On the morning of June 24 2020, at 12 am PST, The Graph’s hosted service (used by Uniswap, Synthetix, and others to index queries from nodes reading the Ethereum ledger) started experiencing significant service degradation… “Despite having 50% headroom in our Google Cloud database… our database CPU maxed out at 100%, causing requests to fail.”
Early morning on November 11 2020, Infura (used by Metamask, virtually every DeFi front end, and even exchanges like Binance to query the Ethereum blockchain versus running their own nodes) “experienced its most severe service interruption in [its] four years of operation”, taking over 7 hours to resolve. In this case, the problem was a lack of client diversity as all of the nodes managed by Infura ran a custom version of Geth, meaning that a Geth consensus bug caused all Infura nodes to become out of sync with the main chain.
Ethereum, the “global, open-source platform for decentralised applications”, is overly reliant on a handful of cloud and node service providers. The single points of failure are manifest.
Source: State of Adoption Report
If we want to have unstoppable applications, we must build anti-fragile systems, which not only survive in adversarial environments but get stronger from every challenge, block by block.
It starts with incentives. Those who run full nodes have no monetary incentive to serve API requests (Relays).
Why do Relays even matter, you ask?
Relays are how wallets, exchanges, explorers, and dApps, in general, confirm user account balances, send on-chain transactions and interact with smart contracts. It is how dApps pull data from blockchain ledgers. Decentralised storage solutions like Arweave, Filecoin, and IPFS, also require relay solutions. These protocols incentivise data storage, but none of them natively incentivise data retrieval.
You could say that Relays are the basic infrastructure lego blocks for every app developer in the Web3 space.
The lack of native relay node incentivisation at the protocol level is an age-old problem that affects almost every blockchain network, from Bitcoin to Ethereum.
Source: BitcoinTalk forum from 2011
“The p2p portion of the network relies on node sharing and relaying data but currently their [sic] is no incentive…”
As a result, if you are a developer, your options are to either run your own full node infrastructure (and take on the dev-ops risks yourself) or outsource the risks to one or two centralised infrastructure providers.
There simply has been no alternative to the status quo until now.
Pocket Network is an independent, application-specific blockchain using an adapted version of the Tendermint consensus engine with a native cryptocurrency, denominated as “POKT”.
At its core, Pocket is a two-sided marketplace.
On the demand side, there are developers of Web3 applications (e.g. wallets, explorers, exchanges, dApps) with demand for data (i.e. Relays) from public blockchains or other publicly verifiable databases like IPFS.
On the supply-side, infrastructure providers are running full nodes (Nodes) for public blockchains like Ethereum, Bitcoin, Matic, Solana, Near, Filecoin, Flow, etc.
However, what makes Pocket different to a traditional marketplace is in terms of its resiliency and low-cost structure by design.
First, let’s talk about how Pocket reduces costs.
Taken together, these mechanisms result in Pocket able to deliver data infrastructure that is “at least ten times cheaper” than centralised alternatives.
A 10x cheaper cost differential is monumental, but let’s talk about how Pocket turns two seemingly antithetical concepts -- efficiency and redundancy -- into one side of the same coin.
Taken together, Pocket is the most resilient provider of blockchain data possible.
It is clear that removing intermediaries using blockchains and incentives not only eliminates costs; it is also possible to create more resilience in systems and enable the redesign of whole value chains.
Developers using Pocket network truly pay less for more.
Suppose you’re starting to believe that digital finance and/or digital content will live on public blockchain rails in the future. In that case, you don’t need to think too hard to imagine that the market for accessing the data secured by blockchains in the future will be a big one. Most likely, one denoted with a “T”.
This is important to note as centralised players dominate the current blockchain data infrastructure market, extracting value for a tiny group of stakeholders. Such concerns are also part of the reason why influential investment finance analysts from outside of the crypto ecosystem, like Lyn Alden, remain bearish on Ethereum due to the “pretty big centralized attack surfaces to go after.”
Pocket Network offers a more sustainable alternative.
Pocket Network turns a public good -- blockchain data -- into a sustainable open economy that benefits everyone in the global blockchain ecosystem.
The use of POKT on both sides of the marketplace ensures that Pocket’s key stakeholders (apps and nodes) have skin in the game when it comes to the protocol’s success.
However, holding a token is not enough by itself to create true skin-in-the-game. Stakeholders are more likely to feel empowered if they believe their “voice” can make a difference, and the best way to maximise voice is through effective governance.
Those who demonstrate sufficient contribution to Pocket’s ecosystem -- in other words, Pocket’s citizens -- get a vote in Pocket’s DAO through a gamified path called POKT Arcade. Pocket’s open governance model ensures that Pocket’s voters are its most engaged and knowledgeable stakeholders and not just those with the biggest bags.
Taking the idea of community contribution further, the next stage of Pocket’s journey involves arming Pocket community members with a crypto catalyst, a wrapped version of POKT on Ethereum, wPOKT.
Like how nodes and applications natively benefit from the growth in Pocket Network’s value through their holdings of POKT, community members can now actively support the network’s growth through staking on behalf of their favourite Ethereum dApps and subsidising infrastructure on their behalf. In doing so, such community members evolve to become “Farmers”:
As a decentralised autonomous organisation, Pocket’s true defensibility comes from its community of nodes, developers, and farmers. Pocket’s community represents a synergistic network effect, whereby more nodes support more applications, who, in turn, support more nodes, and so on in a virtuous cycle.
“By augmenting Pocket Network’s core market with a Data Farming economy, Pocket directs liquidity farming mechanisms towards a noble purpose – being the supercharger on the flywheel of a true public good. This revolutionary new economy will coordinate speculative capital towards productive work within the Pocket Network – planting rather than extracting value – by decommissioning centralised points of failure and bringing crypto back to its decentralised roots.
Source: wPOKT Green Paper
Pocket is breaking new ground with its innovative approaches to economics, governance, and community incentivisation. Taken together, we believe that Pocket is the most sustainable way of extracting blockchain data and distributing it to the engines of the Web3 economy.
Similar to how DAOs like Lido are coordinating participation in ETH 2.0 on behalf of 1000s of capital providers and validators, we believe that in the next 3-5 years, Pocket’s DAO will coordinate hundreds of thousands of the most diverse and robust network of nodes possible across every blockchain. And it will do so without compromise to the core principles of the crypto ecosystem: namely, credible neutrality, decentralisation, and permissionless access and participation. Anyone can request data from Pocket Network to support their application. Anyone can spin up a full node and earn revenue from the network. And anyone can prove their sufficient skin-in-the-game to earn a vote in Pocket’s DAO.
Eden Block is proud to support Pocket Network and play a part in its essential mission to create a “sustainable, decentralized ecosystem for blockchain infrastructure”.
If you’re a dApp developer or node runner, go to Pocket’s Discord to join their metaverse and start supporting sustainable blockchain infrastructure.
Disclosure: Eden Block is an investor in Pocket Network
Nothing contained herein constitutes investment, legal, tax or other advice nor is to be relied upon in making an investment or other decision. This presentation contains the opinions of the author, and such opinions are subject to change without notice. Furthermore, it may also include data and opinions derived from third party sources. Eden Block does not accept liability for the accuracy or completeness of any such information or opinions which can be subject to change without notice.