I have a few questions to pack into one post sorry!
The current infra fees for PoktPool are $7 per day per node. That means approx $21,000 of sell pressure from pocket pool at 3k nodes per day. I understand it’s necessary to sell to manage the costs but I’m worried that with continuing rates of compounding in addition to other node providers charging a similar rate the sell pressure is going to negatively impact us a lot over the next few months until ABR is implemented. Let’s assume 30k out of 40k nodes charge approx $7 a day for infra fees, that would be $210k sell pressure per day on a very low volume token.
Are we able to gain any insight into how this is being mitigated? Would the DAO consider implementing a cap on nodes until we are getting full usage out of our current stock? Would the DAO consider implementing the ABR sooner since we are reaching our relay goals ahead of time?
In relation to future revenue clarity. I understand the premise of ‘over rewarding’ our current node runners to incentivise the network to onboard a high number of nodes.
However even with this in mind, when the ABR is implemented it feels as though there is going to be a big drop off in rewards if there is going to be a 1:1 burn/mint ratio if we are going to match price or even be cheaper than competitors, as is the stated goal. According to documents in the forum we will attempt to lower our service costs compared to key competitors, however looking at the market now we’ve seen Infura Drop their costs from $0.0005 per relay to now $0.0002 and other competitor services such as Quick Nodes seem to be dropping their prices to as low as $0.00005 per relay which is 10x cheaper than what Infura was charging in 2021.
Does the Pocket team have any plans on how they will manage the payment for relays by apps when the future price of Pocket could be extremely variable on any one day and the user experience/stability of paying with a credit card/bank account could be significantly easier?
Are we allowed to gain any insight into how PocketDAO is planning to manage the price structure of its service, e.g. which competitors we will monitor as the benchmarket? What happens if it continues to be a race to the bottom on prices? When ABR is implemented node runners being paid $0.0005 per relay is significantly more attractive than 10x lower than that at $0.00005 and between those two prices there is the risk that existing node runners may not be prepared for that drop, even with the WAGMI inflation reduction.
Combining the questions of the two above If each node was to charge the same as Infuras rate of $0.0002 to break even on the $7 a day infrastructure charge each node would need to service 35,000 relays, a significant increase on the 100 odd that is happening today.
There is a WIDE variety of underlying costs across the network, and poktpool’s infra fees aren’t in any way a good metric for calculating opex pressure across the entire network. Some providers are well under $100 a month.
In addition to that, v1 is going to significantly reduce the opex costs for running a servicer node on the network.
So, while the question “how is opex sell pressure going to be mitigated” is a reasonable question (and one answered by the v1 release), your core metrics aren’t a good reflection of the actual opex across the network.
That’s fair but even if I am to divide that figure by 4 at $50 per node we are still looking at approx $50k of sell pressure everyday on a very low volume token. While v1 addresses a lot of this v1 is still a very long way away and while long term I have confidence we will be okay until ABR is implemented there is potential for significant headwinds until then. I get that it’s crypto but I think there are potentially steps we can take to mitigate this e.g. ABR implementation, node limit.
There should 100% be a cap on the nodes. The network is already performing to a reliable standard. Why keep diluting POKT until we get some actual revenue through the door? Printing your own native currency is not revenue (See Zimbabwe).
Anyone can see what is happening now is far too inflationary for the ‘revenue’ we are generating. It’s like the FED. We are reacting to this really slowly and inflation is something you need to get a handle on quickly as their are long-term effects that are difficult to come back from.
I would propose increasing the node prices to 50k-100k POKT once you hit over a certain threshold (50k nodes) It rewards early investors and will ensure the network grows as a more sustainable rate moving forward devoid of the current inflation.
This is a bad stat to use for comparison. Node providers who run at scale can significantly reduce this cost and generally they charge a premium to keep a sustainable business.
This is not possible to control through the current protocol and can be seen as centralization.
Here’s what we do know:
The network is absolutely over provisioned right now,
It’s good that we are over provisioned since we become more decentralized and prepares us to service more relays as we onboard more chains. It’s a bad thing because it costs $$ to run up another Pocket Node (more vCPU’s and SSD space) pushing the costs onto the node runners, the foundation, and future app runners. Tons of idle resources sitting… waiting… for a session, it’s a bit bothersome to think about how much resources are being wasted right now.
The realistic solutions I can see occurring in the near future:
Reiterate on WAGMI and propose parameters as necessary if the ecosystem believes inflation is becoming out of control.
Make node running less expensivs
V1 acts as an amazing futuristic solution on reducing costs since the protocol is far more efficient. The only thing to consider is that it’s at least a year out (timeline may vary could be more or less, it’s innovating blockchain/software development we’re talking about here).
Another option is to optimize the current client of V0 so that way it takes less vCPU’s, IOPS, and SSD space to run multiple nodes. This is definitely feasible as well, and something I’ve been researching into.
The inflation parameters kinda feel out of control right now…
And imo the response is simply happening way too slow for the rate of relays POKT is growing at.
Lets call a spade a spade and link the reward rate to the amount of relays being processed. It makes a lot of sense and actually takes into the rate of growth we are experiencing rather than some arbitrary date in the future that seems to have been chosen randomly so as not to disenfranchise existing holders at the expense of what is actually best for the business! I am a fairly recent holder myself and would be more than okay with this as I can see way past the sugar hit the rewards get me today to see the benefit POKT can have in a web3 future. One thing I do love about the POKT community is they can see and feel this vision. I do worry the DAO is really underestimating their own product and how quickly we are growing. I don’t think the existing parameters work at today’s relays let alone 1b, 2b and one day 10b.
It is not too late. It might hurt a little bit in the short term but ultimately if POKT becomes the de facto validator for web3 in the future it won’t matter. 2/3rds of POKT is staked as it is so there is essentially a 21 day cooling off period for existing node runners to cool off themselves at a potential change to inflation parameters. I think the so called ‘death-spiral’ as touted by many is far more likely to occur with the existing parameters in play rather than a change in tact.
The current situation is a a result of the lack of demand for POKT on the application side. We’re not burning, and as a node runner, if you earn POKT what are you going to do with it, let is sit in a wallet and get diluted, or spin up some more nodes and increase your chances of being selected for a session. The answer is a no brainer, but unfortunately it leads to an arms race amongst node runners. Clearly we don’t need more nodes right now from a relay standpoint, nor do we need to pay infrastructure costs for mostly idle nodes, but that’s where we’re at.
Since WAGMI tells us exactly how much POKT will be minted in the next year, and the only demand for it at the moment is for staking more nodes, we can easily see the network reaching ~65000 nodes and rewards of about 12 POKT/node/day a year from now. That may or may not be a problem, depending on how POKT price evolves.
I’ve expressed this before, but I think it would be good to create node tiers to enable node runners to hold on to their POKT until there’s sufficient demand from the app side, without needing to spin up additional costly infrastructure. Something like a 50k node increases your probability to be selected for a session by 15%, 100k node increases your probability to get selected by 30%. Obviously you wouldn’t want to send all traffic to the nodes with the highest stakes as that would hurt decentralization, but having some incentive to stake higher amounts in order to absorb the POKT being minted without incurring additional infrastructure costs would be a good thing overall, imo.
It seems painfully evident that the ABR is still way too high.
When will someone from the POKT team get a clue and lower the ABR before they blow up their own project? I say it as respectfully as possible but the inaction being taken is is ruining one of the most fantastic ideas the blockchain/web3 has to offer.
Yes I acknowledge it’s a DAO decision but if leaders of the POKT team within the DAO feel uncomfortable or concerned with the rate of inflation then I also don’t think there is anything stopping them from introducing a new proposal asking for more aggressive measures. But if the team is happy with how it’s travelling and see no concerns then I think we need to just trust the process and let’s see what happens I guess.
There must be some key data/metrics that the core team will have access to that many of us don’t in terms of what is the optimal number of nodes for relays today at close to 1b relays and one day at 10b relays.
As the original poster and subsequent posters have alluded to; we are over-provisioned right now which is leading to selling pressure from node-runners for the amount of relays we’re getting.
If not wanting to introduce a level of centralisation into the protocol is a non-negotiable for the team (eg: cap on nodes as originally suggested) then why not simply double the price of a node provided we are able to meet the current relays with half the nodes we have currently and keep the reward to relays multiplier exactly where it is now so it takes longer to accumulate a new node and allows for more dapps to come on board in a better scaled approach? It reduces the amount of pressure to on-board new dapps and keeps the core ethos of decentralisation POKT is striving to be.