PNF Transparency Notice: Supporting POKTscan

[Dermot (Dermot O'Riordan)]

We want to share an important update with the community.

Since July 2021, POKTscan Technologies has been developing and funding the poktscan.com portal. However, with the current token price and the reduction in minting, generating the necessary funding to maintain and further improve the poktscan.com portal is becoming increasingly challenging for POKTscan.

The survival of POKTscan is a challenge for us all because of the vital role they play acting as the primary source of data and analytics about Pocket’s blockchain for exchanges, researchers, and the community at large. Nevermind the major contributions they have made, such as Geomesh, and by developing the custom APIs that enable integrations with external data aggregators like Web3Index and Token Terminal.

We believe that we cannot afford to lose POKTscan, as it is a crucial public good, and supporting them aligns with our mission to advance the best interests of the Pocket Network community.

Given the risk posed by not having the poktscan.com portal available to us all, PNF has agreed to help with a Grant:

Terms of the Grant

• POKTscan will keep all the rewards derived from running 171 validator nodes using 14.3m of PNF’s delegated POKT tokens staked on a non-custodial basis, originally estimated to be worth up to $15,000 per month,

• an additional monthly grant of $5,000 payable in USDC to supplement POKTscan’s operational costs, and

• in the event that POKTscan’s validator rewards are less than $15,000 per month, PNF has committed to top up the rewards towards this amount, but by no more than an additional $5,000 per month.

We made our first payment to POKTscan on 30 June, comprising 219,829 POKT in validator rewards and $5k in USDC. We subsequently sent over an additional $5k in USDC to make up some of the $8k shortfall from the lower than expected return from last month’s validator rewards.

We cannot say for certain how long this grant support will last for. Its continuation relies on POKTscan reaching a point of financial sustainability, which is primarily influenced by the price of POKT. Other factors, such as the necessity of additional analytics providers in the ecosystem, should also be taken into account to avoid relying solely on POKTscan and potential risks of a single point of failure. However, these considerations are of lower priority compared to the immediate importance of maintaining POKTscan as an active and reliable infrastructure for our entire community.

Conclusion and next steps

Detail of these payments will be covered in full in PNF’s quarterly accounts due in the coming weeks.

Stay tuned for more updates, and thank you for your support.

PNF

[h5law]

I don’t understand the logic behind this at all. ARR was presumed to make node runners capitulate and see some leave the ecosystem. We already saw ThunderHead leave - where was their grant? They provided a lot of benefits to the community as well.

If PoktScan cannot stay around with the ARR cut they should not recieve any grants without a vote. They should put up a proposal and it should be voted upon.

I assume the funds for this grant are coming from the PNF treasury and although this is not DAO money it hinders PNF’s ability to spend in other places, reduces runway and reeks of favourtism. As such I think we should really think twice before bailing out companies we like.

Has PoktScan tried to reduce costs at all? Reduce personnel numbers? Reduce infrastructure costs? Is any of this even planned?

I am wholeheartedly against this.

[Dermot (Dermot O'Riordan)]

@h5law

If PoktScan cannot stay around with the ARR cut they should not recieve any grants without a vote. They should put up a proposal and it should be voted upon.

This is about supporting the POKTscan portal, not their node running business.

@h5law

I assume the funds for this grant are coming from the PNF treasury

Correct

@h5law

I am wholeheartedly against this.

What do you propose as alternatives to letting the portal go under?

[h5law]

@Dermot

What do you propose as alternatives to letting the portal go under?

I propose they put up a proposal to fund their dashboards, here I would prefer to not use the word portal for confusion with the gateway/portal actor. They provide a very helpful service and I am sure we all use it, myself I used it a lot just yesterday to trouble shoot some problems I was having.

I am sure if they put their struggle to a vote they would be met with constructive feedback and most likely support. However, I really don’t agree with this bailout. If a company can no longer sustain itself it must change. Now they are recieving funding from PNF where are their transparency reports? Why do they not have to perform and budget reducing actions such as laying off employees or shutting down some of their internal services?

I mentioned in the latest POP they would be a great fit for it and most likely be the ones selected so why dont they go down that avenue instead of a handout? I am strongly against bailing a company out no matter how “essential” it may be. We have pokt.watch no? I am sure there are means by which they could reduce their costs a lot and extend their runway.

I am not against helping them. I am against doing so without a vote, without any signals to the community before hand, and without any show on their part of any actions they are taking to stop taking a grant. They are not essential. We can live without them. If they aren’t willing to play by the rules of a free market and change their operations according to a change in their ability to fund themselves they should leave the ecosystem.

We should not be in the business of helping businesses that cannot sustain by themselves anymore. This is a one way ticket to demise, and in my opinion we cannot afford to take the first step down that road at this current time.

[Dermot (Dermot O'Riordan)]

@h5law

If a company can no longer sustain itself it must change.

What you are saying highlights the tragedy of the commons when it comes to the funding of public goods.

As per Vitalik:

Public goods are practically useful resources that in economist terms are non-excludable and non-rivalrous. Another way of describing public goods is that they are anything that is good for the public that struggles to find funding through traditional funding sources.

Public goods are notoriously overutilised, underfunded, and poorly understood. Poktscan.com as one of the most valuable public goods in Pocket’s ecosystem is a good example of this. It was funded altruistically by a team that can no longer afford to do so, and its existence is now in peril.

If you complete an impact scorecard to consider POKTscan for a typical DAO grant, it would score very highly across each of the key dimensions of utilization (how widely and frequently it is used), measurable benefit (depth and long-term nature of benefit), ecosystem-wide significance (whether it is more than just a nice to have), access to alt funding sources (how much hard would be inflicted if it didn’t receive outside funding), and the novelty factor (how many alternatives are there?)

While PNF does not have the capacity to fund grants as large as the DAO, we can move quickly in line with our responsibility to act in the best interests of the Pocket Network community.

@h5law

They are not essential. We can live without them.

You are welcome to your perspective, but this is not a valid one from PNF’s view. POKTscan is literally fundamental to how exchanges, data aggregators, along with most of the community interact with and parse Pocket’s blockchain every day.

@h5law

Has PoktScan tried to reduce costs at all? Reduce personnel numbers? Reduce infrastructure costs? Is any of this even planned?

We have discussed their costs in detail, and we have asked the POKTscan team to share these publicly. We solely support their costs to maintain and run their data analytics platform, which does not include funding for their data science team or node-running business.

@h5law

I propose they put up a proposal to fund their dashboards, here

The DAO has no direct say on how PNF spends its treasury. We could put up a vote on a purely advisory/signalling basis, but I’m not sure how much benefit this would provide, and it sets an extremely unclear precedent for future PNF funding decisions.

Never mind the fact that requiring a vote on some - or all? - of PNF’s funding initiatives would require an amendment to PNF’s constitutional role within Pocket’s ecosystem, including an update to PNF’s articles, mandating a vote on PNF spending decisions would remove many of the benefits of how PNF is currently set up. PNF is designed to provide reliable support to the ecosystem and a long-term mission-driven view of Pocket’s strategy. This is undermined the more we require proxy votes on operational/strategy decisions. It’s a very bad way to run an effective organisation.

Sharing some quotes from the debates about approving the current design of PNF at the end of last year:

@b3n

Governance defines permissioned authorities and scope boundaries to secure the organisation from governance capture and catastrophic failures. Permission however is a terrible way to run an organisation. You cannot build a culture of dynamism, innovation and speed using permissions. Permission is “do-not-act-until-approved" which is organisational stasis and death

@Dermot

The more that the Foundation’s autonomy is reduced, the less its impact will become. And while there is undoubtedly a balance to be struck, highly centralised direct control of the Foundation by the DAO is not it.

We are ultimately talking about a grant of a maximum of $10k in stablecoins per month from our treasury and the opportunity cost of not staking PNF’s POKT as validators (which we may do in the future).

If you are comfortable with the principle that PNF can fund other contributors from its treasury, the same principle should apply here. This is how we supported some of your work without requiring a vote before the ERA Budget passing, for example.

Lastly, preserving optionality is usually the most effective strategy in times of uncertainty, particularly when a binary decision is unnecessary or entirely self-imposed. Instead of forcing an immediate decision to fund POKTscan or let them die, we are giving them what they need to survive to prevent them from immediately closing up shop, buying us more time to think about the most appropriate next steps. Community input is, of course, welcome in this regard as we continue to work out the optimal path forward.

As per the original post:

@Dermot

Other factors, such as the necessity of additional analytics providers in the ecosystem, should also be taken into account to avoid relying solely on POKTscan and potential risks of a single point of failure. However, these considerations are of lower priority compared to the immediate importance of maintaining POKTscan as an active and reliable infrastructure for our entire community.

[h5law]

I am not against their funding at all, my only gripe is the lack of transparency in this funding.

@Dermot

If you are comfortable with the principle that PNF can fund other contributors from its treasury, the same principle should apply here. This is how we supported some of your work without requiring a vote before the ERA Budget passing, for example.

I receive funding for my work on IBC which although started as a private branch of the forum has since been made public (sockets). I had to apply for this and post monthly updates on its progress. I do all the work in public, where any and everyone can see, change and edit my contributions as they see fit.

I have also received funding under the RAD and RAD2 programs, both were voted on by the DAO and anyone could have done the tasks that I ended up doing. The tasks were public and open for applications.

I am not against the faster nature of the PNF treasury grants, what I am against is the avoidance of processes that have been put in place for a reason. I don’t see PoktScan going through these processes. What I see here is instead a bypassing of them. Whether it is them being close to PNF, having a larger reputation or whatever other reason it may be I am against it.

If they are indeed a public good they should be public. This involves open sourcing their code and being transparent in their processes. Until this is done they are a private entity, and as a private entity should be allowed to fail on their own. They made their bed let them lay in it too. If I was in the same boat I would hope someone on the forums called me out and told me to fail and reminded me of the DNA of this community - openness is key.

Until they conform to the standards that PNF laid out, openness, they should not receive funding. When they do conform to this standard I will again support them. We should not let the pressures of economic difficulties blind us to who we as a community are. We strive for openness, transparency is part of that. PNF should ultimately take over PoktScan if it deems it a public good (as you mentioned off of the forums). If that is deemed a lower priority then that may need to be reevaluated. Perhaps PoktScan could help offloading it to PNF as part of the terms of this grant to ensure the grant stays a short term thing.

[aos_bs (call_me_al)]

I am not against their funding at all, my only gripe is the lack of transparency in this funding.

I wholeheartedly agree. Personally I use poktscan quite frequently, and have always had nothing but respect for their development process - they’ve always been up front about problems, usually are the first party to provide data in response to questions, and are consummate professionals in a space that sometimes doesn’t lend itself to that.

Regardless of how we got here and that decision-making process, the funding is a fait accompli and I think the best use of energy here is to say “What next?” In my opinion it can be broken down into two main questions:

1. How do we de-couple ourselves from this specific single-point-of-failure in the future. The fact that we’ve decided pokscan’s analytics are “too critical to fail” should be a flare shot up for innovation. Let’s try to iterate out what specific features we don’t have equivalents for in other platform that are core to the ecosystem, and get those out to the builders in some form of public RFP. Then we can tackle the very real, challenging technical problems together, and add value back into the ecosystem in the form of completely open tooling. Even with software in hand, running a service like poktscan is a lot of operational work I’m sure, but by de-coupling the “secret sauce first mover advantage” from “running a great service”, we’d be able to I think much more fairly gauge (and reimburse) the cost of running something like this. Maybe poktscan still winds up running the service, but at least it would be after some form of public “bidding”.
2. How do we maintain transparency in the short-term? Dermot has brought up the great stipulation that PNF will be paying solely to support the analytics platform, but unfortunately I think that’s an incredibly muddy thing to have to ‘prove’. Any organization more than a couple people is going to have a lot of dependency, and frankly I don’t see how you can say that any payment would verifiably not benefit the node-running arm. I know that’s not the intent of this support, and I don’t have a great solution here, but I think that putting as much transparency as possible out there from a “what exactly is costing money” standpoint would do a lot in terms of good-will in the short term. I know personally seeing things like “XXX hosting fees, YYY person-hours for management” would at least let it feel more like supporting a valuable service and less like “let’s subsidize this node runner that happens to also provide a service”

I do want to reiterate I respect the hell out of Ramiro and the whole poktscan team, the work they’ve done for their analytics project, and their presence in the community. If it were put to a vote I would probably vote YES to support them in the short term. I just think we can collectively do a better job of transparency in the future.

(edited to remove too many instances of me saying “frankly” lol)

[Dermot (Dermot O'Riordan)]

@aos_bs

I just think we can collectively do a better job of transparency in the future.

@h5law

I don’t see PoktScan going through these processes. What I see here is instead a bypassing of them.

Never mind the fact that we didn’t need the DAO’s approval for this funding of c.$17k (in total so far, including the validator rewards), we fucked up by not communicating our thinking about POKTscan’s situation as soon as we became aware that we might need to step in. And we fucked up again by not communicating more as the situation unfolded. And then again, by not announcing everything immediately as soon as we agreed to help the POKTscan team.

And these mistakes have made things harder for the POKTscan team and the rest of the community, who naturally feel aggrieved that they deserved to hear about this earlier.

So, I’m really sorry. And I take full responsibility for this. We can do better. And absolutely should do better.

Transparency is a key value for the ecosystem and this is not a good example of “defaulting to open”.

Please continue to keep holding us accountable to this value, along with all the other key dimensions of our DNA.

I ask you, in return, to please also uphold one of our other key DNA values of “assuming positive intent”.

@h5law

This involves open sourcing their code and being transparent in their processes.

@h5law

Perhaps PoktScan could help offloading it to PNF as part of the terms of this grant to ensure the grant stays a short term thing.

@aos_bs

Let’s try to iterate out what specific features we don’t have equivalents for in other platform that are core to the ecosystem, and get those out to the builders in some form of public RFP. Then we can tackle the very real, challenging technical problems together, and add value back into the ecosystem in the form of completely open tooling.

All of these points above are very fair and are things that we are mindful of.

The first thing to say is that this grant isn’t representative of a scalable or repeatable funding model. It’s simply not sustainable as is. The grant is very much a bespoke arrangement that arose from POKTscan’s needs and our ability to react to the situation as it unfolded.

While the first round of funding of $10k in USDC and the validator rewards from our 14.3m in POKT have been paid out, everything - within reason - is on the table regarding the next steps. We will not be putting any of PNF’s spending decisions to a DAO vote unless our articles demand it, but we do respect everyone’s input and we will strive to be much more transparent with everything going forward.

The purpose of this transparency notice was exactly that, to notify the community transparently about something important. Now that everyone is armed with the same information, the community is free to ask questions, challenge us, be called to action, and work together on what’s best for the community going forward.