2022 has been quite a year for crypto - you probably don’t need a reminder of all the events, storylines, and developments that have shaped the narrative the past 12 months. Crypto and Web3 remains a space that continually makes us think: “All of this was just in the past year?!”Even with all the turbulence, though, it was still a great year in many ways for the builders in our space. For Pocket, this was especially true when it comes to the work that our Protocol team put forth, helping to evolve Pocket Network’s v0 and lay the groundwork for all that’s to come with our v1 overhaul. It’s now been nearly two and a half years since Pocket’s mainnet launch, and we’re seeing the protocol mature into a more and more robust feature set for the broader Pocket ecosystem.Let’s take a closer look at some of the major protocol achievements we saw in 2022, and what’s in store for 2023 and beyond.

Major Protocol Developments in 2022

2022 brought us several major protocol updates, bringing key benefits like non-custodial staking, stake-weighted rewards, and serious reductions in node costs. The protocol team also made major strides in researching, speccing, and coming up with MVPs for Pocket’s upcoming v1, the next major evolution in the protocol.

Non-custodial Staking Brings More Options to the Table

The 0.8.0 release laid the foundations for non-custodial staking, a critical security upgrade that improves the service provider model and keeps stakes safe. Non-custodial staking is the process of having the operator of the node be a different account from the account that receives the rewards. This is an important feature because many of our node runners are service providers who have been responsible for custodying all staked funds on behalf of their customers. With non-custodial staking, service providers can diversify their offerings and strengthen trust between their operations and those interested in staking with them. The network has been quickly adopting non-custodial staking, and now upwards of 20% of the network is utilizing non-custodial as a preferred node configuration.

Stake-Weighted Rewards Help Reduce Node Running Costs

Release 0.9.0, on the other hand, introduced stake-weighted rewards for our node network. Stake-weighted rewards were proposed in PIP-22 in order to help reduce node running costs by incentivizing stake consolidation (without compromising quality of service). After the introduction of stake-weighted rewards, the network has responded with more than a 40% reduction in single service nodes since July. Plus, we’ve seen that a secondary effect of introducing weighted “bins” has been an increase in validator diversity, which has gone up more than 130% since August.While there are many factors that can incentivize node consolidation, PIP-22 has played a major part in getting us to the current state, in which a third of the nodes on the network now have a 60k+ POKT stake. This consolidation has helped us towards PIP-22’s intended effect of reducing node running costs by disincentivizing the strategy of running as many nodes as possible.

LeanPocket Brings a Light Client to Pocket

The LeanPocket release brought an innovative light client that reduces node costs by ~99%, by allowing node runners to vertically stack 150+ servicers per 1 full node. This release was a collaboration between the Pocket internal team, Thunderhead, and Poktfund, who all came together to integrate LeanPocket into Pocket Core.Since this software was open-sourced by Thunderhead and Poktfund in August, we’ve seen around a third of the node network adopting this light client, making it a large contributor to continued node consolidation and even further reduction of network costs.

Building Towards v1

Throughout 2022, the Protocol team researched and develop specifications for Pocket’s v1, which will be a scalable, secure, and modular app-specific proof-of-stake Layer-1, with the goal of eliminating technical scaling limitations for relays, servicers, validators, and applications.In addition to surpassing the current scalability bottlenecks of v0, v1 will utilize chain-agnostic utility to implement permissionless staking and on-chain quality-of-service, with a new actor called the Fisherman to ensure that the data being serviced is correct.That being said, while data correctness is fundamental to our protocol, we also know that we can’t compromise on KPIs like latency. That’s why the Protocol team has specced v1 to have competitive and consistent low latency through the introduction of geozone staking incentives and an increase in node diversity in different regions.Once these specs were complete, the team got to work on implementing MVPs of the four modules that will make up v1. We now have working proof of concepts for all v1 modules!

• Peer-to-Peer Module. The first implementation of RainTree, a proprietary algorithm that helps reinforce data redundancy to account for variables like failed node communications, unreliability, or not maintaining the same lists.
• Consensus Module. Creating validator logic.
• Persistence Module. Ensuring state data persists throughout the blockchain.
• Utility Module. Standing up all actors and defining their behaviors.

Beyond the MVPs, the Protocol team has also been working on client tooling to support user interactions with, and deployments of, v1. The team has stood up basic 4-node remote and local environments, and have built an MVP of the CLI to interact with this environment.Plus, as part of the efforts to ensure that we build the best environments possible, the Protocol team has been focusing on telemetry MVPs (such as a shared logging module), and will be building user-friendly dashboards to expose the data and help us learn more about node and network health in order to identify gaps and reinforce the resilience of v1.With all these efforts combined, the team was able to send its first successful end-to-end transaction in testnet earlier this year! The E2E transaction demo can be tested by users here.

See How v1 Will Be Changing the Game

The Work Ahead

Looking ahead to 2023 and beyond, the Protocol team is focused on a number of key areas that will benefit the ecosystem.Continued v1 Groundwork. In 2023, v1 development will ramp up to focus on a number of specific areas: enforcing quality of service with Fisherman metrics sampling and report cards; improving latency with geozone staking; incentivizing service with utilitarian economies; a complete proof of concept that can be deployed to v1 Devnet; incentivized testnet release; opening testnet to the community; enhancing the testing suite and encouraging the community to build new tooling; and a path to mainnet launch.Persistence Replacement. The team is working towards a serious performance upgrade to our Persistence module, which ensures that data persists across software updates and deployments. This improvement in performance will utilize fewer resources and should discourage node pruning. Based on preliminary testing, this optimization has resulted in a simpler codebase, more efficient Merkle root generation, a 41% reduction in overall disk usage, and an even more impressive 79% disk usage reduction in applicationDB specifically. Additionally, overall average historical queries are showing to be 45% faster, and block processing times have seen a 10% improvement.Self-Staking. With demand monetization coming to fruition with the new Pay As You Go model, v0 will be supporting diversifying our monetization efforts by enabling self-staking on the protocol via the Pocket Portal. The Protocol team will be able to support this effort by introducing and updating parameters that enable staking functionality to help further decentralize Pocket’s protocol and improve the value proposition of the Pocket Portal.Automated End-to-End Testing. E2E testing enables us to automate hundreds of test scenarios for more advanced QA. This testing suite will have the ability to ingest and apply new test scenarios without any go code, including one-and-done scenarios such as querying existing node parameters, as well as ongoing scenarios such as validating behavior against blockchain movements. The team is aiming to stress test the E2E automated testing suite with the Persistence Replacement upgrade, before open-sourcing the code (which is exportable to any project). We hope to see this initiative evolve with contributions from our developer community and beyond.Improved Mainnet and Testnet Monitoring. The Protocol team is also focusing on improving our monitoring. We will be able to benefit from having more Tendermint RPC state data on hand, to make sure we have full coverage across Mainnet and Testnet for faster triage and mitigations when needed.Ongoing Research. As we move beyond v1 MVP mode, and start to focus on binding modules and filling gaps, we are keeping an eye on the evolving landscape and conducting ongoing research to identify opportunities to incorporate proven solutions into v1. Some of these research fronts include: peer discovery (RainTree compatible algorithms for dynamic peers); VDF and ZK (deterministic vs. probabilistic proofs for volume metrics); light clients (application infra, interoperability, decentralizing proofs with proxies); and BFT validation (forensics and practical async DKG).Guardrails to Keep Scaling. In addition to work that is being done to keep the network validators more secure, we are going to be putting effort into providing network guardrails that enable us to keep scaling. With daily relays increasing  by hundreds of percentage points since January, and more relays on the way, Tendermint scalability constraints need to be considered against demand growth. To this end, the Protocol team will be working towards automating the collection of key data to establish real-time benchmarking, and exploring ambitious scaling solutions that could enable increased block sizes and reduced block times.

Big Bets for the Future: “Decentralize Everything”

All of this protocol work throughout 2022 has been a testament to the combined creative forces and human coordination capabilities of the Pocket Network community, as their collaboration with the Pocket core team has been crucial.Looking ahead to v1 and beyond, our core mission remains to progressively “decentralize everything”:

• Fully permissionless actors (e.g. Fisherman)
• Fully decentralized portals
• Interoperability (e.g. bridging)
• Decentralized altruist network
• Light client support
• Service classifications
• Increased DAO control
• L2s (e.g. indexing)

Taking steps towards these types of initiatives will continually move us closer to truly permissionless, trustless, interoperable, and reliable RPC access. With all of the protocol work ahead in 2023, we will be able to keep our key value propositions of data resilience, reliability, and redundancy in balance with our pace of decentralization. Collectively, we can achieve the vision of truly unstoppable and censorship-resistant Web3 infrastructure.Thank you so much for riding along with us on this amazing journey throughout 2022 - we can’t wait to share the next round of milestones with you in 2023!