As a reminder, the initial objectives were to:
- Enable the interoperability of Pocket Network with best-in-class DeFi and DAO tooling and infrastructure, and
- Improve liquidity and access to POKT
We are now integrated with Hedgey to pay out all contributors via streaming payments. We also use wPOKT to pay contributors and contractors much more easily and with more security by leveraging the native multisig functionality of the PNF and DAO SAFE wallets on Ethereum and Gnosis.
Goal achieved, with much more value to be unlocked in the future.
The primary success metric for this goal was to target a range of liquidity for the 2% depth in the Uniswap wPOKT/ETH pool of between $15k and $25k.
The 2% depth is over $42,000 on Uniswap as of 20 December 2023, so we have hit this goal out of the park.
Access to POKT is also much greater than before, with 414 (and counting) holders of wPOKT just 2 months after its launch.
However, it is clear that Ethereum’s gas costs can act as a barrier from time to time for those looking to buy and sell wPOKT in smaller amounts. Additionally, Ethereum is no longer the only game in town. With the explosion of activity on L2s, many users spend more of their time on Arbitrum, Optimism and Polygon, to name just a few.
Goal achieved, but we need to do more work to improve access to wPOKT.
Please note: everything in this post is separate from the behind-the-scenes work to help enable Tier 1 listings for POKT. That will take more time, and everything we are doing with wPOKT is helping to support that goal before the end of Q2 2024. More information on that goal will follow early in the new year.
Now, back to wPOKT. After taking a lot of time since launch to listen to the community and consult with the protocol team, outside technical experts and DeFi experts, a clear path forward has emerged.
1. Extend the current wPOKT LP incentive program from the end date of 10 January 2024 to 9 April 2024.**
The incentives will be at a similar level as currently, meaning c.700k wPOKT to be distributed over the 90-day incentivised period. This 90-day extension will ensure that current levels of liquidity and access to wPOKT are maintained while we implement the next step below.
We considered a Uniswap v3 pool, but the migration time and coordination costs to move from v2 to v3 counteract the benefits in the short-term pre-Shannon. In the medium to longer term, migration to Uniswap v3/v4, as well as pivoting to a protocol-owned liquidity strategy, are options we are actively considering. Further, post-Shannon, even native swaps between POKT/wPOKT could become available by leveraging liquidity options native to the Cosmos ecosystem, such as the interplay between IBC and Osmosis. More information on all of this to follow in the course of 2024.
Arbitrum is the leading EVM L2 when it comes to DeFi. The c.$260m daily trading volume for Uniswap v3 on Arbitrum is 3-4x the leading DEXes on Polygon and Optimism. The number of active addresses is also dramatically increasing. Combined with lower gas costs, Arbitrum has the potential to significantly improve access to wPOKT.
However, the main obstacle to launching on Arbitrum is avoiding increasing the migration overhead for the Shannon protocol launch. Avoiding any redundant development work is also preferable. We are currently speaking with technical partners and the protocol team to consider the best way to achieve the objective of launching on Arbitrum as soon as possible.
One option is to leverage the native bridges between Ethereum and Arbitrum to set up a liquidity pool on Arbitrum without enabling the ability to mint POKT from POKT Network to Arbitrum directly. This would require holders of POKT to use the bridge to mint wPOKT on Ethereum, and then to bridge wPOKT on Ethereum to wPOKT on Arbitrum. While this isn’t an ideal scenario, it would satisfy the goal of enabling greater access to wPOKT and lower cost DAO payments to all contractors and contributors. Consequently, this approach could be an interim option until shortly after the Shannon launch. Further, by using an Automated Liquidity Manager (ALM) such as Arrakis, Gamma or Steer, we should be able to launch a Uniswap v3 liquidity pool on Arbitrum that wouldn’t need as much capital as on Uniswap v2 on Ethereum to hit similar liquidity depth metrics.
We haven’t made any final decisions yet on anything apart from extending the incentives for the Uniswap v2 pool Ethereum, and we would appreciate your thoughts and input on everything else in the meantime.