PEP-4: POKT listing

Attributes

Summary

We propose to instruct a committee to pursue listings of POKT on centralized and/or decentralized exchanges, and to grant Pocket Network Inc (PNI) 800,000 POKT to cover exchange listing fees, in order to create an open market for POKT.

Abstract

Given the combination of the prevailing market conditions and the strong progress of Pocket development and adoption, it appears to be an ideal time to list POKT on exchanges and open the door to new stakeholders.

In order to do so, due to the time constraints and levels of due diligence involved, the DAO should select a small committee of one or more individuals to identify and launch POKT on an exchange. Given the sensitive nature of listings and legal implications, the committee would be bound to secrecy about their activities until the launch of a listing.

Motivation

Although it’s been effective for some users, the community-run OTC has inherent levels of friction that an exchange would eliminate. What’s more, with an exchange listing comes added transparency and a more efficient market.

A POKT listing and accompanying marketing/PR should be the best validation and advertising for Pocket (see The Graph as an example). The earned media from a listing would spread the word of Pocket Network to untouched markets and would provide additional legitimacy for the project.

The net result would be the ability for nodes to more easily sell POKT they’ve earned and nodes/apps to more easily acquire POKT thereby onboard to Pocket Network more easily. As a result, one would expect more interest on the product side on the one hand, and increased usage/traffic on the other.

Budget

Due to the nature of an exchange listing, POKT will not be an effective form of payment for such a proposal. Pocket Network, Inc. has agreed to cover all fees (listing, marketing, market makers, legal, etc.) associated with an exchange listing in exchange for an 800,000 POKT grant from the Pocket DAO. This excludes any capital required for market makers to operate with (if required). A separate proposal would be submitted for any market maker required capital. PNI may propose reimbursement in the future for expenses that exceed this initial grant.

Deliverable(s)

  1. DAO Approval (PEP-4)
  2. Search process + due diligence (listing/partnerships/marketing)
  3. Partnerships (market makers, PR, marketing)
  4. Contracting and legal
  5. Launch: listing of POKT on a top-tier exchange
  6. Exploration of additional listing options

Contributor(s)

Pocket DAO
Search Committee (selected by the DAO) - As part of this proposal, @adam is nominating himself to lead this committee. Adam has a background in finance and leads economics at PNI.
PNI resources, where necessary, to execute the PEP.

Copyright

Copyright and related rights waived via CC0.

3 Likes

@stef. Thanks so much for putting this together. Sorry I didn’t get to it last week.

I’m going to contribute my thoughts to get this a little more attention and flesh out the strategy a little (I hope you don’t mind) so that the DAO gives it full consideration. I’ll tag you when I post my changes (hopefully this week) to get your feedback.

@stef, made some significant changes. Take a look and let me know what you think. Also, let me know if you’d like to be on this committee.

I’d like to propose rethinking PEP-4 to not spend money on centralized exchange listings and instead leverage the ETH ecosystem and the wPOKT bridge for POKT price discovery via wPOKT price.

Going native DeFi could lend authenticity to the project and centralized exchanges will follow successful DeFi listings for free to get in on the trading fees. I don’t think UNI or 1INCH had to pay listing fees on coinbase et al.

This is contingent on there being an always-open-to-everyone-POKT-wPOKT bridge and the listing could happen e.g. via Balancer launch pool

As the main function of wPOKT is trading while POKT is for staking, I don’t see a reason why POKT sellers wouldnt be able to bear the extra step of wrapping their POKT before selling it as long as price parity is guaranteed through an open bridge

The main drawback coming to mind is binding the POKT sales vector to ETH gas price

If the only way to sell POKT is to go through the bridge, will that not create the same price disparity between POKT and wPOKT that you expressed concerns about in Discord? In the same way that Bitcoin has historically been inflated in some instances due to it’s function as an off/onramp for altcoins.

I notice you edited your comment as I was typing mine to add “as long as price parity is guaranteed”, which I suppose addresses my comment as an assumption, but I want to make sure we question that assumption. How do we guarantee price parity if the only way in/out of POKT is via wPOKT?

If wPOKT is the only way to sell POKT outside of P2P OTC trades, POKT won’t have its own price, (okay it will, but OTC trades usually follow the free market price, not the other way around)
because, in order to have a price there has to be a market. Since POKT will be 1:1 transferrable to wPOKT, and wPOKT provides the market and liquidity - I believe POKT will assume the price of wPOKT.

Also, wPOKT is the more flexible asset than POKT. Since it integrates with the massive ETH ecosystem people could realize smart things like “staking pools” by node runners simply borrowing other people’s wPOKT and paying some part of the node profit in the form of interest on their deposits.
So I believe people would rather want to buy and hold wPOKT (whether on a CEX or DEX) and convert it to POKT only if needed for staking.

Since this is the case, I believe a direct POKT listing on a CEX is really not needed for the ecosystem

And - I just realized - wPOKT lending/borrowing would be amazing for all competition on the network (nodes and apps), as large hosters would have a dramatically reduced upfront cost of onboarding to the network if they didn’t have to buy their own POKT to stake and similar - apps could convert the economic model back to fee-streaming by borrowing the stake they need for their app and just paying interest instead.

I believe enabling the token for lending on a CEX must be far more expensive than just listing it for spot trade, so DEX/ETH is not just equivalent but superior to a CEX in this regard

This whole thing could throw the staking-growth #ecosystem:economics for a loop though and it must be carefully considered - because whether you want it or not, once wPOKT and a bridge exist, people WILL do this. No way to prevent it.

1 Like

Yeah, I agree with this, the main advantage of a CEX listing would be lowering the barriers to getting involved for new node operators before the bridge is live. That said, I think a CEX listing is only worthwhile if it is one of the most liquid CEXs (e.g Coinbase, Binance, FTX etc), otherwise, the funds might be better spent incentivising on-chain liquidity.

Thanks @stef for putting this together and @adam for adding to it.

I think in terms of the order of operations this would be the optimal strategy. We will be allocating 5M POKT from the foundation to be minted for the initial bridge and wPOKT minting. As you noted in your other posts, I agree that the POKT price will follow the wPOKT activity due to the liquidity and easily accessible DEX markets.

We’ll be sure to communicate the plan on the bridge itself so it’s clear as to when it will open. The expectation is 1 - 3 months from wPOKT launch. Our assumption is that it will drive OTC volume in expectation of arbitrage opportunities. These opportunities should create more liquidity and volume which is also a good thing.

I would argue that having other onramps/offramps for POKT that don’t significantly fragment liquidity is a good thing. I don’t think this is an issue now, but at some point, the market will want more efficent ways (time, ETH fees, slippage) to cover their costs. wPOKT is an ETH native creation and don’t think it’s as important for CEX listings.

All that said, I wholeheartedly agree that we shouldn’t be paying for a CEX listing - the incentive here is that a CEX would be missing out on trading fees so they would be happy to list us regardless. I do know that CEX’s have market making requirements but even then, given a large enough market, market makers would also have an incentive to participate.

This is brilliant and is something we’ve talked about in the past for native POKT. I hadn’t considered this with what wPOKT could enable.

This proposal passed with 8 Approvals and 0 Rejections, so I’ll now close the topic.

https://gov.pokt.network/#/pokt-network/proposal/QmaJLp1EWVMWDc22xTdMiJQjVWW2L8CTqKYhqm6dGfVd4o
https://ipfs.fleek.co/ipfs/QmaJLp1EWVMWDc22xTdMiJQjVWW2L8CTqKYhqm6dGfVd4o