Pocket Network is a decentralized infrastructure protocol. The project tackles the data dependence of dApps on centralized infrastructure providers and delivers a resilient and distributed solution to cater to their data requirement needs.
Table of contents
Introduction
With the onset of new projects being built with the help of blockchain technology, network activity is increasing proportionally to the increase in participation and the complexity of the applications being built.
The nodes of those networks service the demands of the increasing activity. To create a fully functioning dApps on any blockchain, a node infrastructure must be built alongside to stay updated with the state of the network. The complexity and time required are substantial. Therefore, the dApps outsource their node requirements to infrastructure providers.
What are nodes?
Nodes are small servers on a blockchain, constantly communicating the latest data on the blockchain with each other.
Types of nodes:
- Full nodes have a copy of the complete data on the blockchain, and they’re responsible for validating block information
- Light nodes have a copy of the block headers, and they’re accountable for validating block information
- Mining nodes contribute their computing resources and earn the right to add blocks to the chain
What are RPC nodes?
RPC (Remote Procedure Call) is an API used by applications to communicate between servers. RPC nodes allow us to read data on a blockchain and send transactions to different networks. The communication between the application and the nodes is done via RPC nodes.
These RPC (Remote Procedure Call) nodes can be difficult to set up for individual applications, as it’s a complex and time-consuming procedure. Therefore, applications depend on centralized services like AWS for hosting that infrastructure.
The majority of the blockchain node/infrastructure providers are centralized to a large extent, and this can run counter to the essence and “ethos” of blockchains.
What is POKT Network?
“Pocket Network is the TCP/IP of Web3 node infrastructure – a multichain relay protocol that incentivizes RPC nodes to provide dApps and their users with unstoppable Web3 access”
Source: Pocket Network
Pocket Network enables a decentralized infrastructure that is censorship resistant, has zero downtime, and has no sunk cost to the applications. This ensures smooth interaction between applications and infrastructure providers.
Challenges in the current landscape
With the increase in the adoption of blockchain technology, the demand for infrastructure providers is rising. Money is being poured into the blockchain economy to get the best products built.
Worldwide spending on blockchain solutions since 2017
Source: Statista
To catch up with the growing demand, developers face severe challenges in finding adequate infrastructure solutions to cater to that demand. This leads to compromising on cost, privacy, decentralization, and other aspects to keep up.
Scalability becomes an issue while considering decentralized options. This leads to applications depending on single nodes, which might be hosted on a centralized AWS server for data requests, transactions, and state updates of a blockchain. This single point of failure leaves room for exploitation and downtime.
Notable Infura Outages
April 22, 2022:
A network disruption was observed affecting many of the internal Infura services. The reason for the interruption was a change in the configuration of an internal network.
April 3, 2022:
An Infura outage affected an array of apps built on top of Ethereum. It was determined that there were issues with some of its API endpoints, namely: Polygon, Eth1, Palm, Optimism, Filecoin, and Arbitrum.
March 3, 2022:
In a bid to comply with the legal requirements of some countries, Metamask and Infura restricted access to people belonging to those particular areas. Due to a technical error, the restrictions affected a wider area than intended. This brought on unwanted limitations and restrictions of access for unintended users.
To read more about these outages, go here.
Metamask uses Infura as its default node provider leading to a heavy reliance on Infura for its functioning. The centralized points of failure can cause concern down the line. Overreliance on a single infrastructure provider can increase the potential for a large-scale disruption on Ethereum.
Enter Pocket
Pocket Network comes to the rescue with its 47,000+ active nodes spread across nearly 50 different networks to solve the centralization problem with infrastructure providers.
The growth of Pocket Network can be attributed to 6 value propositions.
Core value propositions of Pocket Network
- Cost
The freemium option of 1 million relays/day enables new applications to ease access to Pocket’s services. For additional relays, the applications can stake $POKT tokens. Pocket Network provides a more economical alternative to access data on a blockchain than its companion data providers. Transforming infrastructure OPEX on the income statement to CAPEX on the balance sheet with an attractive payback period is value accretive for dApp developers.
- Performance
An optimum monetary benefit structure incentivizes nodes with quality service and maximum uptime. The stake to relay model ensures that malicious nodes get penalized for their behavior. Based on the recent speed test done by the Pocket Network team, Pocket Network has the fastest median speed time.
- Privacy
Each application on Pocket Network is serviced by a set of validators in a single session. The length of each session is 4 blocks. After this, tumbling happens. Tumbling ensures that the application is connected to a new set of nodes after each session. This ensures that the data is not passed through any centralized entity at any point in time.
- Multichain
The simplified integration experience of different chains on Pocket Network has enabled the expansion of the network to 50+ other chains. Pocket Network provides simplified, streamlined multichain access on both the supply (node runners) and demand (applications and developers) side.
- Uptime
With over 47K+ active nodes, Pocket Network is built to provide ~100% uptime to applications.
- Egalitarian
Each application is prioritized on a similar scale to be serviced in a session, with the number of relays varying according to the staked $POKT of the application. Similarly, nodes have the same priority and chances of being selected for a session.
Source: c0d3r
Architecture of Pocket Network
The architecture of Pocket Network comprises 3 parts:
- Application
The application sends the API requests to get the required data.
- Node
Service nodes handle the relay activity of the applications and the external blockchain. They run a full Pocket node and at least one Relay chain node (full node on the integrated networks). The transactions are bundled and sent as proof-of-relays to the finality storage.
Validator nodes verify the legitimacy of the proofs provided by the service nodes. The top 1,000 service nodes by staked amount are selected to be the validator nodes of the network.
- Network Layer
The network layer ensures smooth functioning between the application and the nodes.
Source: Pocket Network
A set of validators are assigned an application for each session and shifted to a different application as the session changes. 24 service nodes are currently used in one session lasting 4 Pocket blocks (typically about an hour).
With Tendermint PoS, validators confirm the validity of the transactions handled by the service nodes.
After verification of each block, the network mints $POKT tokens proportional to the number of relays served within that block.
The V1 Upgrade
Pocket Network is working extensively on their V1 upgrade, which is expected to scale up the capacity and quality of relay services to a large extent.
The V1 upgrade will revamp the current network architecture to handle trillions of relays per week from the current 5B+ weekly relays, without compromising privacy and security. This change will occur with the introduction of 4 modules.
- Utility
- Building upon the existing utility to optimize it on 2 factors: Relay Quality & Relay Scalability
- This will ensure the cost-efficiency of each $POKT staked for availing of the service
- Consensus
- Replacing Tendermint BFT with HotStuff BFT
- Implementing a blind and pseudorandom leader selection process
- Peer to peer
- Structured communication will be carried out among nodes
- A significant reduction in bandwidth usage for nodes
- Persistence
- Shifting to an SQL based Tamper Proof Hybrid Mutable DB
- Separating the persistence layer to enable a Client-Server Architecture between Pocket-core and persistence
The V1 upgrade will allow the Pocket Network to build its own tech stack tailored to the specific use-cases of Pocket Network, rather than working within Tendermint’s capabilities.
Growth of Pocket Network
Pocket Network has evolved from handling a few million transactions per week, on average, to servicing 5 billion+ weekly relays spread across 50+ different networks.
The YOY growth of the network is commendable, particularly when viewed in relation to its centralized alternatives.
Source: Pocket Network
Market competition
Market leaders among the infrastructure providers are centralized. The growth of these infrastructure providers is commendable, but as the ecosystem grows, the dependability on centralized infrastructures can be a cause for concern.
Source: Internal research by the Pocket Network team
Compared to its peers, Pocket Network serves the data needs of an application at a much cheaper rate. Pocket Network allows you to recover your initial investments partially. This is done by enabling you to sell your staked $POKT. In theory, the entire amount can be recoverable, but due to inflation, the value of staked $POKT can fluctuate over time.
Pocket Network does not provide infrastructure directly (i.e. it does not do so as a centralized company providing nodes). Instead, it has an integrated network of nodes at its disposal. This enables individual node providers to participate and enjoy the opportunities and incentives provided by the network.
Pocket Network has a potential affinity for infrastructure providers like Infura and Alchemy to partner for a more decentralized infrastructure experience. This will further increase the number of active nodes of the Pocket Network.
Privacy is an essential aspect of data-sensitive applications. Centralization in node services like Infura and Alchemy leaves room for potential exploitation. Pocket Network’s decentralized nature ensures that no particular node is privy to the complete data of an application.
The collaborative growth of Pocket Network
Partnerships have played a significant role in the overall adoption and growth of the ecosystem. A perfect example was Harmony shifting to Pocket Network after facing technical difficulties from their default RPC provider. Since then, a respectable amount of traffic to Harmony has been serviced by Pocket Network.
Source: Pocket Network
Economics of the Network
Pocket Network is designed to increase participation and filter out the non-contributing nodes from the network. The native token $POKT started with an initial supply of 650 Million $POKT. It works on an inflationary model (with burn mechanics planned for the future) wherein the token mints depend on the network’s workload.
Monetary Phases
The economics of Pocket Network are tailored to scale up exponentially and gradually shift to a sustainable economy. The network has to evolve through 3 stages to attain the expected milestones.
- Bootstrapping Phase
- The rapid growth of the node network
- Onboarding applications to use Pocket Network
- Low barriers to entry create exponential growth
- Incentivizing a variety of entities to participate within the network
- Growth Phase
- Hyperinflation to increase overall participation
- Protecting rewards in case of a decrease in relays
- Incentivizing applications to keep their $POKT staked through the growth phase
When
(GrowthInflation > GrowthTotal Staked Pocket Supply) + Price$POKT appreciates = Maturity Phase initialised
- Maturity Phase
- Maintaining a stable supply of $POKT by burning the tokens
- Shift to SaaS pricing model
- Conversion to a self-sustaining infrastructure protocol
Source: Pocket Network
The rewards are divided as follows:
- Service Nodes: 89%
- Pocket DAO: 10%
- Validator Nodes: 1%
Source: c0d3r
Inflation
The network inflation encourages increased participation and allows rapid expansion to different chains. Due to this, there is also a risk of participants falling out due to their token price dilution, given the increase in coins as the number of daily relays increases.
Thus, a new proposal was passed and is currently being implemented on the network.
WAGMI (Weighted Annual Gross Max Inflation rate)
The “WAGMI” proposal was designed to decrease the mint rate of $POKT as the daily relays increase. The targeted annual inflation started at 100% of the initial baseline amount, gradually decreasing to 50% of that baseline by July 24, 2022. The initial value of the mint was 0.01 $POKT/relay.
Source: Pocket Network Forum
Mint rate =Total Supply Baseline X Inflation Rate30-day trailing average of daily relays X 365 days
Utility
- Applications stake their tokens to get additional relay requests at their disposal
- Nodes earn servicing rights to the relay requests
- The minimum requirement for handling application requests is 15,000 $POKT
- Delegating your $POKT to service nodes
Business Model
The business model is currently a Node as a Service(NaaS), eventually shifting to a SaaS model. Pocket network also provides a freemium model wherein applications can utilize the protocol and pay $POKT to increase the number of relays served in the freemium model.
- Subscription as staking models for applications
- $POKT token appreciation
wPOKT(Wrapped POKT)
$wPOKT is an ERC-20 token with Polygon being the first network for deployment. It is backed 1:1 by $POKT held on the Pocket Network. Smart contracts enable additional use-cases to $wPOKT token.
The initial plan of a farming application was built to enhance the liquidity & participation of different communities in the Pocket Network. Later, the farming project was scrapped as the liquidity and participation increased via other avenues.
$wPOKT will have a utility in governance and payments to the DAO participants. This leaves room for various ERC-20 implementations in DeFi and the EVM development space.
Token Distribution
Source: Pocket Network
Roadmap & Milestones
Source: Pocket Network Blog
Team
The team is distributed across the globe with a size of 50+ people from 16 different countries. The team consists of Developers, Protocol Architects, Executives, Marketers, Designers, and Governance specialists.
Michael (CEO) is a self-taught iOS and Solidity developer. He holds a degree in International Affairs from the University of South Florida. Michael has been involved in the blockchain space since 2013, starting his first blockchain company, Nonce+1 Labs, in 2017. He founded Pocket Network alongside his co-founders in the later part of 2017.
Luis (CTO) is a serial entrepreneur with a B.A. in Systems Engineering and a minor in Information Technology from the Technical Institute of Santo Domingo. He has co-founded multiple startups in the Dominican Republic. Luis is focused on bringing production web-scale engineering to crypto with the help of Pocket Network.
Alex (Chief Architect Officer) is an Engineering Lead with experience of 18 years as a technical lead and a team builder for R&D teams. He has been involved in the crypto space since the launch of a cryptocurrency payment system in 2013. Alex has been working full-time in architecture, DevOps, and engineering for cryptocurrency companies.
Andrew is the Lead Blockchain Developer with a degree in Computer Science from the University of South Florida. He started his journey as a Blockchain Engineer with Nonce +1 Labs in 2017 and later worked as a core developer at BitcoinLatina Foundation and artpiece.io.
Adam (COO) is a well-rounded operator passionate about cutting-edge technology. He is helping Pocket Network with its protocol economics and critical growth initiatives.
Jack (Chief Governance Officer) is a governance architect deeply involved in the DAO ecosystem. His goal is to lead the DAO revolution. Pocket Network’s community governance efforts are the first step.
Conclusion
A multichain future is an inevitable result of seamless large-scale adoption. Centralized infrastructure providers capture the largest market share at the moment. Pocket Network is built to provide a true Web3 alternative to these centralized infrastructure providers, creating an optimum output for all. The growth of Pocket Network to over 47,000+ nodes and 50+ networks is a clear indication of its large-scale adoption.
The upcoming V1 upgrade will overhaul and improve the current V0 architecture. This will ensure the higher efficiency of the network and a structured reward system.
Overall, the future for Pocket Network shows potential for substantial opportunities and growth.
Pocket Network Links:
Website:
https://www.pokt.network/
Blog:
https://www.blog.pokt.network/
Twitter:
https://twitter.com/POKTnetwork
Telegram:
https://t.me/POKTnetwork
Disclaimer: Mapleblock Capital is an investor in Pocket Network. This thesis is a summary of our opinions and views on the project. Cryptocurrency is a volatile asset class, and readers should be aware of the potential risks of investing in blockchain projects. This is not investment advice & we will not accept liability for any loss or damage that may arise directly or indirectly from any such investments.