@caesar has committed to populating such a table. Looking forward to seeing it. He thinks it will show high-single digit cluster… I think it will show more of a low-to-mid-teens (based anecdotally on what I’ve seen them do with the various chains within the Cosmos ecosystem). Pancakeswap seems to be somewhat of an outlier at this point among legit projects, happily chugging along at some 40% inflation
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I think that this proposal is a good start.
In the pre-proposal thread my main concern was the inclusion of a MaxSupply, which seems innecesary for a token like $POKT (IMO). This new proposal creates an asymptotic behabior to low-slope which is enough to keep inflation low and avoids to set a MaxSupply.
I think that during the following months we can create a model that will enable the justification of a “floating” supply, avoiding the need of setting a MaxSupply and enabling a solid narrative around our tokenomics post Application Burning. The exact value of the target supply will be arbitrary, as any other inflation control that we might come up with, but I am more concerned in having a solid plan behind it. In this terms, this proposal can help us up reach that value without adding too much noise.
Regarding the node-runner operational costs, this reduction will be aggressive in the node runners finances that are at their limits in most cases. We are working on some ways to reduce the infra costs of the network but it will not be enough to whitstand a 40% reduction of incomes. I hope that the sales targets are met and some buy pressure could increase the $POKT price. If the price does not follow, the number of node-runners will take the hit and unstaking will follow. Nobody knows what will happen if 50% of the staked tokens (>25% of the current $POKT supply) becomes liquid…
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Just want to add that from a marketing and wider investor perspective, not having a MaxSupply is an immediate red flag to many and it will result that many people won’t dig deeper to understand the coin economics, even if POKT becomes deflationary at some point. People will just pass and decide not to touch it. It’s also looking bad at CoinMarketCap or CoinGecko. I’ve seen this issue in multiple projects and it’s much easier to put MaxSupply than educate the masses, which is kind of an impossible task. It’s always better if MaxSupply is set to some random amount that will never be achieved (or achieved in 20 years from now let’s say) than not having MaxSupply set at all.
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I like the schedule here, and the fact that it gets to single digits this year.
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Yes, I’m starting to have more concerns about this as well.
I generally agree with proposed solution for reduction, however it sorta makes me wonder if it’s actually needed. We still want it attractive for node runners to operate for POKT (our quality on certain chains still suck, too) instead of other chains
Curious if this sentiment is actually still prevalent or not given the current price action.
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This, in essence, is what we spent the last month debating. For now, the line in the sand we have come up with is to not push that narrative. If the community feedback favors such a narrative, it can still be considered - whether via modification of this proposal or via a new proposal.
Question for @TheDoc : would not the “single-digit inflation” narrative be sufficient to cause investors to not do a preemptory rejection of considering POKT as an investment?
Yes, 4% monthly reduction is on the aggressive end of what was considered during the pre-proposal phase, but it is much less aggressive by a factor of 3x compared to the average 12% monthly reduction over the course of WAGMI and FREN. If we navigated the waters of 12% monthly reduction that dropped rewards by a factor of almost 20x over the course of the last twelve months, I think the network can survive and innovate its way to handing a 40% reduction that is gradually put in place over the next twelve months. It will be good to hear from multiple node runners. Driving the single-digit inflation narrative, in our opinion, is worth the pain.
Throwing out some other number for consideration, if we were to abandon the “420” meme. The following are the minimum monthly reductions that are needed to be able to claim single-digit inflation by the end of the year:
3.2% reduction for 12 months
2.45% reduction for 18 months
2.35% for 24 months or more
Note that the latter, done indefinitely, gets you right back to defining a MaxSupply (of 2.40B) and puts us right back where the pre-proposal started
there is a natural feedback loop to stabilize node count in so much as rewards rise for remaining nodes as some nodes drop out due to attrition. I cannot see any scenario in which a 40% reduction that is implemented gradually over the course of a year leads to an unstaking of 50% of the node-staked tokens. Realistically, given the above feedback loop, given historical data in the face of WAGMI and FREN reductions (if I recall last June, node runners were already complaining of being at the break-even point and we have reduced rewards by a factor of 3 since then) and given the power of innovation if given enough time to innovate, I think a reduction-induced attrition of not more than 10% is more realistic.
I use to be in the camp of worrying about the effect of moving POKT from locked to circulating and thought it best to keep as much POKT locked as possible. Vitaly has been chipping away at that notion as being a false narrative and suggests the opposite. As investor confidence is restored that Pocket emissions is uner control and on sound footing, they dwill be glad to buy-and-hold unstaked tokens on the anticipation of capital gain without the worry of inflation devaluing their investment. I copy over also the comment posted by @crabman in the pre-proposal discussion:
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Based on discussion thread I have seen on CoinMarketCap re POKT, I think this sentiment is still prevalent outside the community. Given comments made by @o_rourke , @ArtSabintsev and @Jinx I think this is still a well-represented sentiment within the community, including at PNI.
Also, what do you mean when you say “given the current price action?”
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My numbers were pure speculation, nobody knows what will happen. My rationale was, if the node-runners are at break even, those who survive will need to claim 40% more network share (in terms of relays) and that share needs to come from unstaked node runners, so at least 40% of them need to go to keep status quo.
Anyways, it is impossible to know and I cannot propose anything better right now, so no need to dwell much more around this.
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OK, just wanted to check in if this is still the sentiment. Some days, I hear inflation should be lowered. On other days, I hear it should be higher. I haven’t really given too much thought about which direction we should go now that the network has gotten much more efficient.
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Leaving my 2 cents in here based on some of the comments in here.
We at PNI believe the network is drastically over provisioned based on data we’ve received from multiple larger node providers and community members. We were planning on introducing an inflation reduction proposal that would take us into the single digits, and this was to be based on what we believe it would to operate the network. However, this morning we decided not to do so. There were a few reasons for this, however, in speaking with @o_rourke today, we don’t believe it is PNI’s role to drive these decisions, especially after formally having PNF split from us. We believe the community and PNF can handle it, as they have been doing, and moving forward we can add our thoughts just like other members of the community.
As it stands, we do support reducing emission. I cannot yet say if I personally support it through this proposal because I am still digesting the content, but I support the spirit of what this is trying to achieve.
The fact that it gets us to single digits this year is in the same spirit of what we were thinking of doing.
I’ll leave it at that for now.
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On the narrative side:
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I’ll let Caeser chime in as this is his specialty, but I think the ‘single digits by the end of the year’ will be enough for most of the ‘but won’t someone please think of the Inflation!?’ brigade.
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I do agree with The Doc that having some very long way off way to get down to 2% to satisfy the ‘tick box’ crowd is useful. Maybe something we can look at as SER gets closer to wrapping up, we start the next bull and v1 ready to drop.
At that point it could be something super shallow- a reduction from 8% → 2% inflation over 10years etc, giving lots of time for ABR to kick in. But we shall be in a better place to discuss EoY, and hopefully have a better token price to ease concerns of node runners.
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Even if you decide not to move forward with introducing that proposal, I would request that you synthesize the data obtained and release a white paper (doesn’t need to be long) outlining where you think we can land and why, emission wise, with an all-bare-metal network. Even if PNI does not wish to drive the emission control discussions, the role it currently plays in terms of having the node-runner community support and trust in even being able to pull together and synthesize such data is enviable and not easily reproduced by myself or @cryptocorn or anyone else. That form of co-laboring would be most welcome.
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I wish that’s the case, but sadly “average Joe” ( == average crypto investor) won’t dig deep to understand coin economics for any coins, including POKT, but listen to what it’s being said on social media. Stories will be circulating (like it’s already happening) that POKT is a hyperinflationary coin. If the Max Supply field is empty on CoinMarketCap or CoinGecko, that is still a red flag even if inflation rate is single digit (even 2% only). I’ve seen such cases already and projects were trying to explain deeper their coin economics (a.k.a. educating masses), forwarding people to their whitepapers or coin economics website page, but it’s doesn’t really work. It’s a painful process that can be avoided easily just by putting arbitrarily some random number at MaxSupply to have that data available on CoinMarketCap and then on top of it we can explain how POKT can become deflationary with ABR etc.
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The information we received came by asking some node runners in private conversations about their setups, and understanding their profitability standpoints, and operating margins. I don’t want to break their trust and share that information publicly. The initial rough draft that we had written only took some of that information into account, but the numbers we came to were rough. We had more conversations then we spent time writing/updating our proposal internally.
So let me flip that back at you - I think it would be good for the community, the DAO, and/or the Foundation to put together a truly anonymous survey to understand what it costs to be a node runner at this point. I believe questions a long the lines of:
- How many nodes (and tokens) do you have under management?
- How many regions do you operate in?
- How many chains do you support?
- How do you choose which chains you operate and do you dynamically update those?
- Do you do a revshare? If so, how much?
- What are your operating/labor margins?
- What is your break-even point?
And so on.
There’s probably a few dozen questions in total that can b strung together, and if synthesized properly, could be used to build out a bunch of models and projections. Assuming everyone is trustworthy in their responses, then data can be used to help drive some of these decisions in emission.
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@msa6867 I wanted to present this for benchmarking- compare POKT’s 16.8% & where SER will take POKT VS the space.
I believe the takeaway is self-explanatory and one of the reasons I lobbied hard to go higher than where SER pre-proposal initially was.
About the table:
- Annual Inflation % for all tokens in one place is hard
- https://coincodex.com/ attempts it but there are severe data integrity issues
- Even Messari can do it for only a few selected tokens
- Randomness, gamification, non-programmatic burns, other differences and complexities/combinations such as fixed cap, pre mine, lock, releases, make it almost impossible
- There are niche paid providers who supply similar data to traders. I maintain some data for occasional trading, so got some help there
- Net X 2, plz consider this a best attempt and I apologise for the lack of aesthetics, have a day job too
- Top 50 tokens by MC
- Removed stables, meme coins, metaverse, new ones such as Aptos, irrelevant ones such as lido, and others we probably don’t care about- xrp, ltc, etc
- Tokens such as ATOM might undergo changes in tokenomics. Once that happens ATOM will become my other favourite in addition to ETH as far as tokenomics goes.
- Solana follows a simple emission reduction plan as proposed in SER.
Thanks @Cryptocorn , will just copy/paste what I have already written about narratives-
Here &
"POKT is different"- I have come across this line in the past.
It’s analogous with parents/mothers saying “our baby is different”.
POKT “CAN” be different, sure!! There are numerous possibilities in the future.
But for now a prudent approach is to work around the similarities, do some benchmarking with other chains and protocols and remind ourselves that POKT trades in this small market competing for attention amongst hundreds and thousands of distractions, driven by common narratives that drive sentiments.
There are no certainties but given historical patterns, the probability of token value appreciation due to any type of supply cut is high .
Takes me to-
@Cryptocorn, let’s discuss marketing around SER if it gets approved. May be ask for some budget from the DAO. I love your CoinDesk idea. @msa6867 & @RawthiL can also get involved if interested.
Talking about marketing, I am warming up to Messari. Will reach out to you @Cryptocorn separately as you are one of the dissenters
My thoughts about fixed supply are here and we have spent weeks debating it specially with @RawthiL . I would encourage the community members to read through those exchanges in the pre-proposal.
The pre-proposal has been debated for 2 months. We and @RawthiL have all agreed to present this proposal in its current form. I personally would spend my energy in discussing this proposal on this thread instead of diverging into something totally different.
Having said that- open to succession planning- SER getting superseded by a sophisticated and dynamic model that incorporates burn, demand factors, etc but on a separate proposal. We have discussed openness to such evolutions several times in the pre-proposal.
Tokenomics should be a living and ongoing discussion as we learn more in this nascent space IMO.
I appeal to the community to support this simple reduction plan starting Mar, 23.
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I realize I am not an amazing economist nor will I pretend to be one, but I would say I do have a good gut feeling when it comes to incentives. I’ve outlined my pros and cons:
Pros:
- Decreases inflation slightly to attract more investors who believe we are hyperinflationary (speculative)
Cons:
- Force small node providers slowly to look into chain sharing or quit node running (which is still not mature at the moment as CC is not available and we need more than 1 provider to offer this service imo).
Note: I have also received word from multiple small node runners that this is detrimental to them, and this also limits the potential and motivation of becoming a large node provider in the future. I would love to see more diversity in the node-staked set. - We reach inflation rates closer to other more “mature” tokens such as AVAX and ATOM.
- There are fishermen and portal actors in V1 who should be incentivized from the get-go. We aren’t including them in the inflation measures, and we will need to pay them. THis becomes increasingly difficult if we are decreasing rates now.
I am concerned about the small to medium short impacts this proposal has, and I don’t believe we are being future forward enough to leave room for V1 incentives. In my anecdotal experience, small runners’ skills, input, and experience are extremely valuable to this ecosystem, and I don’t believe we are in a mature place enough to be forcing them to consolidate due to the lack of software available. While I realize that we can also revert course on these changes, it may come with certain pushbacks that will be hard to reverse. There are a lot of unknowns that we haven’t figured out yet, and sometimes the best thing to do during a time like this is nothing.
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Thank you @poktblade for some very well thought out feedback. For context, I will paste below the discussion points I made in our dm outlining from my perspective, “why SER”.
I note that the cons you list are very node-runner centric. We have tried to do node runners justice in this proposal as a counter to the more drastic cuts Art and Michael were suggesting, and shifting to a reduction rate that is much slower than that of the last year (4% per month vs 12%). On the other hand, we must collectively remember that the project does not exist in order to prop up node runners. If that becomes the goal sans commensurate demand, it becomes a ponzi scheme, which eventually collapses with token price driving to zero. In which case node runners are in much worse shape than any hit resulting from this proposal.
I am mindful of upcoming v1 shakeup of the emissions pie. I do not know if portal actors need to get a piece of the emissions pie, as they should be capturing value by the differential between fees collected from their clients and the expenses incurred. They do not need pay from the protocol in order to capture that value . But fishermen… yes they will squeeze into the pie, and yes servicer rewards will likely have to be reduced to make a carve-out for fishermen.
The end goal is emissions produced in balance to app burn (“burn and mint”). As app burn increase, emissions for node runners will increase, not decrease, even as the inflationary boost-strap portion of emissions diminishes and eventually gets phased out altogether. If some node runners decide to call it quits in the current environment, I think that will be temporary only. Once demand is there to warrant growing the network, emission growth via burn-and-mint will naturally lure back those that were sidelined.
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Hey, thanks for your feedback.
Heard you are an amazing coder though- respect! 
I have a huge inferiority complex there.
I generally do ok with markets and economics.
“Gut feel” is something we all believe we are good at (including me) but Daniel Kahneman debunks that very well.
Allow me to address your post a bit differently and nothing is for universal acceptance, just my personal views.
A famous and soon to be a living centenarian once said: “Show me the incentives and I will show you the outcome.”
Are you a node runner as well? I am relatively new, please forgive my ignorance.
The length of the cons list above VS pros hints me so.
I don’t consider such probable behaviours good, bad or evil btw.
I consider those very humanly and therefore discuss them very openly.
Behaviours and aspects such as- humans being interest and incentive driven, forming interest groups, tragedy of the commons, etc etc
Just as in one of my recent tweets I said- incentives may not be aligned for PNI (as a for-profit entity) to de-monopolise themselves. I don’t consider that evil, thats just capitalism. And PNI can be replaced with any 3 letter company in the current situation, and my comments will not change.
Why is this important?
Because if PNF (@JackALaing , @Dermot , @nelson , @b3n , @Ming ) has to do good and smart governance in this DAO, it’s important to discuss those probable behaviours and consequences openly, and factor those in the governance processes.
I have called out a few more things here and here.
Going back to supply and inflation-
I would encourage you to check this sheet and you may change your mind if you want to compare and contrast (which we should).
I think the conclusions are self-explanatory of where POKT stands VS the rest on the list.
I mean most actually have a definitive supply, which is even more radical if we were to take that route but we didn’t.
Btw Solana and Pocket mainnets happened around the same time.
Comments I keep hearing- we are over provisioned, we don’t need ~25k nodes, we need more validators, etc
I don’t know the precise answers because that’s not my area of expertise yet.
But I do wonder how other POS chains are decentralising, securing, validating, transacting with less staked, fewer validators, etc.
ETH staked is ~13% of the supply (although will increase after Shanghai)
Solana has ~3000 validators
Forgive me if I overstep because I am not an expert here; maybe I am missing critical details & nuances of the argument.
I understand the supply side going little ahead, the need for subsidies etc in a startup.
But Pocket is not a node running company, that’s not its core offering. And it’s not “THAT NEW” anymore.
It’s high time that we start paying attention to other space and market realities:
-Demand/end users
-Investors/Token Value
-Dev/mind share
-Market share
-Protocol financials
-DAO governance
-Marketing
to name a few, also overlapping ones.
And there will be tradeoffs and compromises to be made.
I will continue to be vocal on this front.
At this moment, SER appeared “net-positive” & “the best alternative” to align with market and space realities and to get the ball rolling. We decided against “do nothing”.
Next step of tokenomics will hopefully be more dynamic and robust- factor in demand, burn etc. At least that is the attempt and discussions have already started. We are all excited!
To end this- “speculation” has a bad reputation but we forget that we all indulge in it knowingly or unknowingly. Several comments above are speculative in nature.
Starting a company (entrepreneurship), marriage and many more critical decisions are the biggest speculations ever!
Thanks for reading.
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Just to bring a little clarity:
The above numbers are benchmarks against we can compare POKT number of validators and POKT staked to validators. Currently POKT has 1000 validators with 6% of the supply staked to validators. I think those numbers speak for themselves as being low compared to other projects in the space. Hence my separate proposal to at least double the number of validators (which will also almost double the POKT staked to validators. 6% is simply too low to secure the network (IMO)
Number of servicers ( and everything in that black box such as number of chain nodes etc), on the other hand, is a very different beast, and it is difficult to form comparisons between projects. POKT servicers are a distributed set of service providers earning pay via emissions. for servicing client’s’ RPC requests on various supported chains. The number of servicers needed has nothing to do with the Pocket chain itself but everything to do with level of demand generated by clients’ PRC requests. It is by comparing the client demand as measured in the RPC requests per region and per chain and the supply to service that demand in which judgments of “under-provisioned” or “over-provisioned” can be made.
The “top-50 by market cap less stables” is a good first stab at comparitive analysis. A next step, if you are game to do more research, is to form a list limited to just other “work” tokens like POKT, whether for distributed computing, storage, rendering, or whatever.
[Note: As to POKT staked to servicers, vitaly makes a compelling case that it should be zero. Staking to nodes (almost always validators in other projects) is for the purpose of being able to enforce a punitive bite for bad or negligent behavior via slashing. This helps secure the network. With no slashing defined for bad or negligent servicer behavior (in v0), what is the point of requiring them to be staked (in vitaly’s argumet)? This is not to say that we should get rid of POKT stake for servicers. That ship has sailed. And I do believe that v1 will bring concept of slashing to servicers. Just wanted to bring some clarity.]
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