The Economics
Last updated
Last updated
POKT is the lifeblood of the POKT Network ecosystem. It coordinates all actors within the ecosystem and drives the core utility of the network.
Node runners currently need to stake at least 15,000 POKT to operate a POKT node. We expect this requirement to change once Shannon is deployed to mainnet later this year.
Validators must stake enough POKT to become one of the 1,000 validators, a protocol-defined cap. The current “validator threshold” is 75,100 POKT as per POKTscan. (Validators might be replaced by Sequencers in the Shannon protocol upgrade).
Every gateway routing traffic to POKT Network’s decentralized network of nodes must pay a “Gateway Operator Fee” of $0.00000085 per relay, as per the protocol burn proposal passed on 16 May 2023. Paid in POKT, these fees are burned. Approximately 6.5m POKT were burned over the 12 months since burning began in May 2023, an average of 540,000 per month. (For live metrics, refer to https://pokt.money.)
There is a flywheel effect in place for POKT's economics as more gateways drive more relays to the network, requiring gateways to buy more POKT, which is then burned. More relays incentivize more node runners to join the network to earn rewards, and with more node runners with better QoS, more gateways, in turn, are incentivized to bring more of their business to POKT Network, which keeps the flywheel turning.
The original genesis distribution of POKT was 649,984,998 POKT distributed as follows:
The vast majority of POKT's supply is now liquid and circulating, with most tokens - almost 1b (and counting) of the current supply - distributed permissionlessly since POKT Network’s mainnet launch on 28 July 2020. The distribution mechanism - POKT Network’s version of a fair launch à la Bitcoin - was to issue POKT rewards to those staking POKT as node runners to serve RPC requests and as validators to secure the network.
POKT's latest supply schedule is dictated by ARR (Accelerating the Road to Revenue), a proposal that passed on 5 July 2023. This schedule targets an average mint rate of 220,000 POKT per day, which varies based on the 7-day trailing average of relay requests to the network as per ACCURATE, a proposal adopted on 25 January 2023, which includes the calculator used to update the mint rate weekly.
All POKT minted in each block is distributed as follows:
85% to the node runners for serving the relays
5% to the validators for securing the network
10% to the DAO treasury
See here for the total supply of POKT.
You can calculate the total supply of POKT by adding the monetary base figure on POKTscan's supply tab to the DAO Treasury. For supply change figures, see POKT.Money.
Some exchanges and investors include the DAO Treasury and the main PNF Treasury wallet as part of the circulating supply of POKT, as neither sum is subject to any legal vesting provisions (apart from the small amount of POKT granted to PNF staff). For those that follow this line of reasoning, the total supply of POKT is the same as the circulating supply.
Other data providers, such as POKTscan, calculate the circulating supply of POKT by deducting the DAO Treasury from the total supply, as all DAO Treasury spending is subject to prior approval from the DAO. See here for POKTscan's calculation of the circulating supply, which they refer to as POKT’s “monetary base.” Or see here for a public endpoint showing the same.
For community reference, all of the DAO- and PNF-controlled wallets are listed below:
the DAO Treasury
the DAO ERA Budget wallet (containing all POKT to fund upcoming ERA expenses)
the DAO's wPOKT SAFE on Ethereum (used to launch the wPOKT pool)
the DAO's Gnosis SAFE on Ethereum (used to pay DAO contributors)
PNF's Gnosis SAFE on Ethereum (used to pay contractors and agencies).
The main drivers of the supply of POKT are:
The amount of POKT paid to node runners, which is projected to drop in POKT terms as the price of POKT increases (to target an approximate USD profit margin for node runners, though any update requires a DAO vote).
The number of relays and the price charged to gateways for each relay served since every relay results in the burning of POKT.
The graphs below illustrate the potential supply growth for POKT over time and how that impacts the total supply of POKT. Please note that these projections are based on a USD/POKT price of $0.15 and 60b relays by day in 2028.
Others may be more optimistic or conservative in their approach to the variables underlying these graphs. We invite the community to fork the numbers in this spreadsheet to create their own projections based on their assumptions for the price of POKT, the number of POKT needed to reward node runners, the number of relays, and the Gateway Operator Fee.
