Defining a Maximum Supply for Pocket

The benefit in the Marketplace of defining a maximum supply for Pocket Network has been expressed by many, such as in the following comment from @thedoc in the SER proposal discussions:

The original SER draft proposed an emission strategy going forward that would asymptote to a maximum supply of 3.0B POKT in the absence of app burn or other sinks of POKT. IT was decided by the authors to abandon that approach in favor of defining a more aggressive emission reduction strategy over the next twelve months that gets to single-digit inflation by the end of the year and forces the DAO to revisit emission strategy for V1.

Were the roughly 4% monthly reduction outlined in the final draft of SER be continued indefinitely, it would correspond to a maximum supply of just over 2.0B $POKT. Other monthly reduction levels correspond to different maximum supplies, as seen in Table 1.

Table 1 – Max POKT Supply as a natural consequence of small, stable monthly emission reductions.

monthly emission Corresponding Corresponding Period Other projects w/
reduction max POKT to reduce emissions similar long-term
(percent) supply (Billion) by half (Years) emission reductions
0.2% 12.00 28.8
0.4% 6.80 14.5 IRON
0.6% 5.00 9.6
0.8% 4.14 7.0
1.0% 3.60 5.7 SOL, AVAX
1.2% 3.25 4.8
1.4% 3.00 4.1 BTC, ADA, LTC, BEAM
1.6% 2.81 3.6
1.8% 2.67 3.2
2.0% 2.56 2.9
2.2% 2.46 2.6
2.4% 2.38 2.3
2.6% 2.31 2.1
2.8% 2.25 2.0
3.0% 2.20 1.9
3.2% 2.16 1.8
3.4% 2.12 1.7
3.6% 2.09 1.6
3.8% 2.06 1.5
4.0% 2.03 1.4
4.2% 2.00 1.3

Using the SER proposal as a mechanism to define a Maximum Supply proved problematic due to the inability to reconcile two incompatible design principles within the confines of a single proposal, namely the goal of not unreasonably constraining emissions in the future if the network encounters the need to rapidly grow, and the goal of bringing inflation to single-digit levels by the end of this year. If monthly reductions were set too small, such as the original 1.4% pre-proposal, the reductions were seen as too small as to be meaningful and resulted in taking too long to reach single-digit inflation. If monthly reduction were set to a higher value such as 4% it would not leave enough headroom to accommodate growing emission during a future growth phase.

The proposed solution to this conundrum is to separate actual from allowed emission.

An actual emission schedule does exactly what it’s name implies - dictates actual emissions. Examples include WAGMI, FREN and SER.

An allowed emission would sit above the actual and would trace what in the following I call an emissions “bound” or emissions “envelope” that is higher than and imposes constraints on the actual emission schedule. It represents what users and investors of the token can reasonably expect the supply never to exceed, even if actual emissions are not precisely known into the far future and even in the face of follow-on DAO governance actions.

Were the DAO to pass a proposal that constrains the allowed emissions (e.g., by defining a 3.0B maximum supply), it would be free to pursue any actual emission schedule it desired within that bound, but not above the bound. (Caveat: the DAO always retains the right to vote to revoke or modify an allowed bound but the goal would be to right-size the bound in the first place such that the DAO would never need to revoke or modify it in the future).

The logical method by which allowed governance actions are constrained is via the Pocket Network Foundation Constitution. For example, article 4.25 of the constitution constrains how validators may be rewarded and was invoked several times over the course of 2022 to test if one or another proposed governance action was allowable or not (see, e.g., PIP-22, PIP-25 discussions):

The course of action being investigated is to submit a proposal to amend the PNF constitution by adding a clause just after the above quoted clause. The wording is still being worked on, and is subject to community imput, but a draft laungage may be as follows:

4.26. As investors are the first building block upon which Pocket is built, care must be taken not to dilute investors’ token holdings via unlimited expansion of the token supply. Toward that end, the total supply of $POKT shall not exceed 3.0 billion $POKT. The Council must never approve Protocol Upgrades that would cause the token supply to grow in any one month by more than ten percent of the difference between the then current supply and the maximum supply of 3.0 billion $POKT.

Note that it is important that the language of this clause reference supply growth and not emissions. In the future when Pocket Network handles hundreds of billions of paid RPC requests. emissions is likely to grow to be very large, but when balanced by app burn, the supply growth will be small, zero or even negative (i.e., POKT become deflationary).

The proposed value of 3.0B as a maximum supply is strategic in that it allows for the claim that over 50% of possible tokens have already been minted while giving so much space for growth of net emissions in the future, if such growth is ever needed, as to cause the constrained to never be felt in practice.

Current supply as of March 1 is expected to be ~1540MM tokens. This is 51% of the Maximum Supply if Maximum Supply is set to 3.0B. This would position Pocket to be in good company with several other tokens such as LINK and NEAR, as can be seen in Table 2 that was complied by @caesar for the SER proposal and copied over here. This provides a much cleaner narrative for reporting services such as Messari, etc. than reporting that the token supply is unlimited.

At the same time, the constraints placed by the above clause are never likely to get tested. Every way that I have sliced and diced the numbers leads to the conclusion that the constraint is nominal only and will never get tested in practice, as illustrated below.


Supply as of March 1 of this year is approximately 1540MM. IF SER passes, anticipated supply at the end of the one year is 1740MM. Emissions at the end of the SER period would be 0.42MM per day or 12.8MM per month. Now compare this to the constraint imposed by the above proposed clause. The headroom between the then current supply at the end of SER and the max supply is anticipated to be 1260MM POKT (3000MM – 1740MM). 10% of this value is 126MM POKT. Thus, the constraint imposed by the above clause on monthly net emissions is anticipated to be ten times greater than the actual emissions at the end of SER. While fluctuation in emissions may be desired to implement Vitaly’s ideas on demand-centric emissions and to accommodate growth, it is not anticipated that Pocket will ever need to go back to 10x the current level of emissions.


If 420k daily emissions were to continue indefinitely into the future following the 12 months of SER, there would come a point in the future, as POKT supply got close to the maximum supply, that the 420k/day emission would itself start to exceed the constraint imposed by the above clause. This happens when the supply reaches 2872MM POKT (3000MM – 2872MM = 128MM and 10% of this is 12.8MM). This would not happen for over 7 years. In other words, Pocket Network could continue until summer of 2031 at 420K/day emissions in the absence of app burn before being forced to further reduce net emissions by the above constraint. Even in the very worst-case scenario, app burn will turn on long before this and render this to be a moot point.


Suppose, on the other hand, that following the conclusion of SER, the decision was made to turn on emissions to the maximum extent allowed by the above clause – that is, to cause actual supply growth to trace the envelope defined above (10% per month of the headroom between current supply and max supply). While this is somewhat of an artificial construct, it helps inform the discussion to know how long the network could be run at “full throttle” in the absence of app burn before emissions came back down to the 420k/day level. As can be seen in the hypothetical emission schedule shown in Table 3 - where emissions are ramped up almost 10x at the conclusion of SER - the network could be run at the full throttle allowed by the proposed clause until January of 2026 before emissions reduced back down to end-of-SER levels. All while never endangering breaching the 3.0B defined maximum.


Actual POKT supply will, in practice, most likely never approach anywhere close to 3.0B POKT.

SER, if continued indefinitely traces to just over 2.0B. Ending reduction measures at the end of SER will cause supply to grow linearly rather than asymptote to any value, but at a rate of only 0.15B added POKT per year. App burn will turn on long before 3.0B is even on the horizon. It is likely that POKT supply will never exceed 2.2 to 2.3B POKT, no matter what tokenomics policy is employed going forward. Imposing a max Supply of 3.0B is safe from the perspective of not unduly tying DAO hands in governance actions it takes in the future. Enforcing the integrity of the Maximum by not allowing any governance action that would cause supply to grow in any month by more than 10% of the remaining headroom between current supply and max supply is a stable and often used methodology and is also free from imposing any practical constraint on likely desired DAO action.

The only downside to defining a Maximum Supply of 3.0B is that it plants a number in peoples head that is likely larger than it needs to be, potentially giving an impression that POKT is more inflationary that it actually is. Defining a Maximum of 2.5B rather than 3.0B is better in this regard, but is more constrictive in the case the DAO finds the need to rapidly expand emission for a period of time in order to grow the network. Further, the narrative of 2.5B is only slightly better than 3.0B (current supply sits at 62% of max supply for Max of 2.5B vs 51% of max supply for a max of 3.0B). The goal is to find the right balance between controlling the narrative of POKT in the marketplace while being the least constrictive of potential future DAO actions.

Feedback from the community is solicited on this approach to defining a Max Supply for POKT (i.,e the use of constitutional amendment to constrain allowed governance action so as to ensure a max supply) as well as on the actual values being suggested.


This is a great write up msa, from what I can see this looks like a great idea.

As you say, this is likely never to be tested, it’s purely from a perspective standpoint of potential investors. Not to mention, a further proposal could change this if absolutely necessary, although I would hope it would never be needed.

Also think this would be an easy implementation and could get done quickly, obviously the dev team have priorities but this may be a quick ROI in terms of marketing.


Supporting this proposal. 3.0B sounds like a decently balanced number after taking everything into consideration (such as current inflation rate, targeted inflation rate and future POKT plans regarding coin economics). 3.0B will likely not get touched anytime in the future, especially knowing what’s planned to be implemented and overall plans to make POKT deflationary at some point in the near future.


Thanks for addressing this topic and giving it the space that it deserves in the community as it is not a minor change to the protocol.

I’m not in favor of setting a max supply because it feels not to be adequate for the protocol. I understand the benefits of filling that “tick” in the crypto community and encourage uneducated investors to buy $POKT. However I feel that the balance would be negative for the project.

My thoughts, some already mentioned:

  1. Setting a max supply after so long (2 years) sounds as a quick move, rises the question “do they even have a plan around their tokenomics?”. Simply setting a MaxSupply does not sound like a long term plan (IMHO).

  2. How large is the target market of dumb speculative capital that we expect to capture? I mean really dumb “box-checking” investors (this is an honest questions, coming out of my ignorance in the finance world).

  3. Do we need a max supply even if we know that we wont reach it?

  4. Does this align with V1? I think that we are in a survival mode, with all eyes on V1, will this be necessary in a post V1 landscape? I think not…

  5. If we set a high max supply too high, without in-chain emission controls, we could be preparing another high inflation round. I mean: constrain emission, set a max supply, drive price up (fingers crossed), increase emissions, staked people (most of the DAO) profit and dilute new adopters/holders positions. Maybe this is too sketchy, but setting max supply in the DAO constitution wont be enough, you will need to also add max emission rates to block this.

  6. We need to be clear that Pocket cannot survive without a genuine on-chain burning mechanism. Instead of setting a max supply we should be discussing how to include burning as fast as possible, with a burn wallet or something else.

I think that the first discussion that we need to promote in this thread is more narrative oriented than technical. The actual value of MaxSupply can be discussed after we agree if we need one and how tight should it be wrt current supply.


I’m not wholly convinced that’s the case, in fact, I don’t think dumb speculative capital would even go as far as that. It’s usually ‘current mc vs circulating supply’, inflation and max supply in the future I’m not convinced come into it that much.

I think from a VC or large investor point of view it’s a nice to have, as it does in fact tick boxes when it comes to inclusion within a portfolio.

That said,

If we set a high max supply too high, without in-chain emission controls, we could be preparing another high inflation round. I mean: constrain emission, set a max supply, drive price up (fingers crossed), increase emissions, staked people (most of the DAO) profit and dilute new adopters/holders positions. Maybe this is too sketchy, but setting max supply in the DAO constitution wont be enough, you will need to also add max emission rates to block this.

This is a point, having a ceiling might act as a magnet for leeway in inflation, but from the current inflation proposals I’m not sure.

Does this align with V1? I think that we are in a survival mode, with all eyes on V1, will this be necessary in a post V1 landscape? I think not…

Maybe not, probably needs more discussion alongside V.1 mechanisms, otherwise it’s a waste of time for the devs.

Setting a max supply after so long (2 years) sounds as a quick move, rises the question “do they even have a plan around their tokenomics?”. Simply setting a MaxSupply does not sound like a long term plan (IMHO).

“do they even have a plan around their tokenomics?", I think this question has been asked throughout the last two years anyway, maybe definitive changes to show inflation isn’t forever and can’t exceed certain numbers would make people say the opposite. “it looks like they finally have a plan for their tokenomics”.


We need to be clear that Pocket cannot survive without a genuine on-chain burning mechanism. Instead of setting a max supply we should be discussing how to include burning as fast as possible, with a burn wallet or something else.

The ABR and overall burn question is a whole different kettle of fish and not a simple change like this. I think that particular question needs to be handled with regards to the payment mechanisms going forward. Clarity on if this is happening and if so, when, would be good, I think it deserves it’s own proposal.


I agree with this take. Too many changes at once without measuring the outcome has been a theme somewhat, and it’s led to some chaos. It would be prudent to let the dust settle and measure the impact before attempting to make additional changes.


Great input so far. Just wanted to get the conversation started. I’ll share additional thoughts on specific questions raised later this week or early next week. I need to switch over to @RawthiL’s radCAD thread for the time being


I guess most important question here is if MaxSupply can harm POKT in any way? Core developers should jump in and put their input about it. If there’s no harm, I don’t see what’s wrong with putting up a MaxSupply at the amount that is not going to be touched anytime in the future? It can even serve as an additional and valuable protection measure if someone, somehow, successfully create billions of POKT out of thin air.

It’s large. We cannot know exactly, but imo even if you lose “only” 5% of the capital that didn’t get in due to the absence of MaxSupply, we made a serious mistake as a DAO. We should strive towards maximum attractiveness and avoid saying things like we don’t care about dumb speculative capital. It’s a wrong approach.

Yes, because of the same thing explained to the question above.

That is a question for core devs as I said at the beginning of this message. Question isn’t if it’s “necessary”, but if MaxSupply can harm POKT in any way. If it can’t, why would someone want to prevent it to be implemented? Everyone knows what’s POKT aiming for (such as being deflationary, introducing ABR, …), so argument that someone will think POKT is preparing for another high inflation round is not strong actually.

To me, not having a MaxSupply in place screams more like “POKT will be inflationary forever” than putting MaxSupply in place as a strong, tangible message to end the high inflation etiquette.

After all, it shouldn’t break V1 mechanisms in any way.


Thanks @msa6867 , will circle back after SER. Already spoken so much on this topic on TG and forum, so a lot will be repetitions. More curious about @RawthiL 's radCAD post because that falls outside my comfort zone and therefore is intellectually challenging.


Hi @msa6867, thanks for all the work you have done to putting this post together and kicking off this discussion. Speaking just for myself here, while I agree with the need to continue reducing inflation and moving towards minimal viable issuance, I am against a max supply cap. While I agree it can act as a useful forcing function, in my view it likely ends up similar to the Ethereum timebomb or US debt ceiling which just ends up causing contention and ends up being repeatedly moved.

There are two important but distinct conversations here in regards to network issuance that I think it’s helpful for the community to reach alignment on:

  1. Changes to the short-term issuance (pre-v1)
  2. Long-term issuance model (post-v1)

While these are separate decisions, where we are going will shape how we get there. With this in mind, it’s useful to step back and talk about the long-term issuance model first. @o_rourke’s early vision for an inflationary network with burns linked to demand on the network has been validated and proven to be ahead of its time with Ethereum’s EIP-1559 implemented on mainnet today with a consistently negative issuance. The beauty of this model is that it allows issuance to expand and contract with the demand cycles of the network and the broader industry.

With the launch of v1 I believe there is also an opportunity for us as a community to potentially move further towards Ethereum’s EIP-1559 model implementing app burns, but also potentially burns for successful POKT transfers targeting a minimal viable issuance and deflationary issuance over time.
With these thoughts in mind, while I am in support of further reductions to issuance pre-v1, I do not feel it is constructive to impose a firm supply hard cap.


I’ll start engaging this topic and interacting with the input thus far, next week. In the meantime did want to echo to pick up this burn wallet thread:

100% agreed.

We should definitely be discussing (and have been discussing) off-chain precursors to on-chain app-burn. Will dm and see your thoughts and how we can collaborate on that front. I see it more of a “both/and” rather than a “either/or” discussion. The two topics are mutually compatible, perhaps even complimentary. Getting even an off-chain burn up and running is not trivial; I’ve been having conversations w folks about it since October. In my mind, setting a max-allowed supply can be accomplished relatively quickly in the meantime (if the DAO decides it is useful) and is more or less set-and-forget after that.


I can claim and I think people would agree that no one has talked about narratives and narrative building in the Pocket community as much as I have.

I empathise with the narrative and the sentiments behind fixed supply and I myself have been a proponent of digital scarcity.

Yet, I have to agree with @nelson and @RawthiL , and my thoughts about fixed supply are on this thread.:

I have at least glanced through the tokenomics of most of the relevant top 50 tokens because of the above exercise and also for my day job.

I believe $POKT has an opportunity to do better than simply fix a number, and come up with a model that is intellectually superior and honest than whats out there. The bar is low.

Whether $POKT needs $ETH level complexities, I don’t know (yet) but that is definitely the gold standard.

Which takes me to “burn” that @RawthiL and @nelson proposed and you @msa6867 also seem to be excited about.

Me too!

Even from a narrative standpoint, burn is superior to fixed supply. Why?

Because token burn is repeated and every time it happens there is excitement in the market. $BNB is one such token.

Since the merge, despite so many intellectually vital subjects, the most talked about $ETH properties have been the burn, $ETH being deflationary and therefore ultra sound money.

Going back to $POKT burn, here are my suggestions and questions:-

  1. Burn ideally should be programatic such as of ETH and not non-programatic burn such as of $BNB, $Aave etc.

There should be on-chain transparency of supply and issuance such as:

And burn such as:

Such standards will elevate POKT tokenomics to newer standards, which is generally not the case as I highlighted in this thread.

Screenshot 2023-02-18 at 10.57.40 PM

  1. Question is burn what? Are we talking about merely a supply/demand equilibrium or are we also talking about app stake burn? Because the latter I think is a bigger discussion and involves the only seller/reseller PNI; it’s their pricing plan.

I am very interested to discuss protocol financials, token value accrual, app stake burn etc but I am not sure if that will cause scope creep.

  1. What’s the timeline? @RawthiL says “as fast as possible”. Think answer to #2 will matter here. Also what about “post-V1” pushback to many changes/proposals that happens?

  2. How does this relate with @RawthiL 's radCAD post?

I will add more as I think through but for now this is it.

Also @Cryptocorn , SER is up for voting. So you could join this party, its getting interesting :wink:


To clarify, I’ve never suggested a fixed supply. Rather a max allowed supply. Actual supply once app burn is in effect will cause dynamic movement of supply well below the 3.0B level, whether or not a max-allowed supply is defined. Nothing is changed in what is being discussed in this thread concerning the future actual supply of POKT being dynamic based on the relative balance of sources and sinks.

Assuming SER passes, the playing field for figuring out the incorporation of app burn into tokenomics is wide open; I’ve tried to show that in practice 3.0B is a bound unlikely to ever get tested no matter how the app burn discussion goes.

Exactly. See above. Separating the concept of max allowed from most-likely actual trajectory could be that opportunity to introduce a new concept into tokenomics that advances the way projects define their tokenomics.

Exploration of burn methodologies will be kept front and center and high priority both with respect to on-chain burn post v1 and possible off-chain burn prior to v1. We would love your participation on that front.

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Yup, I understood. The “narrative-only” faction doesn’t differentiate much between the two though. So I wanted to cover all bases including fixed/capped supply arguments.

Exactly. In burn methodology we have a choice to either have a supply number or not have one. Such as $BNB works with a number but $ETH doesn’t.


Thank you.

Sure, happy to contribute and learn.

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If butn is to be applied in V0 it would need to be done by off-chain means, such as PNI buying $POKT in the name of app clients and send it to a burn wallet that we can track. Burning stake or any other method will be consensus breaking changes that are to be avoided in v0.

How much can we hold living on inflation and speculation? that’s the main issue. V1 is still a year away, we should have ABR or some proxy ready to go by then.

The model should help us define this. It is not a model of v0 or v1, it is a generalist model that can be changed and adapted. However it is only a tool to test hypothesis, we first need to define how burn should work.


Proves once again why MaxSupply matters when someone new start asking about POKT: Twitter comment

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Thank you @TheDoc . Noted.

Defining a maxSupply is something I still support seeing move forward, but as a “realist” I am not sure there is the will yet to approve such a definition. For the moment I keep the issue open, but on the “back burner” . Change of community sentiment, as evidenced by positive comments toward defining a max supply by more community members could help greatly in that regard.

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