wPOKT v2 update

Announcements Foundation
1

The wPOKT bridge and token are now alive and well. Before we look ahead to the future, let’s look back at how well we have done so far.

As a reminder, the initial objectives were to:

  1. Enable the interoperability of Pocket Network with best-in-class DeFi and DAO tooling and infrastructure, and
  2. Improve liquidity and access to POKT

1. Enable interoperability with best-in-class DeFi and DAO tooling and infrastructure

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.

2. Improve liquidity and access to POKT

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.

Next steps for 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.

2. Launch an incentivised liquidity pool for wPOKT on Arbitrum ASAP**

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.

Thank you,

PNF

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2

If I understand this right, wPOKT on Arbitrum will be provided through wPOKT in Ethereum.
So, in order to get YYY wPOKT liquidity in Arb an scenario like this should happen?

  • XXX POKT is locked in the bridge wallet
  • XXX wPOKT is minted on ETH
  • (XXX-YYY) wPOKT (on ETH) is left liquid.
  • YYY wPOKT (on ETH) is locked on the ARB bridge (or something like this?)
  • YYY wPOKT is minted on ARB

Then, someone could buy wPOKT on Arbitrum (using some DEX) to hold and trade, but if he/she wants to get this wPOKT back into POKT (for staking into a node) then it will be necessary to go through the Eth bridge paying the fees (ARB ->$$-> ETH ->$$-> POKT).
It does not seem too bad, if you are buying low amounts of POKT just for holding and speculating, you will rarely care to mint your POKT.

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3

This was an initial suggestion from Raid guild, but is subject to more input from both the community as well as other technical providers on how best to achieve our goals while minimising the migration overhead for Shannon

But to answer your broader question, yes, that is the flow as I understand it as well.

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4

Thanks for the update.

Good to see a focus on a low-cost Gas chain.

IMO: if people really want to buy native POKT to stake, there are ways to buy on CEXs and OTC, while not ideal, are possible.

More importantly, especially given that lower APRs don’t make it imperative to stake if one wants to hodl, is to offer exposure to Pocket for lower value investors. Having a way to buy $100 of POKT via DEX without paying half in Gas fees is the primary objective, and as such having a DEX that offers this is more important than the ability to cheaply bridge wPOKT - POKT for the time being until Shannon is released.

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5

A few thoughts it might be too late but what if wpokt used layerzero protocol to launch. It might make it easier to make the token to be on multiple chains. Or perhaps an upgraded erc token standard which could eliminate third party risk but still make the token interoperable on multiple chains. I would consider deploying on an iso9000 (i think thats the right standard) compliant chain like hbar as a marketing strategy and for the benefit of interoperability. Or just go straight for the big dog and connect to Quant…deploying there could be a learning curve but its maximum interoperability including private chains. Which could considerably boost liquidity and be great for marketing. in discord I mentioned fractionalizing nodes or staked tokens via nfts…it could be interesting to try out considering pokt has utility which could possibly be used as collateral for loans or other financial functions or leverage. If you found this post helpful feel free to donate some pokt to me:
f8d7ebe52ce9e6614077ed72a98a29198199edb3. I’m exploring how to use pocket as a depin service for something more than just announcing block heights.

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6

The next 90 day reward period for the Uniswap wPOKT/ETH pool started approximately 25 minutes ago and will run until 9 April 2023.

250,000 wPOKT will be awarded block-by-block to LPs staking their LP tokens over the next 90 days. This is a 33% reduction in the initial dollar value of the pool compared to the first scheme, but this is justified given the much higher daily trading volumes and the fact that wPOKT is more established now.

More info on the next steps for boarding the Arbitrum Express will be shared in the coming weeks.

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7

This make a lot of sense…

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8

Two short and sweet updates

1. Extension of current wPOKT incentives program on Ethereum by 50 days

  • The current wPOKT/ETH Uniswap v2 incentives program on Ethereum mainnet- which is due to end next Tuesday 9 April at 14.35 GMT - will be extended by 50 days to Wednesday 29 May 2024. This buys us more time to finalise the wPOKT migration plan for Shannon and to develop a more holistic liquidity strategy for wPOKT in a post-Shannon world.

1.5k wPOKT will be distributed to liquidity providers (LPs) each day over the course of this period. This is down from the c.2.8k distributed per day in the current program due to i) the POKT/USD price being approximately 50% higher now, and ii) the much higher trading volumes in the pool, resulting in a lot more fees to compensate LPs

2. Launching a wPOKT Uniswap v3 pool on Arbitrum before the end of April

  • We plan to launch a wPOKT/ETH Uniswap v3 pool on Arbitrum in the next couple of weeks using some of the DAO’s current liquidity holdings to target a 2% depth of $10-15k.

  • This pool will not be incentivised initially, but this may change in the future. More details on this will be shared separately once we have more certainty on launch timings.

  • We believe that this pool is the easiest and highest impact method to quickly expand access to wPOKT. All other options, including Base, require more coordination and planning, eg Base will require the whitelisting of wPOKT on Ethereum before it can be transferred via its bridge. All of this doable, but most likely better to do so post Shannon when we are on a new stack and can leverage IBC and other bridge options.

@Cryptocorn captured the purpose of this approach quite nicely above:

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9

the wPOKT rewards contract has now been updated to continue for another 50 days, with 1,500 wPOKT distributed to LPs every day (in addition to trading fees from the Uniswap pool)

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