Earlier this week, we had an AMA with Michael O’Rourke, Pocket Network CEO and Co-Founder, which covered a broad range of topics and updates in the Pocket ecosystem. Michael shared his insights across a number of key areas that the core team is working on right now, as well as some of his thoughts on the competitive landscape in the Web3 infrastructure space.
Here’s a closer look at some of the key points of discussion during the AMA (note: you can check out the full recording via Discord).
The Focus Has Sharpened
One theme that came up time and again in the conversation with Michael was Pocket Network’s sharpened focus on the key initiatives that will have the most impact on the network’s success. Over the last quarter, as our community has seen, we’ve wound down several other projects that we felt should not be prioritized over other, more pressing projects. For example, we pressed pause on the TriForce initiative, shifted our bridging plan to focus on a v1-native solution, and decided to open-source any further development of a desktop wallet.
These decisions have allowed us to focus on a couple of particularly crucial projects: more directly monetizing our service via our major update to the Pocket Portal, which was successfully launched in September, and continuing our development of v1, slated for 2023.
On the v1 front, Michael shared that Pocket has added another person to the protocol team, and is also looking into moving some people around internally to find some more efficiencies as the release is being developed. The aim remains for a v1 release in 2023 – like Michael said, we are focusing on “building something with fundamental value, and the rest will take care of itself.”
Additionally, we’ve been able to progress with Ledger integration, with internal testing now nearing completion, as well as push out a major update to our website.
Going hand-in-hand with this sharpened focus has been the continued growth of the core team, and the Engineering team in particular. Expanding and subdividing the Engineering team has been a priority, as Engineering is hiring and training across several distinct units now:
- Blockchain team
- Product support team
- Architecture team
- Portal/indexer team
- Developer experience team
- V0 team
- V1 team
As Michael put it in the AMA, building a Web3 protocol is like “wrestling a bear,” and at times requires an approach of “contract now to expand later.” In shifting our focus from relays to dollars and cents, via the Portal monetization efforts mentioned above, we’ve been taking steps to balance out the economics of the network and bolster the demand side. Going forward, we’ll have some exciting news and partnerships to share throughout October and the rest of the year, particularly when it comes to capital markets and increased access to POKT (exchanges, custody solutions, institutional-grade node services, and more will continue to make POKT as accessible as possible and boost liquidity).
“Pay As You Go” Service Will Bring In the Revenue
Revenue-generation and economics were hot topics in the AMA as well, as Michael shared his thoughts throughout the conversation.
Thanks to the major update to the Pocket Portal, and the introduction of the Pay As You Go (PAYG) plan in particular, Pocket will now be able to more directly secure revenue from net new users, and focus on converting existing users. As developers tap into self-service through the Portal, we will see rate limiting proving out the demand side of the market, as subsidized relays are replaced with paid relays. As we continue to iterate on the Portal, we’ll have our attention not only on relay growth, but also app stake growth, and the team will be working to convert users over the next several months.
Michael also shared some exciting progress that we’re already seeing on the revenue front, including $500,000 in signed revenue, with over $2 million of potential revenue actively “in conversation.” As Michael stated, we are working towards a revenue goal of $5 million per quarter, with the hopes to hit that mark sometime next year.
Going forward, we’re targeting regular reports on sales for full transparency, as well as further improvements to the developer experience in the Portal, including multi-tenant access to the same account, different permissioning, and options to “Bring Your Own POKT.” With several support engineers already in full-time roles, we’ll also be looking to bring on a few more to keep us on the ball as revenue grows.
Lastly, on the economics front, inflation continues to be reigned in via the FREN adjustments. We will also be continuing to take strides towards lower network costs, as we move towards a surplus of demand thanks to the Portal overhaul. As Michael shared, we are always thinking about the pros and cons of different tokenomic approaches (like burning app stakes or burning fees) over the long-term, and the team is keeping the options open to weigh with the community as our protocol evolves.
Pocket is Well-Positioned for Competition
We had some great questions submitted during the AMA regarding the competitive landscape as well.
As Michael described, Pocket essentially created a category with decentralized infrastructure, with close to a 6-year “head start” going back to 2017, but we are now seeing others with similar designs to our protocol. As with many other corners of the tech space, there is often a “2 year rule” for competition to start springing up in earnest, and we recently celebrated that mark with our 2-year Mainnet birthday.
Even with this competition, Michael still emphasized the importance of being collaborative. He cited some interesting research that shows that it is usually beneficial NOT to have a siloed organization in an “early industry” such as Web3 infrastructure. Given that approach, we’re looking forward to meeting with others in the space at industry events, exploring different solutions, and keeping an eye out for spots where it may make sense to collaborate!
Meanwhile, it will take others significant time to build from scratch, even if they follow a similar path to what Pocket has laid out. Take, for example, some of the “behind the scenes” load balancing challenges that Pocket has been addressing for years, which all newcomers to the space will need to sort through themselves. As Michael said, “execution matters,” and Pocket has shown some distinct advantages in terms of the number of chains continuously being integrated and supported, the design of the protocol, the way that value is transferred via the economic model, and the strength and passion of the team. Put together, these factors can all add up to a nice moat.
Additionally, Michael shared how the team is continuing to think about other ways to bring innovative solutions to the space, beyond Pocket’s existing service. “Portal As A Service,” enabling other node runners to effectively become a distribution channel for Pocket…indexing…storage…a more robust developer community…more participation in hackathons…these are all potential directions that are on the team’s mind as we continue to differentiate and build on the foundation that we’ve established.
“The Best DAO in the Space”
The strength of the Pocket DAO remains one of the aspects of Pocket that we’re most excited to see. Or, as Michael put it:
“I honestly think we have the best DAO in the space…an opt-in democracy operating at scale.”
The design of the DAO has been able to emerge organically, without the need for over-engineering from the Pocket core team. One potential approach that continues to be surfaced is moving towards more specialized committees in the DAO – we’ll be looking forward to watching how that conversation evolves.
As it has matured, the DAO has done a great job actively addressing issues, and Michael shared his belief that the DAO is now positioned to be in less of a “reactive state” than earlier this year. As Michael highlighted, the governance efforts to implement the next round of inflation controls, combined with the upgrade to the Portal enabling more direct revenue generation, have put Pocket Network and the Pocket DAO in a “very exciting scenario.”
Hope to see you at the next AMA!