12/February/2020

Pocket Economics Paper Release

Alongside our public testnet release, we are extremely excited to release the full overview of Pocket’s economic model. For context, Pocket Network is a protocol that incentivizes people to run full nodes, for any blockchain, lowering the barrier of entry for *anyone* to participate in a global market of blockchain infrastructure.

This document provides a detailed breakdown of our rationale and the mechanisms that ensure Pocket’s sustainability and censorship resistance over the long run. For the full economic overview of Pocket Network, please click here.

The document is divided primarily into two parts – an overview of why Pocket will provide infrastructure a magnitude more efficient than current solutions and the complete economic spec of the protocol.

Pocket Network has a novel crypto-economic model, as our design decisions were not constrained by the need for short block times, high throughput or being a generalized smart contract platform.

A couple of unique properties that are expanded upon in the paper:

– Block rewards are dynamic, completely based on the usage of the protocol

– Developers pay for the service by staking POKT once

– POKT has no final total supply

– The more nodes you run, the more opportunity you have to earn POKT

Similar to work token models, POKT is designed to encourage a high percentage of staking within the network, but replaces fees with direct inflation for those who do the work. This effectively allows for efficient micropayments without the burden of the protocol constantly reaching consensus on transactions or a less than optimal UX through state channels.

We look forward to your thoughts on this model and your participation in Pocket’s testnet. Please feel free to reach out to me on Twitter (DMs are open) or chat with the team on Discord.