Pocket Network is entering the next phase of its long-awaited Shannon upgrade — a protocol-level transformation that expands the scope of Pocket’s business and rewires its tokenomics for long-term sustainability.
With usage-based burning, DAO-governed minting, and a pricing model built on Compute Units, the Shannon upgrade positions Pocket among the most cost-effective data relays in Web3 – while rewarding node operators in a supply-neutral way. Further, to incentivize meaningful adoption, it also introduces a tiered rebate system governed by the DAO.
With many changes coming to the POKT token, already trading on centralized and decentralized exchanges alike, let’s dive into a breakdown of the token changes introduced in the Shannon Upgrade and what they mean for the Pocket Network ecosystem.
Automatic Token Burn and DAO-led Minting
Post-Shannon, Pocket Network will support automatic, on-chain POKT token burning to pay for relay services. Total POKT minting will be equal to POKT burned to ensure a deflationary mechanism, preventing token supply inflation. This adjustment alone puts POKT on the path to new price targets, as it immediately creates ongoing buy pressure in the marketplace while introducing a novel method of supply destruction.
Although the Shannon upgrade will initially have no token supply growth, the DAO can increase the total supply through a reimbursement event if necessary. By enabling only the DAO treasury to mint tokens, the mechanism stops incidents of self-dealing through burn-mint asymmetry.
Mechanism of Action: Emissions, Burn, and Pricing
Pocket Network will implement changes to offer economical relay services and sustainable POKT price growth. By upgrading their tokenomics they can reduce the computational costs making Pocket services cheaper than competitors.
Each relay processed produces a proportional amount of POKT being burned, turning the token into a consumable asset tied directly to network usage – and a true utility token.
The Pocket Network Foundation will introduce service-specific price changes according to supply and demand needs, providing a free and competitive market for accessing data sources.
Besides new POKT minting and burning strategies, the Shannon update will significantly reduce Relay charges – making Pocket Network’s decentralized infrastructure even more competitive among RPC providers and data networks.
Cheaper And Competitive Relay Pricing
Pocket Network will soon become around 30-75% more cost-effective vs its contemporaries.
Currently, Pocket’s “Pay-As-You-Go” Relay service can cost up to $14.30 per million Relays. Pit against today’s other market leaders, Pocket can be up to 2x more expensive than competitors’ $6.58 per million Relays.
But the Shannon upgrade’s “Pay Upfront” model will radically reduce Relay service charges to just $2.50 per million Relays – setting a new pricing floor across the relay market. This will particularly benefit Pocket users who process data requests at scale, while also giving relay operators more predictable revenue.
Volume Rebates To Boost Traffic
During the transition phase to Shannon, Pocket Network will need certain bootstrapping to maintain steady network traffic. Thus, it offers up to a 40% volume rebate to boost network activity and incentivize actors to access Pocket’s services.
Mechanism of Action: Volume Rebates
Since Pocket won’t increase its token supply to prevent inflation, the Shannon update will bootstrap demand through volume rebates. According to the proposed plan:
- No rebates for less than 105 million Relays per day and a 40% rebate for more than approximately 525 million Relays per day
- A progressive rebate of 10-40%, from 105 million to 525 million Relays.
- More Relays will lead to more rebates between the lower and higher traffic levels.
The dual strategy of growing rebate levels and a capped total rebatable claim will minimize unnecessary network traffic and maximize the DAO treasury’s lifespan.
The Pocket Network team has conducted meticulous analysis and mathematical projections to develop its new tokenomics.
This reimagined Pocket economy bolsters POKT’s utility with ecosystem’s users and contributors, while making for a healthier token economy, and charting a path for a long-term sustainable DAO.
We can’t wait to see Shannon go live and see the effects of this migration play out.
