Original Author: Beam | H.Forest Ventures

At EthDenver 2022, protocol expert Daniel Olshansky talks about Pocket networkgave a speech, and they support the growth of the ecosystem by handing out multiple prizes for the best projects integrating with Pocket.

Pocket network establishes an incentive mechanism among all blockchain participants (application developers and full node operators), and provides access to blockchain data through a decentralized node structure, which belongs to the web3 infrastructure track. In simple terms, the Pocket network's mission is to provide web3 applications with reliable, blockchain-agnostic, decentralized API access at a fraction of the cost of centralized competitors such as Infura.

Before understanding what Pocket network does, you need to understand the relevant knowledge of web3 application development. If you are a developer, before running your protocol perfectly, for example, you deploy a lending protocol on the public chain, and users come to interact with your protocol, you need data from the public chain, which is usually API Operated in the form of a session request. At present, blockchain developers generally use centralized blockchain infrastructure like Infura to call and return data on the public chain.

But this actually has a hidden danger. The cost of these web3 API providers purchasing data centers, self-built servers and investing in hardware research is quite high, so most web3 API providers usually run on the existing web2 platform (such as AWS, Amazon Cloud).In other words, in our top-to-bottom decentralized architecture, a key link appears to be centralized.

Pocket network can solve this problem. It is a value exchange platform built around the supply and demand of nodes. Its ecological participants are divided into:

• The supplier of the node,They can join the agreement by staking POKT to provide node operation services;

• the demand side of the node,That is, developers of various Dapps also need to pledge POKT to obtain node services.

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1. Summary of main points

1. Project Highlights

① The track has broad prospects and strong certainty

Pocket network is a decentralized API data service protocol, which belongs to the web3 infrastructure track. We are optimistic about related tracks mainly based on the following logic:

1. The future must belong to multiple chains, and the ecology on the chain will grow explosively. At present, other public chains except Ethereum often have security incidents due to insufficient decentralization of node operations, such as September 2021 SOL downtime event.

2. For most Dapp development teams, the cost of renting and maintaining their own nodes is too high, and they will prefer to choose node hosting operators such as Infura. The risk is relatively high; for example, on March 4th, Metamask blocked user IPs due to a configuration error in the Infura node.

3. In the node operator track, a leading project (Infura/Alchemy) with a large market share has been produced. For small and medium-sized operators, it may be one of the options in the future to jointly fight against large operators under the agreement.

Therefore, from the perspective of the decentralization requirements of public chain operations, the security requirements of Dapp deployment and operation, and the market strategies of small and medium-sized node operators, the segmented track where Pocket is located has great certainty and great market prospects. .

②After the launch, the business has developed very rapidly

According to the tracking and observation of Pocket official website and Dashboard, we found that Pocket currently has more than 30,000 nodes (600 at the beginning of 21), and the daily processing of more than 200 million relays (3 million/day at the beginning of 21), supports More than 20 public chain networks (mainly Harmony).

③Economic model upgrade brings stronger deflation

Pocket adopts a very novel token value capture method. For node suppliers, they join the network by pledging POKT to obtain block rewards; developers who are service demanders need to join the network by pledging POKT. The amount of coin pledge corresponds to the upper limit of the number of data relay services obtained in a session cycle. Different from the traditional method of paying according to the number of uses, when developers do not need node services and withdraw from the network, the pledged tokens will be unlocked after the 21st.That is to say, the payment method for developers is opportunity cost - because the nodes continue to generate tokens, the value of the POKT pledged by the developers is actually diluted, which is the so-called pay via dilution.

According to the official white paper, the current project adopts such an economic model out of the consideration of the rapid development of the project at the initial stage. From a penetrating point of view, it is equivalent to subsidizing the demand side and the supply side by issuing coins, and developers can obtain them at a lower price. service, node suppliers receive POKT output as a cost subsidy. When the market develops to a mature stage, the team considers adopting the method of pay via burn, that is, part of the POKT pledged by developers will be destroyed, and greater deflation will be exchanged for better value.

2. Project risk

The project's benchmarking against AWS or Infura is essentially a process in which a group of small and medium-sized operators redistribute value in the same agreement: the agreement acts as a whole to fight against centralized operators. Therefore, under the current economic model, the essence of the token of the agreement is: a two-way subsidy between node operators (miners) and Dapp developers (node ​​users), which will cause problems as follows:

1. First, the market expansion is not as expected, resulting in insufficient pledges, higher than expected inflation, and excessive selling pressure. Therefore, it is necessary to observe its ecological expansion and cooperation with the public chain for a long time;

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2. Business Brief

1. Basic structure

The core business of Pocket network is to provide developers with decentralized data relay services. Its network consists of 3 components: application program, node and network layer.

Where applications submit relay or API requests. Nodes do this by submitting these requests to the corresponding public database and returning relevant data to the application. The network layer consists of protocols and deterministic storage, which are the backbone of interactions between applications and nodes, including (but not limited to) configuration, record tracking, governance, and economic policy. The mechanism used by the network to regulate the interaction between applications and nodes is the session (Session).

2. Business object

Therefore, the business objects of Pocket network are usually public chains and Dapp developers.

Some public chains can choose to access the Pocket network due to their early development stage, insufficiently dispersed node operators, fewer ecological participants, and insufficient decentralization. For example, in October 2021, the Pocket network will integrate public chains such as Harmony and Solana . Another type of business object is the developers of various decentralized applications. For developers, they can choose to build their own nodes. This has the advantage of higher security, but the price is high, so most developers will choose something like As API service providers such as Infura and Alchemy, while reducing costs, they need to bear risks such as censorship, privacy disclosure, and single-point downtime. Pocket network provides developers with a third solution. In a decentralized way, it enhances the stability of the system and avoids the risk of network service interruption caused by a single node downtime. At the same time, due to its full-node operator topology The flexibility brought by diversity reduces the cost of use.

3. Business Development

The track where the project is located is mainly benchmarked against Infura or Alchemy. According to the announcements of the former two, its daily data request is usually at the level of 100 billion, and the valuation is about 3 billion US dollars, while the daily data request of Pocket is currently stable at around 200 million , only accounts for a very small part of the relevant market, and the current fully diluted valuation of Pocket is about 700 million.

However, mechanically comparing the decentralized service provision agreement with the centralized node operating company is tantamount to seeking a sword. The exploration of decentralization is a long-term process. The decentralization of applications spawned by Ethereum smart contracts, decentralized storage represented by AR, etc., decentralized content distribution represented by Theta, etc., and HNT, etc. Decentralization of data infrastructure is a weak link in the entire infrastructure construction represented by the construction of decentralized network facilities, and Pocket can be said to fill the gap in this field.

3. Token Model

Inflation:

Inflation:

Every time the Pocket network processes and verifies a relay data request, it will mint 0.01 Pokt, 89% of which will be rewarded to the verification node that correctly processed the data request, 10% will be allocated to the Pocket foundation, and the remaining 1% will be rewarded to the Pocket The verification node of the packed block in the network.

The DAO of Pocket network will adjust the output speed of Pokt according to the situation to balance the inflation of Pokt. Adam, a core member of the team, initiated a parameter adjustment proposal (PUP-11) in community governance, called the WAGMI parameter. Considering the recent increase in the number of relays, the output of Pokt has reached 2-3 million per day. He suggested Consider this pace of inflation carefully. On February 8, its governance community Pocket DAO released the governance proposal PUP-13. The content of the proposal is to gradually reduce the inflation rate of POKT by reducing the node reward POKT. The proposal has been approved, and the inflation rate is adjusted as follows:

After the proposal is passed: target inflation rate = 84.85 POKT/day

+30 days: target inflation rate = 76.36 POKT/day

+60 days: target inflation rate = 67.88 POKT/day

+90 days: target inflation rate = 59.39 POKT/day

+120 days: target inflation rate = 50.91 POKT/day

+150 days: target inflation rate = 42.42 POKT/day (or 15,486 POKT/year)

Deflation:

Demanders of data relay services and providers of data relay services need Pokt to participate in the network.

For developers, in order to obtain system services, they need to pledge at least 1 Pokt to obtain data relay services, and each pledged 1 Pokt can use the relay service about ten times in a session cycle. For node operators, the minimum stake required to become a service node capable of handling relay requests is 15,000 Pokt.

According to the official website plan, when the entire system has passed the early growth phase and entered the mature phase of the system, in order to ensure the balance of the system, DAO will start the application destruction mechanism, that is, the application uses the relay service At this time, the pledged Pokt will be destroyed according to a certain ratio. At this time, the payment model of the application will gradually shift to the SaaS model, that is, it will be charged according to the actual business usage.

4. Financing

Pocket Network has conducted multiple rounds of financing. According to official sources, in April 2021, it raised $9.3 million. In addition to Blockchain.com, Eden Block, DACM, LD, OKEX, FBG and other institutions, investors are more than 200 node operator.

In January 2022, according to the official, $10 million in strategic financing was completed, led by Republic Capital, RockTree Capital, Arrington Capital, and C² Ventures, with participation from Coinshares, Decentral Park Capital, and Dominance Ventures.

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