PEP-21: Bypass wPOKT LBP and go straight to the bridge

Attributes

  • Author(s): @Patrick727
    Recipient(s): Pocket Network Foundation
  • Category: Agreement
  • Fulfills: n/a
  • Related Installments: n/a
  • Asking Amount: 0

Summary

Do not do a wPOKT LBP, instead go directly to the bridge and DEX’s.

Abstract

POKT is now listed on many exchanges, with apparently more on the way.

Volume is picking up on those exchanges and an expected “repricing” is occurring.

Many new market entrants have gotten into Pocket Network through this and subsequent activities.

wPOKT was originally expected to launch before this date, with an LBP and bridge following.
It has since been pushed back and because of this, concerns regarding the LBP are surfacing in the community.

This proposal is to bypass the LBP of wPOKT and instead go straight to the bridge.

Motivation

A LBP’s main function is to raise funds while creating an initial “price discovery” event where the market provides a fair value estimate of the token given its new liquidity.

This made sense when POKT was trading at relatively low volume through OTC channels that the majority of market participants were unaware of, or not comfortable using. But now with the recent exchange listings this discovery is taking place on exchanges now.

The motivation for this proposal is to create a healthy discussion based on what I am hearing from community members. By openly discussing these concerns and alternative approaches, at the very least, we will have a transparent process in which the community can buy into.

Budget

0 Dollars, just time from Pocket Network Foundation to refactor the roadmap and communications.

Rationale

An LBP will introduce new supply into the market that would not have otherwise been introduced, and may have an adverse effect on the current market repricing of the token.

Pocket Network expressed that the funds raised in n LBP would go directly into AMM’s anyway.

Even if the LBP was 10x of current CEX price, due to the active price discovery happening now, and the introduction of new supply, there may be an adverse effect on price actually where nobody buys at the high price, dumps at first chance of 2x and the resulting price is worse then it would have been otherwise.

There are examples of projects attempting similar things in the past, and the results reflected the concerns outlined above, fundraising goals were less than expected and price was less than before.

Whereas going direct to bridge has many benefits that are aligned with the vision of wPOKT

  • Smaller token holders don’t need to rely on sending their POKT to a third party to participate in shared nodes, they can either LP/Single-sided stake or stake in regenerative finance to lock supply while adding new utility (crowdsourcing DApp Bandwidth)

  • No additional circ. supply introduced

  • DEX’s can immediately accept wPOKT which will increase liquidity.

  • Community sentiment is even better, as it benefits the token and ecosystem & team doesn’t raise more money which would directly take from open market demand.

Dissenting Opinions

wPOKT may be priced different because it is a premium

  • This may or may not be true, but introducing an LBP at this juncture and market conditions I believe will more adverse effects then the benefits of a slight premium if that.

We already committed to an LBP

  • There may be some blow back from those that were waiting for LBP to deploy capital into pocket. I think by having this discussion openly we can mitigate that blow back, and at the end of the day, we can’t make everyone happy all of the time and I believe this is what is best for the project at this juncture.

Repricing has not happened yet

  • This also may or may not be true, given macro market conditions I don’t think this is a risk worth taking. Going direct to bridge and DEX’s also creates more liquidity depth which can aid in any expected repricing events.

Deliverable(s)

  1. Refactor roadmap to exclude LBP
  2. Maintain current roadmap an milestone dependent launch, accelerate timelines where possible given that LBP would be excluded.
  3. Refactor communications to re-educate community there will no longer be an LBP

Contributor(s)

wPOKT team.

Copyright

Copyright and related rights waived via CC0.

7 Likes

I’ve been thinking of that as well actually, since it’s already been listed on multiple CEX with more coming, so the need of the LBP for wider adoption of POKT is no longer as needed since POKT is no longer OTC only. The only concern I have would be the liquidity on Uniswap. One of the main reasons for the LBP is to utilize the funds raised to be used to create the initial LP, if the Uniswap listing happens without a good starting LP, the price impact would not be friendly, and the price will have huge swings even with small orders. If this is passed, I would propose the foundation to still provide the initial LP/liquidity as they’ve done with CEX listings. I will also assume PEP-20 would then also apply to this if they do so.

4 Likes

I am torn on this one.

On one hand, we can easily do without LBP now.

On the other, LBP is a large marketing event that lets us tap into the user base of the platform.

So, in exchange for some volatility - which isn’t necessarily bearish as many unlocks in DeFi turned out to be bullish - we will be on-boarding a decent chunk of new community members.

5 Likes

Yep, this is a fair view as well.

1 Like

I agree that an LP is still needed.

I was planning on doing a follow up proposal for a wPOKT/Stable LP pool anyway

Stable because of market conditions but it could be ETH.

And anyone can also make a liquidity pool.

2 Likes

Makes sense. I agree with Lex that a marketing event would be beneficial but it looks like your follow on will address that.

3 Likes

I hear you.

It’s possible that the launch of wPOKT itself with the Bridge & straight to DEX has the same marketing impact as it will be immediately tradeable.

2 Likes

I think that actually might work. Okay, let’s ditch the LBP.

3 Likes

I don’t have anything eloquent to say on this topic other than, what had been planned so long ago with wPOKT is no longer relevant given where we are as a project, including the LBP. I support this proposal and the need to refactor the wPOKT launch strategy.

This personally saddens me because of the effort I and others put into this, but the need to focus is paramount.

7 Likes

I shiver at the thought of how much of our on-chain analytics code will be thrown away when v1.0 is out.

Totally feel you, Adam.

3 Likes

I would maintain the LBP as I only see advantages to doing so, namely:

  • Increasing awareness in a totally different community. There are tens of new projects launched per week; we are all very invested with our time in POKT, but 95% of the world has not even heard of POKT
  • Raising LP liquidity owned by the DAO; an LP position is a productive asset, investors will give their USDC for POKT; and the DAO will own and monetize this liquidity
  • Creating enough liquidity on the DEXs to allow working with LP management protocols like Toke, Olympus Pro, OndoFi, etc…
  • Allowing for new investors to buy in size without opening accounts on CEXs or dealing with our beloved OTCs

I am not saying it should necessarily be a copper LBP; many projects have recently demonstrated that other mechanisms are fairer… not sure what the new buzzword is for it, but you basically pledge USDC vs. POKT for a few days, and in the end, everyone pays the one and same price.

3 Likes

I agree with this proposal.

It makes little sense to have an LBP because the token is already distributed and has a market price. Also, launching the bridge after the LBP is not good because people will be buying a token at a probably inflated price that will quickly come back down to CEX/OTC pricing after the bridge launches.

I think the DAO should still explore some strategies to sell POKT in order to provide liquidity; however, I know plenty of whales that are going to do this, so it may not be necessary.

We could do an LBP but launch the bridge first.

2 Likes

This proposal makes perfect sense (especially after watching the recent ill-fated Colony LBP). For wPOKT the price discovery is already in. The market will correct any congestion pricing in an LBP immediately after, leaving investors with overpriced holdings, not to mention misspent tx fees. Better to move on and allocate resources to the bridge and LP.

2 Likes

I disagree.

  • The LBP has been expected for a very long time and many people are waiting for it.
  • It is in the roadmap and I do not think we should pivot away from that at such an early stage and create bad optics.
  • “When is the LBP” is a very common question on Discord and Admins have replied on many occasion that it is happening and just delayed.
  • The same question is also frequently asked on the Alchemist Discord.
    -LBP would be a substantial marketing event.
  • Copper has become the market leader for “fair” launches.
  • LBP would bring exposure to new communities.
  • Many people do not want to purchase on a CEX.
  • Many people do not like or trust OTC.
  • Some of the CEX to date are not very reputable.
  • CEX are not decentralized, which is the whole point of POKT, is it not?

If the mechanics of the LBP are clearly explained this is good exposure for us, the optics of not doing this are not great given the amount of time we have continuously stated it is happening. We can at least stand by the “fair” launch and true price discovery. How much of the existing CEX volume is wash trading?
Proceed with the LBP as promised as thousands of people are expecting.

3 Likes

Well said. The LBP event, even if not strictly necessary, would be good publicity: it’s an opportunity to raise awareness about POKT especially among the wider Defi world especially those active on Ethereum and L2s. Promotion in the lead up to the “fair launch” could also generate excitement by hyping various Defi uses of wPOKT, eg liquidity pools and other initiatives. (And don’t forget the proposal to explore a Copper co-launch on Polygon to expand POKT purchases among an even wider community and spread awareness of POKT further.)

1 Like

Up for the proposal as:

  1. the initial price discovery has happened
  2. we are already trying to figure out what to do with the growing supply
  3. not sure that lpb will bring the necessary effect taking into consideration the market conditions

My only concern is how to bring enough liquidity to ETH without LBP.

The thing is, it wouldn’t be fair launch.

The tokens already live, and LBP buyers would be buying up a very low float relative to what native pokt is already circulating.

People will still be able to buy it on a DEX.

Also, its permissionless, so some people could team up and start their own LBP if the DAO chooses not to :slight_smile:

I do agree though that the LBP brings a lot of publicity.

I think there will be a lot of whales that LP. The dao can also do a token sale outside of an LBP for liquidity.

aw man… thanks for all your efforts! maybe something will come of it still!

what are cost savings of bypassing lbp? any efficiencies gained - faster bridge, more money for liquidity…?

also, would many deem the copper silly? were i a new investor i would say, “copper launch? isn’t it already being traded? why would i pay a penny more on lbp? why would i buy at all?”

i think we should expedite wPOKT for the purpose of data farming. if marketed correctly it could gain a lot of attention and incentivize adoption of POKT.

2 Likes