Attributes
- Author(s): @o_rourke
- Implementer(s): @o_rourke
- Category: Governance Upgrade / Permission Upgrade
- Replaces: PUP32
Summary
We decentralized Pocket Network too early in its lifecycle. The decision to launch the DAO shortly after Pocket’s launch and subsequent decision to separate the responsibilities of Grove (formerly Pocket Network, Inc.) in two entities, in mid-2022, was partly legal and mostly philosophical. Building the network from the United States, we needed to give control to the community as soon as possible to avoid the ire of the SEC. More importantly, we are creating institutions. Having one person be the final decision maker for a protocol that is cross-border and has no opinion on jurisdictional laws results in a fragile system.
In this vein, we opted to give as much to the community as possible which led to many unquantifiable benefits for the community. It’s difficult to determine the cause-and-effect relationships but I believe from people building out products and gaining votes, there was and continues to be an unquantifiable benefit from stakeholders sticking around the last two years and continuing to build.
The first proposals to reduce inflation were seminal for Pocket Network. These were purely community driven. The involvement of everyone within these proposals is one of the things I am most proud of –- it felt that it was possible to involve a truly democratic DAO to push forward long term beneficial changes.
In addition, until January 2023, the entire operational burden of the network was under Grove. As we evolved the business at Grove, stepping down from the Foundation made sense. Grove focused on the business, while the Foundation was operationalized to focus on the network. This further decentralized Pocket, giving agency to an organization with no legal ties to Grove. Over time, PNF formulated its own vision and road map, which it has been executing to this day.
In hindsight, this was the wrong decision. We prematurely decentralized the DAO and the Foundation.
In 2022, Pocket Network had not reached true product market fit, despite relay growth and price telling us otherwise. Fully decentralizing the network has slowed us down in decision-making and fractured priorities at Grove, PNF, and the community:
- Grove has been focused on revenue, quality of service, and shipping Shannon
- PNF has been focused on long-term adoption of gateways, governance, and liquidity
- The DAO has been focused on tweaking the economic parameters of the protocol
The result of these decisions lies before us. While we had reached all-time highs for the price of $POKT in 2022, the fact is that the network has been at risk of stagnation. I helped set a culture that has always under-indexed the price of $POKT in favor of building the products that drive usage and adoption for developers. This has led to a lack of prioritization of economic mechanisms and marketing efforts to drive the adoption of the network for $POKT token holders. The key learning I have had over the last two years is that the price of $POKT is the ultimate arbiter of our success. We can have all of the adoption in the world, but we will fall behind companies with more capital to invest because they are more liquid and are worth more than Pocket Network. If Pocket Network was worth billions of dollars today, I wouldn’t be advocating for this change.
It is under this backdrop that I have made the decision to submit this proposal to take over as steward of the Pocket Network Foundation. My proposal is the following:
- Re-elect me as the sole director of Pocket Network Foundation
- Give the Foundation sole discretion over as the DAO treasury and the ACL address to make parameter changes to Pocket Network
- An incentive-based compensation package based on shipping Shannon and the price of $POKT
I am advocating for taking control of the economic parameters of the protocol to be able to sprint. I am advocating to control the DAO treasury to continue to distribute POKT to the community for the hard work being done. I do not claim to have all the answers. I am a left-curve founder. It would be irresponsible of me to make changes in a smoky, back room without the brilliant people of this community poking holes in my, or anyone else’s ideas.
I believe I am the right person to drive the growth of this vision, because I have led the only team that has built not one, but two versions of Pocket Network, has sourced, sold, and driven the overwhelming majority of network traffic over 4 years, and have built our entire business, generating millions in revenue over the last 2 years, on top of a web3 backend.
On the current Foundation
I am not disparaging the Foundation’s efforts or integrity. I would keep several of the core work streams that are currently in flight and are critical to our success. This includes the following:
- Multichain $wPOKT efforts
- Gateway-verse
- Exchanges
- POPs and Sockets
- Incorporating community contributions
That said, we need to reset the culture and have unified leadership under one vision.
Specifically, I am interested in doing the following at a high level, with the details of the changes specification section of this proposal:
Helping the Supply Side (Node Runners)
- Change the number of maximum chains/services that can be staked per Pocket node
- Adjust the network inflation rate to be temporarily higher in times of high traffic periods
Helping the Demand Side (Gateways)
- Increase the emission rate of newly launched chains/services to be 10x higher for six months
- Full rebates for the gateway fee mechanism to remove barriers to entry for gateways
Helping the Protocol
- Taking leadership of the Foundation
- Increase the DAO Allocation
- Implement a concrete marketing strategy to drive net new POKT purchasers
- Reposition Pocket Network to be more AI-forward
Aligning incentives
- A milestone-based grant for shipping Shannon
- An incentivized compensation package based on the price of POKT
The motivation for this proposal revolves around being able to push my vision for this protocol more quickly, assuming we agree on my philosophy for turning this around. I care more about the “why”, not the “how”. Ultimately, to maximize our odds of success, you can boil this proposal down to my belief that we need unified leadership and execution at this crucial time for Pocket Network.
Motivation
When I, and my original co-founders, first designed Pocket Network as a system, the DAO and Foundation were critical parts to the eventual resilience and success of the protocol. A slower moving democratic DAO is meant to provide the checks and balances for a Foundation that has more autonomy is necessary for a foundational protocol providing decentralized access to data across the open internet.
Fundamentals
Every POKT token holder will agree that we have some of the best fundamentals in the industry. Some highlights are:
- Shannon, a full rewrite of Morse, and a true technological innovation, is expected to launch this year.
- We have multiple gateways excited to build on top of Pocket, despite it being permissioned and difficult.
- We are no longer just RPC - Grove’s AI pilot is in flight, with our Litepaper released.
- Our forum, consistently active, has some of the smartest and deepest-thinking community members in the space.
- $POKT is one of the most decentralized cryptocurrencies in the world - to my knowledge no one person or entity owns more than 7% of the supply.
- $POKT is effectively fully unlocked - we have never played low-float games.
- Grove’s Quality of Service is world-class. We have multiple centralized RPC providers as customers of ours.
- Grove has material, growing revenue despite a hypercompetitive market where many RPC providers provide it for free.
- To my knowledge, Grove is the only web3 infrastructure company in the world that has an SLA with hundreds of paying customers fully dependent on a permissionless protocol.
When I see on x.com “when $5 POKT”, the above fundamentals are why I believe this is possible, but the market doesn’t reflect this reality. I share the same immense frustration as all $POKT holders. I believed the market would acknowledge what we have built, and lead to a natural value accrual. This has not proven to be the case. We need something to change.
Challenges
Here are the primary challenges I am seeing today:
- The first, and most important - We have no new demand for the token.
- Suppliers don’t earn enough APY/APR to justify net new buyers of $POKT coming in.
- Gateways are not enough of an offset alone to drive value accrual to $POKT in the short to medium term.
- Gateways allow $POKT to find an eventual equilibrium and provide stability for both the supply and demand of the token.
- We have tens of thousands of $POKT holders who believed in us, and now are down big or have exited the ecosystem.
- The above point has led to Pocket Network having a perception problem across the broader industry. I have personally heard from investors (and I speak to nearly everyone), that people think Pocket Network is dead or dying, that the service is not good, that we move too slow, bad tokenomics, etc.
- Governance moves too slowly to adapt to changing conditions.
- We have 60+ DAO voters managing $100M (at time of publication) in market cap, which is a bureaucratic nightmare.
- While these checks and balances are important for governing a protocol that is worth many billions of dollars, the reality is that we have to go through too many processes to make decisions, and even more to iterate if they need to change.
- Liquidity has always been bad. I’d argue the best, and most liquid time to be able to buy and sell POKT was when it was just through the various OTC telegram chats.
- We have not been good at capturing the narrative. The only time we truly did was when relays went from 10M a day to over 1B in 10 months. Decentralized RPC was new, and we were the first to prove it was possible at scale. We have been hanging on this since 2022 and it’s old news.
Every $POKT holder who is still here believes in our mission. You see the hard work happening. At the end of the day the mission doesn’t matter if $POKT price performance doesn’t reflect the work we are doing. Pocket Network will die, and we’ll see competitors end up being the winners in the market.
Grove, who are the primary architects and customers of the protocol, and who have been able to build a business under these conditions, believe the following to be true about Pocket Network:
- There will be a cambrian explosion of services that POKT will be able to serve, with each new service increasing the total addressable market of the network
- Pocket Network is positioned to settle traffic for all manner of these open-source platforms, be it blockchains, LLMs, social protocols, storage protocols, etc.
- At the current stage of the network, all barriers to attracting gateways must be removed to help drive current and future demand
- At the current stage of the network, all barriers to diversifying the number of specialized infrastructure providers must be removed to help service this expected demand
Pocket Network has the potential to become a runaway train. Part of the motivation behind this proposal comes from my belief that we need to drastically shift our economic philosophy.
We can and should fix this.
My Economic Philosophy
George Soros defines the negative feedback loop we’re experiencing as Reflexivity, Market participants’ perceptions influence market fundamentals, which in turn influence participants’ perceptions.
We have been in a negative feedback loop with the price of POKT since the introduction of WAGMI. For those who remember, POKT price was driven purely by supply side incentives and demand for the POKT token. Before WAGMI, dynamic inflation, and had the expectation of “the tenthening” - when we hit 1B POKT, the POKT minted per relay would be cut by 10. At the time, the price of $POKT made the tenthening too extreme of a cut. We all agreed that the existing rate of inflation was unsustainable - yet the introduction of a stable inflation has removed us from one of the most important cryptonetwork properties, reflexivity.
Reflexivity has had us experience all of the downside and none up the upside. I want to bring Pocket Network back to creating economic opportunities for net new $POKT purchasers in a safe and sustainable manner.
In addition, we need to introduce resilience mechanisms that will address the downside effects of reflexivity and instill confidence in the economics of Pocket Network. Nassim Taleb calls this anti-fragility and defines it as such:
“Some things benefit from shocks; they thrive and grow when exposed to volatility, randomness, disorder, and stressors.”
We need to shock ourselves out of our situation and we believe we can do that by having more flexibility to experiment with parameters that govern the tokenomics of the protocol without litigating every change.
We do this by enabling a bottom and upper limit for inflation and immediately adjusting to the lower limit when we hit the upper limit. We keep our lower limit at ~5%, and do not adjust inflation rates until we hit 50%. We then cut back to 5% immediately. This dynamic, like parts of the world that need to deal with natural disasters, embrace the reflexivity of crypto while introducing shocks to the system that participants can get accustomed to.
If I am successful in retaking my role in the Foundation as its Executive Director, I plan on immediately adjusting parameters on Morse that deliver this shock. We cannot control the crypto market, we cannot control the macro market; we CAN control the incentives and dynamics of Pocket Network.
Specification
Parameter Changes
We’re going to move fast and iterate on all parameter changes. The proposals below are a starting point but expect them to change if things don’t work. In the same way that startups iterate fast, experiment and adapt based on user feedback, we can use the price of $POKT to ignore what doesn’t work and double down on what does. We’ll make sure to communicate everything ahead of time as changes are introduced.
Note that the details below are here to provide a rough idea of the parameters and values that’ll be used, but will be modified as a result of network traffic. We will share a spreadsheet of our plans & calculations in due course.
1. Target non-DAO Inflation
- On-chain parameter: RelaysToTokensMultiplier
- Target Start Value: 20%
- Target Reset Value: 10%
- On-chain value: RTTM will be initially adjusted to achieve 20% inflation based on today’s relay volume (i.e. network traffic). A combination of traffic growth and time-bound evaluation, it’ll dictate how these parameters will continue to change. For example, we’ll readjust if traffic jumps and aggregate inflation goes to 30%. If traffic does not change for 6 months, we will reduce inflation. Further details will be shared with the community along the way.
- Reasoning: To leverage reflexivity and market dynamics. RTTM is currently adjusted weekly regardless of network traffic. By adjusting RTTM when the protocol grows, we can take advantage of increased rewards for node runners as traffic grows.
2. New Chain Emissions
- On-chain parameter: RelaysToTokensMultiplierMap
- Target Start Value: 10x RTTM
- Target End (Reset) Value: Baseline RTTM
- Proposed Change: Add an entry to RTTMMap for every new chain introduced. Six months after it is onboarded, it’ll be removed from the map and default to the baseline RTTM. Note that while evaluating the impact of this change, we’ll explore other thresholds (e.g. trailing average of traffic) as an alternate signal to reset the value as a function of our learnings.
- Reasoning:
1. Bootstrapping Tax - Launching a new chain on POKT Network has a chicken-egg problem. Each new chain must be bootstrapped onto the network by the Gateway onboarding it, leading to an upfront off-chain expenditure/tax. This tax must be paid until sufficient demand is brought online by one or more gateway customers, which takes weeks to months to generate.
2. Network expansion - By increasing the emission rate during a chain launch window (e.g. 3 months), and then progressively lowering as critical adoption is reached on the network, the burden of onboarding new services is lessened. This makes it more cost-effective for gateways to launch chains, and their ability to negotiate deals that are orders of magnitude lower than centralized providers
3. Node Runner Minimum Stake
- On-chain parameter: StakeMinimum, ServicerStakeFloorMultiplier
- Current Value: 15,000,000,000 uPOKT == 15,000 POKT (~$1,200 at $0.08 per POKT).
- New Value: 5,000 POKT (~$350 at $0.07 per POKT).
- Reason: Lower the barrier to entry for new node operators, encouraging greater participation and decentralization. This number is high enough to avoid a disincentive for existing POKT holders to exit their stake, yet materially reducing the barrier of entry for new POKT purchasers. If successful in value capture, we would continue adjusting this parameter to keep the value of running a POKT node within the $250 - $500 range. Note that the Stake Weighted floor would be adjusted in accordance StakeMinimum, while ServicerStakeWeightCeiling will remain at 60,0000 POKT until we see opportunity to adjust it for network growth as well. Implementation can be found here.
4. DAO Allocation
- Current Value: 10%
- On-chain parameter: DAOAllocation
- New Value: 75%
- Adaptation: We will adapt this parameter to maintain Node/Validator inflation aligned with the current schedule as annual inflation id adjusted.
- Reasoning:
- This will become a perpetual funding source to fund protocol development and ecosystem initiatives.
- The protocol team has always been funded by Grove. Due to having to split our funds between building the business, and building the protocol, we have not always been able to recruit or retain the level of talent we need. This will go a long way in addressing this issue.
- I plan on supporting many of the existing public goods initiatives and using this larger DAO take to help fund them and future ones.
5. Burn For Gateways (ARR)
- Current Value: $0.00000085 per relay ($0.85/million-relays)
- New Value: $0.00000085 per relay but with full rebate from DAO treasury
- Reasoning: As mentioned above, Grove’s goal is to grow the number of gateways sending traffic to POKT in a sovereign way, and we want to remove all barriers to entry. Having to account for the cost of a protocol burn at this stage of the project is prohibitive to onboarding new gateways, especially those that are starting out and don’t have a large POKT treasury to start with.
Execution plan for the Foundation
DAO Treasury and Parameter Execution
Put the DAO and Constitution on pause with all governance mechanisms for 24 months. After 24 months we re-instate the ability for the DAO to vote in or out new directors. The following sections from the Articles and Constitution should be amended during this period:
Current Constitution and Proposed Adjustments
Section 4.7-4.10: Foundation Deferral to DAO
Current Sections: 4.7 New Directors/Supervisors will be appointed/removed according to PIPs approved by the Council. 4.8 The Foundation’s Articles compel the agents of the Foundation to give full notice to the Council concerning: 4.9 The Directors and Supervisors of the Foundation can refuse the Council’s decisions subject to limitations. 4.10 The Foundation shall serve as a custodial entity for Pocket Network, deferring decision-making to the Council in all cases except Material Adverse Exception Events (MAEEs).
Proposed Adjustment: Suspend deferral of the Foundation to the DAO for 24 months.
Example: 4.7 For a period of 24 months from the date of this proposal passing, the appointment and removal of Directors/Supervisors shall be determined solely by the sole director without requiring PIPs approved by the Council.
4.8 For a period of 24 months from the date of this proposal passing, the Foundation’s agents shall not be required to give notice to the Council concerning any appointments or removals.
4.9 For a period of 24 months from the date of this proposal passing, the Directors and Supervisors of the Foundation shall not be subject to the limitations imposed by the Council’s decisions.
4.10 For a period of 24 months from the date of this proposal passing, the Foundation shall not defer decision-making to the Council, except in cases of Material Adverse Exception Events (MAEEs).
Section 6.3: PIP Votes
Current Section: 6.3 PIP votes will last 7 days and pass with Majority Approval, unless otherwise specified in this Constitution.
Proposed Adjustment: Allow the sole director to bypass PIP votes for 24 months.
Example: 6.3 For a period of 24 months from the date of this proposal passing, the sole director shall have the authority to implement changes without requiring PIP votes to last 7 days and pass with Majority Approval.
Section 6.8: Majority Approval for Parameters
Current Section: 6.8 All other On-Chain parameters not specified above will be governed using Majority Approval in votes lasting 7 days.
Proposed Adjustment: Allow the sole director to govern all On-Chain parameters for 24 months without majority approval.
Example: 6.8 For a period of 24 months from the date of this proposal passing, the sole director shall have the authority to govern all On-Chain parameters without requiring majority approval in votes lasting 7 days.
Section 7.2: Distribution of Treasury Funds
Current Section: 7.2 It is forbidden to propose or approve unconditional general distributions of the Pocket Core DAO Treasury to token holders, which may be misconstrued as dividends.
Proposed Adjustment: Allow the sole director to manage the distribution of Treasury funds for 24 months.
Example: 7.2 For a period of 24 months from the date of this proposal passing, the sole director shall have the authority to manage the distribution of the Pocket Core DAO Treasury funds without restriction.
Section 8.11: Protocol Upgrades
Current Section: 8.11 Protocol Upgrades (including changes to the ACL) will be approved by the Council according to the PIP process.
Proposed Adjustment: Allow the sole director to approve Protocol Upgrades for 24 months without the PIP process.
Example: 8.11 For a period of 24 months from the date of this proposal passing, Protocol Upgrades (including changes to the ACL) shall be approved by the sole director without requiring the PIP process.
Section 8.14: Foundation Article Amendments
Current Section: 8.14 Because Supervisor decisions are not valid unless ratified by the Council, no upgrade can be made to the Foundation’s Articles without the Council first signaling approval.
Proposed Adjustment: Allow the sole director to amend the Foundation’s Articles for 24 months without requiring DAO approval.
Example: 8.14 For a period of 24 months from the date of this proposal passing, the sole director shall have the authority to amend the Foundation’s Articles without requiring approval from the Council.
Current Articles and Proposed Adjustments
Article 1.5: Requirement for DAO Resolution
Current Article: 1.5 Unless otherwise specified herein, no Ordinary Resolution or Special Resolution passed by persons entitled to attend and vote at a general meeting shall be valid or take effect until such Ordinary Resolution or Special Resolution has been approved by Supermajority DAO Resolution.
Proposed Adjustment: Remove the requirement for Supermajority DAO Resolution approval for 24 months.
Example: 1.5 For a period of 24 months from the date of this proposal passing, all Ordinary Resolutions or Special Resolutions passed by persons entitled to attend and vote at a general meeting shall not require approval by Supermajority DAO Resolution and shall be valid and take effect upon passage.
Article 4.5: Appointment of Directors
Current Article: 4.5 Subject to Article 4.6, a director may be appointed by Ordinary Resolution. Where a director has for any reason either been removed or has resigned, the directors of the Company may appoint a temporary director to fill such vacancy until such time as the DAO shall direct the appointment of a new director by DAO Resolution.
Proposed Adjustment: Allow the sole director to appoint new directors and fill vacancies for 24 months.
Example: 4.5 For a period of 24 months from the date of this proposal passing, the sole director shall have the power to appoint new directors and fill any vacancies without requiring an Ordinary Resolution or DAO Resolution.
Article 4.6: Resignation from Other Positions
Current Article: 4.6 Notwithstanding any other provision in these Articles, any person appointed as a director must resign from any positions of executive or managerial authority in the DAO before being appointed to their role as director.
Proposed Adjustment: Suspend the requirement for directors to resign from other DAO positions for 24 months.
Example: 4.6 For a period of 24 months from the date of this proposal passing, any person appointed as a director shall not be required to resign from other positions of executive or managerial authority in the DAO.
Article 4.8: Removal of Directors
Current Article: 4.8 A director may be removed by Ordinary Resolution.
Proposed Adjustment: Allow the sole director to remove directors for 24 months.
Example: 4.8 For a period of 24 months from the date of this proposal passing, the sole director shall have the power to remove directors without requiring an Ordinary Resolution.
Article 4.17: Compliance with DAO Resolutions
Current Article: 4.17 Subject to any limitation imposed on any director pursuant to each director’s fiduciary duties to the Company and all applicable law and these Articles, the directors shall observe, implement, carry out, action and execute with best efforts any and all DAO Resolutions.
Proposed Adjustment: Suspend the requirement for directors to comply with DAO Resolutions for 24 months.
Example: 4.17 For a period of 24 months from the date of this proposal passing, the directors shall not be required to observe, implement, carry out, action, or execute DAO Resolutions.
Article 4.35: Disclosure of Information
Current Article: 4.35 The directors shall give to the DAO and to the general meeting (or the persons who have the right to attend the general meeting) such reports, accounts, information and explanations concerning: (a) the Company’s business and affairs; and
(b) the discharge of the directors’ duties and the exercise of their powers,
as may be required by a DAO Resolution of the Company.
Proposed Adjustment: Suspend the requirement for directors to disclose information to the DAO for 24 months.
Example: 4.35 For a period of 24 months from the date of this proposal passing, the directors shall not be required to give reports, accounts, information, and explanations to the DAO.
Article 4.38: Director Compensation
Current Article: 4.38 A director or officer shall only be remunerated for services rendered. Any agreement between the Company and a director or officer concerning the remuneration of such director or officer shall be null and void where such agreement: (a) entitles such director or officer to participate in any distribution, dividend or transfer of assets of the Company or awards or entitles such director or officer to any profits or any assets of the Company, except where the transfer or entitlement of assets is in the form of a POKT token grant subject to at least 3 years vesting; or (b) sets the remuneration according to a percentage of the turnover, income, profits or earnings of the Company; or (c) agrees to remunerate the director or officer for an aggregate sum exceeding US$300,000 per annum (as of January 2023), adjusted annually for inflation by reference to the Consumer Price Index as measured by The Bureau of Labor Statistics, where such aggregate sum includes the annual vesting amount of any POKT token grant, and the value of the per annum vesting of such POKT grant will be determined by the prevailing market price as at the time of the grant and shall not exceed 50% of the director’s US$ salary.
Proposed Adjustment: Allow new compensation agreements for directors and officers for 24 months, including performance-based incentives.
Example: 4.38 For a period of 24 months from the date of this proposal passing, the sole director may establish new compensation agreements for directors and officers, including performance-based incentives tied to the price of $POKT, without being subject to the existing limitations in Article 4.38.
Article 4.42-4.44: DAO Oversight on Foundation Spending
Current Article: 4.42 Financial transparency reports should be published quarterly by way of DAO Notice within the first 4 weeks following the end of the previous quarter. These should include management accounts showing actual spending vs the budget, an updated balance sheet, and cash flow forecast.
4.43 Annual budgets should be published by way of DAO Notice at least 4 weeks prior to the start of the 12-month period to which they relate. The budget should include director remuneration reported on a per-director basis, total contractor remuneration, and any other material expenses categorized as the directors reasonably see fit. The budget shall be automatically approved in full unless there is a DAO Resolution contesting any line item.
4.44 Subject to any limitation imposed on the directors by any confidentiality agreement, financial regulation, or related laws, the following special transactions shall be published by way of DAO Notice no fewer than 4 weeks prior to the transaction date and shall be automatically approved unless there is a DAO Resolution rejecting them.
Proposed Adjustment: Suspend DAO oversight on Foundation spending for 24 months, allowing sole director control.
Example: 4.42 For a period of 24 months from the date of this proposal passing, financial transparency reports shall be provided to the sole director for internal review instead of being published by way of DAO Notice.
4.43 For a period of 24 months from the date of this proposal passing, annual budgets shall be approved and managed solely by the sole director without requiring publication by way of DAO Notice.
4.44 For a period of 24 months from the date of this proposal passing, special transactions shall be approved and managed solely by the sole director without requiring publication by way of DAO Notice.
Article 6.3-6.6: Appointment of Supervisors
Current Article: 6.3 With the exception of the first supervisor, the DAO may direct by way of Supermajority DAO Resolution that the directors appoint a person named in such Supermajority DAO Resolution as a supervisor of the Company either as an additional supervisor or to replace a supervisor.
6.4 Where the DAO has directed the directors by way of Supermajority DAO Resolution to appoint an additional supervisor, the directors and the Secretary shall undertake all action required to ensure that the additional supervisor named by such Supermajority DAO Resolution is properly appointed and registered in the register of supervisors of the Company.
6.5 Where the DAO has directed the directors by way of Supermajority DAO Resolution to replace an existing supervisor, the directors shall: (a) appoint the new supervisor named in the Supermajority DAO Resolution and, together with the Secretary, shall ensure that the new supervisor named by such Supermajority DAO Resolution is registered in the register of supervisors of the Company; and (b) immediately following the proper appointment of the new supervisor, remove the outgoing supervisor.
6.6 Where no supervisor has been appointed or where all supervisors have for any reason either been removed or have resigned, the directors of the Company must appoint a temporary supervisor to fill such vacancy until such time as the DAO shall direct the appointment of a new supervisor by Supermajority DAO Resolution. The temporary supervisor may be a director of the Company.
Proposed Adjustment: Allow the sole director to appoint and replace supervisors for 24 months without DAO approval.
Example: 6.3 For a period of 24 months from the date of this proposal passing, the sole director shall have the power to appoint supervisors without requiring a Supermajority DAO Resolution.
6.4 For a period of 24 months from the date of this proposal passing, the sole director shall have the power to appoint additional supervisors and ensure their proper appointment and registration without requiring a Supermajority DAO Resolution.
6.5 For a period of 24 months from the date of this proposal passing, the sole director shall have the power to replace existing supervisors and ensure their proper appointment and registration without requiring a Supermajority DAO Resolution.
6.6 For a period of 24 months from the date of this proposal passing, the sole director shall have the power to appoint temporary supervisors without requiring a Supermajority DAO Resolution.
Article 6.8: Removal of Supervisors
Current Article: 6.8 The DAO may direct by way of Supermajority DAO Resolution that the directors remove a person named in such Supermajority DAO Resolution as a supervisor of the Company. For the avoidance of doubt, the directors cannot remove any supervisor unless upon the instruction of a Supermajority DAO Resolution.
Proposed Adjustment: Allow the sole director to remove supervisors for 24 months.
Example: 6.8 For a period of 24 months from the date of this proposal passing, the sole director shall have the power to remove supervisors without requiring a Supermajority DAO Resolution.
Article 6.17: Compliance with DAO Resolutions
Current Article: 6.17 Subject to any limitation imposed on any supervisor pursuant to each supervisor’s fiduciary duties to the Company and all applicable law and these Articles, the supervisors shall observe, implement, carry out, action and execute with best efforts any and all DAO Resolutions.
Proposed Adjustment: Suspend the requirement for supervisors to comply with DAO Resolutions for 24 months.
Example: 6.17 For a period of 24 months from the date of this proposal passing, the supervisors shall not be required to observe, implement, carry out, action, or execute DAO Resolutions.
Article 22: Transfer by Way of Continuation
Current Article: 22.1 The Company may, by Special Resolution, resolve to be registered by way of continuation in a jurisdiction outside: (a) the Islands; or (b) such other jurisdiction in which it is, for the time being, incorporated, registered or existing.
22.2 To give effect to any resolution made pursuant to the preceding Article, the directors may cause the following: (a) an application to be made to the Registrar of Companies to deregister the Company in the Islands or in the other jurisdiction in which it is for the time being incorporated, registered or existing; and (b) all such further steps as they consider appropriate to be taken to effect the transfer by way of continuation of the Company.
Proposed Adjustment: Grant the sole director the authority to resolve and execute the transfer by way of continuation for 24 months.
Example: 22.1 For a period of 24 months from the date of this proposal passing, the sole director may resolve to register the Company by way of continuation in a jurisdiction outside: (a) the Islands; or (b) such other jurisdiction in which it is, for the time being, incorporated, registered or existing.
22.2 For a period of 24 months from the date of this proposal passing, to give effect to any resolution made pursuant to the preceding Article, the sole director may cause the following: (a) an application to be made to the Registrar of Companies to deregister the Company in the Islands or in the other jurisdiction in which it is for the time being incorporated, registered or existing; and (b) all such further steps as the sole director considers appropriate to be taken to effect the transfer by way of continuation of the Compan
Planned parameter changes:
- Day 1: Adjust new baseline emissions
- Day 1: Adjust the DAO allocation
- Day 1: Pause RTTM and do not adjust until we hit 20% inflation for non-DAO emissions.
- Day 1: Turn on 10x emissions for new chains supported by the network
- Day 7: Reduce the minimum stake for a node to 5,000 POKT.
Marketing Strategy:
-
Targeted marketing around APY/APR for new services added to Pocket Network
- Evolve Compare Staking Services to show the best providers, and rankings of returns on all services to create competition.
- Campaigns across specific, new service communities to attract net new POKT purchasers
- Create a pipeline with as few clicks as possible enabling individuals to purchase POKT and immediately stake with a node provider
- Use end to end data to determine whether initiatives or efforts are having the desired impact on demand for POKT
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Work with KOLs to drive new narratives around Pocket Network AI adoption and opportunities.
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Focus on partnerships with existing AI compute protocols that enhance the quality of our supply for inference
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Reposition the brand and website to be AI-forward, emphasizing support beyond RPC (We have solved this!) and the broader vision of the network
- AI
- Storage protocols like Arweave, IPFS, Filecoin
- Indexing
- Social protocols like Farcaster and ActivityPub
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Do the above under the domain pocket.network (recently purchased).
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pokt.network will forward to pocket.network and pokt.foundation will be retired
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Focus on making the technically complex narratives around Pocket Network easy to understand for the market at large
Workstreams:
- Continue new gateway, exchange and Shannon launch workstreams
- Shut down all other work streams that do not drive brand awareness, $POKT demand, or relay growth.
- Research additional sinks and demand for the token such as incentivized long-term staking and demand. Such as:
- Airdrops based on how long your nodes have been staked e.g. If your node has been staked for 1 year vs. 5, you receive an airdrop
- Gateway incentives
Cultural Shift:
- Remove existing Foundation directors, Dermot O’Riordan, Jack Laing and Ben Perez.
- Evaluate existing contractors, bring in community members and contributors from existing organizations in the ecosystem as contractors to push this effort forward.
Compensation Package
Ultimately, the success of the network will not be decided not by how much revenue we have nor how decentralized we are, but by the price of $POKT. I believe that we should be valued as a top 50 cryptocurrency, given the vision and what’s possible with Pocket Network.
I have historically ignored price, because as mentioned above, I believed the market would recognize the fundamentals if we focused on the product. This portion of the proposal is to align my incentives with yours. This compensation package is meant to be distributed across not just myself but all parties involved in this transition.
I want to aim for a total compensation for a percentage of the network. These numbers should be valued from the average trailing 30 day price, meaning that if we hit a specific price for one or two days, it does not count. We should be consistently above a given price target for the compensation to be fair.
This compensation plan should be time boxed to three years from the date of this proposal passing. The compensation should come from the DAO treasury and is contemplated in the changes to the above parameters. I am targeting a 20% dilution of the network, divided between all of the participants who help reach this goal.
All POKT that I earn will be vested over the course of 4 years on 1 year cliffs from the day that the milestone is met. This does not apply to others receiving grants.
All POKT from shipping Shannon will go to the individuals who contributed to the protocol. I am excluded personally from this grant and will only receive a grant if we reach the price milestones outlined below.
When the first $0.50 milestone has been reached I will add a 2/3 multisig as voted on by the DAO to transfer future funds over $100k.
The current total supply rounded down is at 1,680,000,000 total POKT. Aiming for a 20% total dilution, this is 336,000,000 POKT.
- Shipping Shannon: 48,000,000 POKT
- $0.50: 48,000,000 POKT
- $1.00: 48,000,000 POKT
- $3.00: 98,000,000 POKT
- $5.00: 98,000,000 POKT
In the current market a $5 price point would put us in the top 15 of all cryptocurrencies today. In 3 years time, I would expect a $10B valuation result in POKT realistically being in the top 50 cryptocurrencies in the world assuming that the general market increases relative to POKT as well.
Dissenting Opinions
Michael hasn’t been in the trenches, involved in the community or discourse. Why should we trust you now?
I officially stepped down from PNF in January of 2023. Since then, my focus has been on being there for the Grove team, traveling for BD and raising capital for Grove. PNF has been there for the community, and I have always answered their calls to hop on a community call or X spaces.
It’s absolutely correct that I have not been around the Den or the forums. The fact is I was burned out last year. The roller coaster ride up to $3 and down to $0.025 came with a level of euphoria and distractions that I was not prepared to handle. I have paid for that mentally, physically and emotionally over the last 24 months.
Grove is operating smoothly with a small, crack team now. The company knows exactly what it needs to build. Most importantly, I have the energy and space to turn my focus outwards now. Grove is in good hands with leadership and the team.
Knowing my job is changing - driving forth efforts to improve the token and the network allows me to create the space needed to handle it.
Wait, so no more DAO?
This proposal is meant to put the DAO and Constitution on pause for 24 months, at which point the DAO can choose to vote me out or bring in new directors. Community programs and funding has already moved to the Foundation, and I am asking for discretion on who and what gets funded from the DAO treasury. The same level of transparency in how, who and what gets funded is not changing. As outlined in the proposal I still believe that we cannot have one single point of failure for Pocket to succeed in the long run. I have already given up control through creating the DAO initially and stepping down from the Foundation with 7 figure funding. I plan on doing the same again with the benefit of lessons learned.
As mentioned above, it’s impossible for me to make changes without the community’s input or thoughts.
How can I be sure you can execute on this plan?
At Grove we’ve done the following over the last 18 months:
- We reduced our infrastructure costs from $800k/mo to under $70k/mo in 8 months.
- We built a recurring revenue business model on track to hit $1M ARR next quarter
- We went from 10% of our traffic being paid to over 90%
- A full rewrite of our backend infrastructure to be competitive with our centralized counterparts
- Migrated from AWS to GCP with very few hiccups
- A full rewrite of the Pocket Network protocol, leading to Shannon’s public testnet
All we have done is execute on the product and protocol since we began this journey. The difference here is that for the first time, I am setting my sights on the main thing the broader crypto market judges us on - the price of $POKT. I will be laser focused and unabashedly upfront about this.
I want to be clear - these are my ideas to create sustainable change within the token. The outcome is what’s important, not how we get there.They may work, they may not work. It may not be enough by itself. We will fail quickly, double down on what does work and learn quickly. I expect the conversation and feedback from the community to continue informing the decisions we make.
We haven’t seen traffic go up. How can you justify that Grove has executed?
The RPC market is difficult. There are 100 - 200 centralized RPC providers in the market, with many providing service for free as a loss leader to their validation businesses. As I mentioned above, Grove has gone from 10% paid traffic to over 90% in the last 12 months, and is now steadily increasing traffic either through direct customers or our gateway customers. This will be combated by bringing on as many gateways as possible and chipping away over time. Outside of gateways on Pocket that provide free traffic (completely possible), expect steady growth in this sector for Pocket Network as gateways ramp up.
Grove received a 30M grant of POKT last year. Is this not enough?
This was for Grove to retain the team in the form of grants, and at these prices the amount is negligible compared to competitors. I am advocating for this control from leading the Foundation, not Grove.
Conflicts of interest? You’re the CEO of Grove, the leading gateway provider in the network. Wouldn’t this be a conflict of interest with new gateways and post-Shannon?
The reason why it’s important that I do this is because I feel that there are very few people who can be unbiased from a practical, philosophical and moral perspective. While I want Grove to succeed, I have dedicated the last 8 years of my life to Pocket Network. As I wrote in Grove’s gateway thesis:
“Grove will be open sourcing its own Portal over the next year to activate the demand-side of the network. It is clear we are going to live in a world with hundreds (or thousands) of gateways, all solving different needs for developers. Our goal with Grove is to make it as easy as possible for existing gateway providers or new gateway providers to build lucrative gateway businesses on top of Pocket Network.”
In addition, the incentives outlined are aligned directly with the network.
This is a big shakeup. PNF is now starting to move faster. Why should we change?
This is an about-face in terms of focus and priorities. We are hovering near all time lows again after 18 months of a fully operational PNF. While PNF has critical workstreams, I believe that I am the right person to lead this effort given the experience I have had in turning Grove around. At the end of the day, I have most to lose here to make this succeed.
Legal risks?
After speaking with several attorneys, being the CEO of Grove and leading the Foundation does not materially change much within the USA. Our attorney’s view is that Pocket Network is sufficiently decentralized.
However, the SEC does not care about Pocket Network being decentralized. Through this proposal, a light may be shown on us by the broader crypto community which could alert the SEC. This could lead to a love letter. While we have a strong case in court, we don’t have the capital to defend ourselves. That is the risk.
The benefit we have is that it is election season. The SEC’s year end is September 30th. It takes time and research to send out notices, and they have already done the work that they expect to do for any future notices by their year end. Gary Gensler is likely to be replaced no matter who gets elected, leading to a lame duck leader until next year.
Why should you be the person to do this? Why not someone else?
The reason for wanting to do this comes from being one of the people that started this thing. I think a quote from the author Michael Lewis on the Tim Ferris podcast encapsulates my feeling:
“A feeling if I don’t do it, it won’t properly get done. This book should be written and that person should be me. I have an obligation to this material. Once I have that feeling, it’s a motive, and whether I’m full of myself or not, it’s a deeper and more inspiring motive than I need to make a living, I need to get on the bestseller list, I have to have something to tell my friends. It’s the highest motive, I have an obligation, I have a duty.”
What happens if this proposal doesn’t pass?
I would conclude that the community doesn’t agree with my vision, which is fair and fine. As a founder of this project, I would be frustrated and sad. Grove would continue operating and I would ultimately push the economic proposals forward regardless.
Conclusion
There is a lot in this proposal. I have put it all within one because our current situation merits quick change and adaptation. While I remain a firm believer in the governance model of Pocket Network, it’s evident that we need to reach a scale where its checks and balances are truly beneficial.
I care about the price of $POKT. The technical talent and brilliant community we have deserves better. At this stage in our development, it is crucial to have a fully integrated stack from the protocol, to the gateway layer, the community to move swiftly and enable others to build quickly and efficiently.
It is with this understanding that I propose taking a more centralized approach to governance and development, at least for the time being. This approach will allow us to remove barriers, streamline decision-making, and rapidly respond to the needs of our network and community.
I am profoundly thankful for the role the current Foundation has played. Their efforts have always been guided by the highest integrity and dedication to Pocket Network. The Foundation has laid the groundwork upon which we can build, and their contributions have been invaluable. However, the current situation calls for a change in strategy, and therefore, leadership, to prevent stagnation and drive the network forward.
I care deeply about the success of Pocket Network and its potential to become the routing layer for all traffic on open data sources. My commitment to this mission is unwavering. I am committed to the full, day to day communication needed for a change like this. I am embracing the need to truly care about the $POKT token price and its holders. With your support, I believe we can create a thriving ecosystem that lives up to the incredible potential of Pocket Network. Together, we can ensure that Pocket Network not only survives but thrives as the backbone of decentralized infrastructure.
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