Money-focused crypto projects tend to fall into one of three categories. Extractive ones like pump.fun are almost always moving resources toward a small number of people, usually from latecomers who don’t know better to insiders who prey on them. Neutral ones like Uniswap are simply infrastructure, they can be used in extractive ways, but can just as easily be used to help. There’s also a third category, that I think of as prosocial projects, ones that are actively trying to do something useful for people outside the system.
There’s been a lot written on the first category, less on the second, and almost nothing on the third. I believe that’s in part because the projects that fit into this category aren’t focused on speculation, which tends to drive attention in the crypto space. That speculation is driven by the desire for asymmetric upside, which can be tempting for anyone, but especially for people who don’t have resources to work with in the first place.
A lot of people play the lottery. The standard advice is to put that money in a savings account instead, but that advice doesn’t work in reality. A high-yield account right now gets you around 3 to 4% in yield. Someone spending $10 a week on lottery tickets isn’t going to be moved by the math that says if they save for 10 weeks they’ll earn $3 more a year. The number is too small and the psychological appeal isn’t there. The lottery is appealing because it’s one of the only ways someone can realistically see themselves getting an outsized outcome from where they are.
Two examples of projects that I think fit into the prosocial category are PoolTogether and HaloFi (formerly known as GoodGhosting). Both took direct aim at this problem, in different ways.
PoolTogether was a project designed around the idea of a lossless lottery. Participants deposit money into the protocol in exchange for raffle tickets. The lottery still happens, but the pot that the rewards are paid out of comes from the collective interest on the entire pool of money deposited into the protocol. At a large enough size, the interest that communal pot generates is significant, and you still have a chance at winning a portion of it. Meanwhile, your tickets aren’t used up week to week, and your money can still be removed from the principal at any time by swapping your raffle tickets back, so you can’t ever lose the money you put in.
PoolTogether was doing this, and had real momentum. At its peak, it had just over $230 million in deposits generating interest that was given out in weekly lotteries. There were real success stories too, with one user who deposited $74 winning just under $40,000 on their deposit, which they could still get back afterwards.
HaloFi took a different approach. Instead of a lottery, it tried to focus on building steady savings habits by making saving competitive. Challenges would be set with savings goals and time periods. For instance, one might be to save $100 over 10 weeks, with weekly deposits of $10. Similar to PoolTogether, any money deposited would go into a communal pool used to generate yield. At the end of a challenge period, if you kept up with your deposits, you got your entire deposit back, along with a proportional share of the yield generated. If you didn’t manage to make each payment, you still got your entire deposit back, but the yield that you would be entitled to is instead distributed evenly to those who did complete the challenge. You could also withdraw your money at any point before the challenge was over. The mechanism worked, people didn’t want to give up their yield, and kept coming back to make their deposits. There were success stories here too, with more than four million dollars being saved.
Unfortunately, neither of these stories end well. PoolTogether was taken to court by a man named Joseph Kent, who alleged they were running an illegal lottery that was hurting its users. His standing for the case was that he deposited $10 in the protocol, and transaction fees during the deposit had already outpaced any expected returns. What wasn’t mentioned was that he intentionally used the least efficient method of depositing his money, choosing to pay the maximum amount he could. While PoolTogether offered ways to deposit into the protocol for fractions of a cent, Joseph simply did not use them. The case was eventually dismissed, but it took community fundraising to pay the fees for years of a protracted legal battle, from 2021 till its dismissal in 2023. By this time, the protocol had lost its momentum, and along with the volatility in the overall market, it faded from prominence.
Something worth noting here is that Joseph Kent is not your average user. He was the technology team lead for Elizabeth Warren’s presidential campaign in 2020, and Warren has made opposing crypto a consistent part of her political platform. I can’t say for certain that this was coordinated, but the people most motivated to see this project fail had direct ties to the lawsuit that did it.
HaloFi’s end was quieter. The mechanism worked, and the users were there, but there was no viable path to funding the business itself. Any fee they could take from the generated yield was too small to matter operationally, and would have come directly out of what users earned. In late 2024, they announced they couldn’t secure another funding round and were shutting down. This brings us back to the problem with a space so heavily driven by speculation. It isn’t just everyday people chasing asymmetric upside, venture capitalists and investors are looking for it too. A prosocial project designed to slowly and safely build wealth for its users doesn’t offer a 100x return to early investors, which makes raising money to survive as a business in the space incredibly difficult.
These were two projects trying to do something useful for people outside of the system. HaloFi is gone, and while PoolTogether technically survived its legal battle, it exists as a fraction of its former self. But the underlying mechanisms worked. A $74 deposit winning $40,000 and four million dollars saved are real-world benefits. If there was more interest from investors and less hostility from regulators, there’s no reason ecosystems like this couldn’t thrive.