Hey everyone,
We want to provide transparency and context around the POKT Foundation’s approach to funding its operations. As many of you know, the Foundation relies on POKT rewards as its primary source of income to cover operational costs and execute initiatives that benefit the network.
We sent 5M POKT to exchanges between the dates of September 19 and September 27. Throughout this time we were both buying and selling POKT, keeping a balance between stables and POKT on exchanges. This was an experiment to see what the impact of our participation in the market could be.
We resumed on November 12, during which time we sold an additional 10M POKT on exchanges to fund the foundation.
When we began the transition for the Foundation, we said we would prioritize selling POKT OTC and minimize selling POKT on the markets.
We have shifted our focus to:
- Directing all potential POKT purchasers to buy through the markets
- Helping facilitate these purchases when needed
- In parallel selling the Foundation’s POKT on exchanges
- Increasing activity as a participant in purchasing POKT on exchanges
One of our priorities of the foundation is to be a steward for the POKT market. This includes ensuring that POKT’s token is sufficiently liquid. We have worked with community members to build out a bot that can buy and sell POKT safely, based on traditional indicators for the market.
To be clear, this is not a market making bot. We are not trying to keep spreads tight as market makers do. We are in close collaboration with our market maker as we execute on this strategy. As a steward of the market, we are not just in the business of selling POKT, but purchasing it as well. We want to increase our own POKT reserves over time, but also be able to sell without impacting the market. There is no actor in the market with as vested long term interest as the Foundation.
Why Sell POKT on the open market?
There are a few reasons for the change in approach:
Most OTC deals are net negative for the POKT token. Many investors we’ve spoken with want large discounts, on the order of 10% - 20%, as well as short vesting periods, or none at all. In today’s market many investors want short unlock periods to take advantage of the current environment. This is not healthy for the POKT token. We will point them to the open market moving forward. Most of these deals are short term capital that is inefficient for capitalizing the Foundation and no benefit when these are not long term POKT holders.
We are not completely averse to doing OTC deals, but will prioritize those with long term outlooks or other value add.
We want to drive as much volume and liquidity to the open markets as possible. Liquidity begets more liquidity. Everything that doesn’t drive volume to the markets takes away from others being able to purchase in larger quantities. This helps with future exchange listings and those who believe in the Pocket mission enough to purchase on the open markets.
We are not impacting the price by selling on the market. When we began selling on exchanges, the token price was just above $0.03. Today, the price is above $0.05, and the overall trading volume has more than tripled. While the recent positive momentum in macro markets has certainly contributed to this growth, we believe our strategy has played a significant role by increasing daily trading activity and liquidity.
PNF will be a purchaser of last resort.
For node runners who are selling POKT to cover costs, particularly those who sell OTC at a discount, we will be starting a program to purchase POKT within some limits. This discount arbitrage has been a net negative for the token, and we would rather be the purchaser of last resort for you. Once we’re ready we’ll provide more information on how to move forward. Please reach out if you have interest in this program.
Looking Ahead
The POKT Foundation remains focused on strengthening the Pocket ecosystem and being a responsible actor in the market. We believe that transitioning to exchange-based selling was the right decision for both the Foundation and the community, as demonstrated by the encouraging trends in price and volume we have seen.
We expect the DAO treasury to continue to grow while we continue to periodically pull POKT for the Foundation for these efforts. The goal is to ensure the Foundation is properly capitalized, we are able to be the steward for the market, as well ensure the DAO treasury continues to grow.
We’re always open to community feedback and are committed to refining our practices to align with the best interests of the network. If you have any thoughts, questions, or suggestions, please feel free to reach out.
Thank you,
Michael