PNI Update to the DAO (January 25, 2023)

PNI Update (January 2023)

Arthur Sabintsev, COO at Pocket Network Inc.

Today, I will provide you with a transparent update about the state of Pocket Network Inc. (PNI).

Runway & Headcount

Prior to the New Year, we employed just over 70 individuals. As of Wednesday, January 25, 2023, PNI’s labor force has been reduced to 44 individuals. This has allowed us to extend our runway meaningfully, and with the infrastructure cost cuts we are currently performing, we are positioning ourselves to be well capitalized for the remainder of the year. This does not take into account any revenue that our sales team will be bringing in, which will extend the runway further.

We performed two rounds of layoffs over the last two weeks and reduced the remaining team’s pay by double-digit percentages to get our runway in line. Mike, our CEO, took a 100% pay cut, and Laxman and I have taken 40% pay cuts. With this second round of layoffs being completed in the last 24 hours, and with us finally reaching a size we believe to be appropriate for executing on our most important deliverables, we will be re-evaluating everyone’s compensation immediately to reduce this temporary financial hardship the entire team has incurred. These compensation changes are accounted for in our runway projection below.

To provide more clarity here, our average burn on labor has been reduced from ~$800k/mo to ~$400k/mo ($4.8m annualized), which means the average employee is getting paid $109k/year, which makes sense as 75% of our remaining headcount (33 people) are in product, engineering, or leadership roles. The current breakdown of our team is as such:

  • Leadership: 4
  • Finance & HR: 3
    • Accounting: 1
    • Finance: 1
    • HR: 1
  • Marketing: 3
    • Content: 1
    • Brand Design: 1
    • Product Marketing: 1
  • Product & Engineering: 29
    • Backend: 8
    • DevOps: 7
    • Frontend: 3
    • Product: 2
    • Protocol: 7
    • Support: 1
    • UX Design: 1
  • Sales: 5
    • App Sales: 4
    • Partnership Sales: 1

Mike and I take responsibility for letting the company get to the point where we over-hired in 2022. In building an ecosystem, and with changing leadership last year, there was a belief that carried over from the old-guard to the new-guard that we needed to build many products and features, internally, to simultaneously support both the ecosystem and PNI. This was clearly the wrong approach and we have been course-correcting since 4Q2022. We have narrowed our focus on improving the Gateways product, launching new chains, and V1 development.

Quarterly Objectives

We have set the following generalized objectives for this quarter, most of which will carry over into subsequent quarters. In the future, I will be transparent with revenue targets.

  • Reduce Unprofitable Infrastructure Spend
    • We are decentralizing most of our altruists to the community. We have a plan to progressively decentralize new chain integrations as well once they’ve reached critical adoption in the network. This will lower our node infrastructure spend by an order of magnitude or more. We thank all individuals who have signed up to offer access to their data nodes. Please reach out to Fred Teumer if you’d like to participate in this initiative.
    • We will move our remaining internal node infrastructure to one or more bare metal providers. Please reach out to me if you can provide us with an introduction to your host if you use such a provider to run your nodes.
    • We are in the final stages of securing a better EDP deal with a cloud provider to run the portal, which will be run on the cloud for the foreseeable future.
  • Bring in Protocol Revenue through RPC Deals
    • We define protocol revenue as proceeds that are used explicitly to purchase tokens on the supported exchanges through our market makers, adding organic demand-side pressure into the marketplace.
    • We have two primary initiatives for achieving this goal; app sales (e.g., Aave) and partnership sales.
    • We are spending this quarter working on fixing up the current state of the portal to be friendlier to private RPC users.
  • Bring in PNI Revenue
    • We define PNI Revenue as proceeds that are used explicitly to cover PNI’s expenses to operate the business. Most or all of these proceeds will not be used to purchase tokens unless we believe it prudent to hold more tokens on our balance sheet.
    • New Chain Integrations: We will continue integrating New Chains which has always been our strongest revenue stream to date. We plan on doing at least three chain integrations a month, but believe we can accelerate that given that we are offloading quite a bit of our chain maintenance to the community as we decentralize the altruist network.
    • MEV on Public RPCs: We are currently testing performing MEV on transactions going through our public RPCs. We are working with multiple providers to perform searches on a few of our EVM chains. We are expecting meaningful revenue from the public RPCs when sustained positive sentiment returns to the market. We are preparing for that now.
    • Portal Enhancements: We are planning to secure partnerships this quarter to introduce value-add services to our Portal based on market-research we’ve done on current users and the market-at-large.
  • Protocol (v0 & v1)
    • v0: We plan on scaling the relay budget beyond ~3b relays/days. We have two paths in mind and we are currently in a preliminary conversation with C0D3R on having them help us begin development this quarter to achieve this change. We are also working with the POKTScan team on data aggregation, analysis, and modeling.
    • v1: We plan on being 50% of the way complete to launching the Testnet by the end of this quarter, and are hoping to launch the testnet in Q3. Separately, we also have 3 active community contributors working onv1 as well.
  • Ledger Update
    • In 3Q2022, we submitted our outsourced Ledger app to Ledger for review. Since then, there’s been very little movement. We heard recently through our partner-vendor that Ledger’s entire engineering team has been stuck working on their forthcoming Stax device for the last few months. However, we also heard that we are up next for a security review, which is one of the last steps before getting into Leger Live. This may begin as early as next week. We are hopeful to be in Ledger Live by the end of the quarter, however, we have no idea if that will come to pass. I reiterate that this is out of our hands at this time.

All other initiatives that we may have publicized in the past have been terminated. With the successful appointment of Jack as the Executive Director of the Pocket Network Foundation (PNF) and Mike’s removal as a supervisor, we have now finally fully separated PNI & PNF. This enables PNI to fully concentrate on driving revenue to the protocol and to the company without being directly encumbered with obligations to the ecosystem. The role of supporting the ecosystem now falls fully to PNF, who will have more bandwidth than PNI to give the ecosystem the care and attention it deserves and will be deploying a number of exciting initiatives this quarter.


After the departure of our previous marketing leadership in early 4Q2022, we made plans to rebuild that team. At present, given the current environment, and where we are in building our product, the plans are as follows:

  • Retain the following 3 roles: Brand Designer, Content Writer, Product Marketer:
  • Hire a Head of Marketing to lead the team in this product-focused direction. We currently have an offer out.
  • Focus on capturing large partners on the app-side and gateway-partner side with product-marketing campaigns supporting our sales team
  • Work with our community (DAO, Poktopus Army, PoktNews, etc.) more closely on signaling.

Forthcoming DAO Proposals from PNI

I am currently authoring the following DAO proposals that will assist with some of the steps we’ve taken above:

  • Monthly compensation from the DAO to node runners who are running the altruists. I will work with the node running community on this proposal.
  • Compensation for offloading the v0 Testnet and faucet to the community.
  • A new emission reduction proposal that will make one deep cut based on what we perceive to be the effective annual cost to run the appropriate amount of infrastructure on the network to service our current and project throughput. We are currently working through a draft with some members of the community before releasing it to the public. I am keeping this fairly close to the chest until we have confirmed that this proposed methodology for lowering inflation makes sense.


I hope that this update provides you with clarity on our direction and further delineates our commitment to taking the appropriate course of action, no matter how difficult, to ensure the success of this project. As always, I will continue being as transparent as possible through many of the official and unofficial communication channels.


Don’t hesitate to drop these into the Pre-Proposal category!


Lots of good updates and transparency/clarity.

Not sure if the PNI inflation proposal orphans the SER discussion or if PNI is interested in a larger working group?

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Yup, of course. Just working through drafts. Once I have enough internal eyes on it, I’ll post them in the forum for review and discussion.

cc @Cryptocorn


Could you elaborate on the working with C0d3r portion of this update?


@Olshansky can chime in here with the details or point you to the right explanation.


Allow me to push a little on this:

I see three scenarios:

  1. Bring the SER group (Ramiro, Caeser, MSA & myself) into the working discussions you currently have ongoing within PNI.
  2. Once PNI has a draft create a larger working group of PNI + SER, then a (hopefully) joint presentation to the forums.
  3. PNI posts a fully finished proposal to the forums where everyone can debate.

Given we were relatively close to consensus on how best to move forward with SER, and now paused until we can digest PNI’s plan, the more we can keep momentum going, I think this would be preferential.

I have a 4th scenario.

PNI just posts their thoughts to the SER post that has already been created.

They should be joining the DAO’s group, not the other way around. This is not V1.

MSA is the lead on that anyway, thats what the DAO paid him for. Along with Ramiro and of course yourself Cryptocorn.

I don’t like closed groups too much, I have no problem in seeing an other pre-proposal and discuss about it openly, as long as their proposal is different enough from SER. I only expect that they include what they think is relevant from the SER discussion, to avoid repeating ourselves.

I partially agree with @ethen, the PNI should be joining the DAOs groups not the other way around. Since the PNI is looking to be a separate entity, a pair among other companies working in the Pocket Network, it should go through the same process as every other community member.

Hey all,

I plan on putting this in the pre-proposal once I have initial research on what it costs to run bare metal infras across multiple regions. That’s helping me add guardrails/bounds. Right now the closed group is PNI Leadership, PNF, Nodies (since they are one of the top BM performers and provided initial numbers at scale), and MSA (since he wrote SER).

This is really early days - the idea is still being fleshed out, so I will share it once we figure out.

Let’s get SER out first. I don’t want this to hold it back.

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Whether it is feasible to first pass SER then later replace it with your proposal is dependent on whether SER decides to target a fixed max supply. This seems to be a recent point of discussion so it’s uncertain to me what direction SER will move in.

If SER is approved with the intent of signalling a fixed max supply, the effects of that would be undone if we then replace it with a cost-based inflation model. While cost-based inflation may also result in an asymptotic supply cap - if the price of POKT increases, as a result of relay demand growth, the number of POKT needing to be minted to cover network costs decreases - we can’t know what that number would be, so the theoretical supply cap would be dynamic rather than fixed.


Sure - I’m not 100% up to speed on SER given the events of this week, however, I don’t want to co-mingle this proposal that is in very early stages with something that’s been debated for a month. Not throwing a monkey-wrench or anything in that plan.

Hope we’ve cleared the air here.

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Sure thing.

V0 can only scale up to ~3-3.5B+ relays per day. Relays beyond that upper limit would be distributed through our altruist network; where we’re also beginning to get support from some of the major node runners.

V1 can theoretically scale to 100B+ relays (or more). It’s too early to formally verify and we don’t have real data (yet), but the current approach has configurable difficulty, and can be modified similar in a fashion similar to Bitcoin’s mining difficulty.

@jdaugherty and I have been in touch with the c0d3r team to get feedback on potential design and implementation solutions at the protocol level. We’ve also been in touch with the POKTScan team to help us collect data in evaluating the scaling limitations and model the solutions we’re evaluating.

In full transparency, here are all the references that no one is going to read:

We’re keeping a close eye on the progress V1 is making alongside the growth of the network and will submit a formal proposal for v0 if/when needed.


This is why you’re first team all crypto. web3 all-star on his way to the hall of fame. :man_technologist: :basketball:


Does it mean that you are going to sandwich attack the users of your public RPCs?

No, definitely no plans to do that.

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