is decentralized and open source. That means anyone can view and audit the code to verify it is fair and secure. Several professional third parties have audited the HoneyPool code.

Specifically for choosing winners, HoneyPool relies on the ChainLink VRF (Verifiably Random Function). The ChainLink VRF ensures that winners are chosen in a verifiably random way.

Is there an advantage to depositing early?

Yes! Your chances to win are based on your average deposited amount over the prize period. For example, say you have $100 deposited for a full 24 hour prize period. That would mean your average balance for the prize period is $100. Someone else might deposit $200 12 hours before the prize draw. Their average balance for the 24 hour prize period would be $100, even though they deposited more than you, their chance to win would be the same.

Can I lose my money? What are the risks?

Assuming the protocol operates as intended, there is no risk of losing your money. In the two years the protocol has been live no depositors have ever lose money.

However, there are still many risks inherent in using a blockchain-based protocol like this. These risks could result in losing some or all of your money. Please read the "Risk" page for more details on the specific risks you should be aware of.

Are my deposits insured?

Your deposits are not insured, however, you can purchase protocol cover here (INSERT NEXUS LINK HERE).

Prizes & Winning

What are my odds to win?

Your chances to win a prize are dependent on how much you have deposited. The more money you deposit the higher your chances to win.

Your exact chances to win dynamically change in real-time based on how many others are depositing and withdrawing. And what the prize distribution is for that specific prize pool.

How many prizes are awarded?

The amount of prizes (and therefore the total amount of money awarded) changes dynamically. The numbers displayed are projections based on current data and probabilities of winning. It is likely that actual prizes awarded will be either higher or lower in any given prize period than what is visualized.

How do I get my prizes?

1. Once a prize has been awarded there is a 24 hour cool down period before you can check your prizes and claim your winnings. This period ensures cross-chain communication has happened correctly.

2. Once the 24 hour cool-down period is completed you can check and claim your winnings

3. Your winnings are claimed in HoneyPool tickets! This means when you claim them they are automatically added to your deposited balance. When you withdraw you'll receive the underlying USDC.

Claiming prizes must be done within 60 days of the prize being awarded. If it is not done in that time frame you will not be able to claim your prize.

What prevents someone from joining at the last second?

You can deposit and withdraw without penalty whenever you desire. However, your chance to win is based on your *average* deposit size during the prize period.

For example, say you have $100 deposited for a full 24 hour prize period. That would mean your average balance for the prize period is $100. Someone else might deposit $200 12 hours before the prize draw. Their average balance for the 24 hour prize period would be $100. Even though they deposited more than you, their chance to win would be the same.

What is the Prize Cap?

The "Prize Cap" is a parameter controlled by HNYP governance that limits how much an individual wallet can claim per prize period (24 hours). Currently, it is set to 1 but it is adjustable by HNYP governance.

It's important to note you automatically will claim the largest prizes possible. So when the Prize Cap is 1 you will be able to claim the largest prize you win per period.

What is the "Prize APR"

The prize APR serves as a rough approximation of what type of returns you can get by depositing into the protocol. It's meant only to give you a ballpark number and it changes based on a number of variables. Your actual realized return on your deposit will vary significantly based on what prizes you win. The prize APR is calculated by taking (Daily prizes * 365 / current deposits)

HoneyPool's projected prize APR is higher than it is for the yield sources. That is because prizes are currently incentivized by the protocol's treasury. The goal of this is to kickstart the initial launch, over time it is likely to get reduced (decided by the HNYP token holders) until we reach full sustainability.

How long do I have to claim my prizes?

Prizes must be claimed within 60 days of them being awarded. Unclaimed prizes will no longer be claimable after 60 days.