Attributes
- Author(s): @adam
- Recipient(s): Pocket Network Inc and the LBP smart contract (including farmers who participate in yield farming), AMM
- Category: Imbursement / Distribution
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Asking Amount:
- Up to 10,025,000 POKT from the DAO Treasury in total
- 4,875,000 POKT for the LBP
- Up to 5,000,000 POKT for AMM liquidity (exact number determined upon conclusion of the LBP)
- 50,000 POKT to be distributed as farming rewards for the Genesis Pool
- 100,000 POKT to reimburse Pocket Network, Inc.
- Up to 10,025,000 POKT from the DAO Treasury in total
Summary
A development team consisting of Pocket Network Inc and Raid Guild is starting to work on an implementation of the specification introduced here and detailed in the wPOKT Green Paper. To perform an effective LBP (distribution mechanism) and provide rewards for farmers, it is important to allocate a sufficient amount of POKT that accounts for the demands of farmers and buyers. We are therefore proposing that the DAO allocate 4.875M POKT for the liquidity event as well as 30K POKT for farming rewards, as well as compensating development time in the form of a 100K POKT reimbursement.
While Pocket Network, Inc. will bear all of the resource costs and other hard costs associated with the launch, the DAO is well-positioned to provide the POKT for distribution and to help cover a portion of the development costs.
Motivation
As Pocket Network relies on the growth of relays to grow the ecosystem, it requires a way to scale its application outreach without drastically scaling the size of its team. Due to the prevalence and wide adoption of farming programs, we propose creating a mutually beneficial farming program powered by wPOKT rewards. This program is designed to incentivize users to stake on behalf of applications providing “free” infrastructure to applications, in turn, encouraging widespread adoption of Pocket Network by Web3 Apps. Additionally, wPOKT will provide a second on/off ramp for node operators in addition to the existing OTC.
Budget
- 4,875,000 POKT from DAO Treasury for the LBP distribution event
- 50,000 POKT from DAO Treasury to be distributed as farming rewards
- 100,000 POKT to reimburse Pocket Network, Inc.
- Up to 5,000,000 POKT for AMM liquidity (exact number determined upon conclusion of the LBP). Example scenarios (many factors will determine the exact amount of POKT required):
- Scenario 1: 70/30 final weight with final price of $1 - est. additional required: 1.9M POKT
- Scenario 2: 70/30 final weight with final price of $.25 - est. additional required: 3.4M POKT
Rationale
Given these large numbers, we need to address the elephant in the room: this amounts to up to ~20% of the current DAO treasury. I’ll leave comments for specific line items below, but in the aggregate, wPOKT serves two major functions: an on/off ramp for new users and a way to supercharge developer adoption of Pocket Network. Whatsmore, much of the POKT allocated here could be recovered, upon a DAO vote, in the long run. These funds are not sunk costs and are instead performing a necessary function to bootstrap the Ethereum-Pocket ecosystem in the form of liquidity in the AMM. Upon this DAO vote, the DAO could pull the funds of the asset pair, in the form of wPOKT and a stablecoin or ETH. That said, there is a risk of loss of principal due to impermanent loss while in use in the AMM. @JackALaing was quick to point out that losses due to this project and distributed rewards could quickly be recovered if the program can drive 15M+ relays/day, since the DAO gets 10% of all block rewards (which are proportional to relays).
Breaking it down:
- 4,875,000 POKT, or .75% of the initial supply, will be distributed to farmers in LBP. Any unsold amounts of wPOKT and all tokens received in exchange for wPOKT will be provided as liquidity to an AMM pool. This will provide enough wPOKT for farmers and any other use cases of wPOKT for the foreseeable future. This is recoverable less impermanent losses.
- Up to 5,000,000 POKT for AMM liquidity. Because Uniswap pools are 50/50 weighted, the DAO will need to furnish additional POKT as liquidity for trading assuming the LBP ends at a wPOKT weight less than 50%. This amount will be determined by the following equation: (final proceeds of LBP / price of POKT) - remaining POKT - basically, the value of the trading pair minus any of the remaining wPOKT from the LBP. This is recoverable less impermanent losses.
- The 50,000 POKT for farming rewards in Genesis Pool, based on our modeling will support just over 15M relays/day. The duration of this initial pool is 6 months. Any new pools will require an additional proposal.
- 100,000 POKT is to reimbursing PNI for hard and resource costs incurred as a part of the launch, development, and marketing of the farming/bridge program.
Dissenting Opinions
- TBD
Deliverable(s)
- wPOKT marketing launch
- wPOKT LBP
- wPOKT AMM Pool
- wPOKT farming landing page, associated documentation, and farming app
- Creation and maintenance of Genesis Pool
Contributor(s)
- Pocket Network Inc: @o_rourke, @adam, @JaureguiA, @Valebeflo, @evalir, @lekeariyo, @JackALaing (and others)
- Raid Guild: Application developers of wPOKT app.
Copyright
Copyright and related rights waived via CC0.