Invest in Pokt Token to Run a Node, Invest in Ethereum Long Call or a Rage Quit Vote (round 1)

Dearest Kratonians,

PLEASE READ 100% of this message!

We have been deliberating on many intersecting factors over the last couple of weeks. Due to some bad market timing in the general crypto space, we could not meet expectations. Our goal is to mitigate risk and maximize the return on investment by investing in projects not accessible to the general public with 10 or 20 percent of the cashflow.

This vote is to decide the future of Kratos Dao and starts from April 19 to April 22. You are to support investing in pokt token to run a node, investing in ethereum long call or a rage quit.

Please read through before voting.

ABOUT POCKET NETWORK

Pocket network, a block chain data ecosystem for web3 applications is a platform built for applications that uses cost efficient economics to coordinate and distribute data at scale. It enables seamless and secure interactions between block chains and across applications. Pocket provides RPC access to ethereum, polygon and a dozen more blockchain networks.

MONETIZING FULL NODES WITH POKT

The blockchain ecosystem is currently undergoing a tragedy of the commons. Full-node counts are not only decreasing but also centralizing. Since the time of “ The Race Is On to Replace Ethereum’s Most Centralized Layer “ was published on December 5th, 2018, the total Ethereum node count has fallen from 11,803 to 7,669 as of now. Then, there’s an observable trend towards nodes moving to the cloud. According to a study by Chainstack , 61.6% of the total Ethereum nodes are run in the cloud, with the top ten cloud hosting providers accounting for a total of 57% of Ethereum nodes. This isn’t happening to just Ethereum, it also plagues other blockchain commons, because of the lack of inherent incentives to run full nodes. Pocket Network is a protocol that incentivizes individuals and organizations to run full nodes for any blockchain. This will lead to a festival of the commons , fueled by an abundance of full nodes supporting a diverse set of blockchains.

What does running a Pocket Service Node mean?

Pocket Network functions as a two-sided marketplace that matches the demand of application developers building blockchain-enabled applications together with the supply from infrastructure providers running full-nodes of external blockchains (i.e. Service Nodes).

The mechanism Pocket Network employs to regulate the interactions between applications and nodes are called Sessions. A Pocket Network Session refers to the relationship between an application and the Service Nodes that service it during the session duration within the protocol.

A unit of work in Pocket Network can be boiled down to an API request, or “Relay”. So, on one hand, applications submit Relays and other the other hand, Pocket Service Nodes validate these Relays on their appropriate blockchain(s) as well as the Pocket Blockchain, and in doing so, receive a percentage of POKT minted.

Service Nodes fulfill the supply-side role of the network. They serve the demand created by applications and provide network security through a Proof of Stake (PoS) consensus mechanism.

ETHEREUM CALL

What is an Ethereum call?

These instruments give the buyer the right to acquire Ether at a future date for a fixed price and the seller is obliged to honor it. For this right, the buyer pays an upfront fee (premium) to the call option seller.

Ether’s (ETH) $10,000 Dec. 31 call options recently came under the spotlight after surpassing $15.2 million in open interest (8,400 contracts). These instruments give the buyer the right to acquire Ether at a future date for a fixed price and the seller is obliged to honor it. For this right, the buyer pays an upfront fee (premium) to the call option seller. For this reason, call options are deemed neutral-to-bullish as they give its buyer the possibility of high leverage with a little upfront investment. Only buying the $10,000 ETH call options could be deemed a risky bet, or as the WallStreetBets Reddit users call it, a “YOLO” trade. The problem is that longer-expiry options usually involve multiple strike prices or calendar months.

For example, on Jan. 10, a spread trade occurred involving 1,500 ETH call option contracts for Sep. 24 with an $8,000 strike and 1,500 calls for Dec. 31 with a $10,000 strike. Paradigm, an institutional-focused OTC desk, intermediated this ‘calendar spread’ strategy, and the trades took place at Deribit exchange. Unfortunately, there’s no way to know which side the market maker was, but considering the risks involved, one should assume the client was looking for a bullish position. By selling the September call option and simultaneously buying the more expensive December call, this client paid an estimated $80,000 premium upfront, and this amount represents their max loss. According to the simulation above, this client needs Ether at $3,100 or higher to recoup his investment. Despite shooting for the stars with a potential $2.45 million net gain at $8,000 expiry, this same client would lose more than $300,000 if Ether happens to be at $14,000 on Sep. 24.

Countless strategies can be achieved by trading ultra-bullish call options, although the buyer doesn’t need to wait for the expiry date to lock in profits. Thus, if Ether happens to increase 30% in a couple of weeks, it makes sense for this ‘calendar spread’ holder to unwind their position.

As shown in the example above, if Ether’s September futures price increases by 25% in thirty days, the buyer can lock in over $60,000 net profit by closing the position.

This effect happens because the longer-term December $10,000 call option will increase more than the September option at $8,000. Assuming that $10,000 call options buyers are effectively expecting these prices is naive. While it’s exciting to see exchanges offering massive $10,000 to $100,000 2021 expiries, these figures should not be taken as authentic analysis-backed price estimates. Do professional traders use these instruments to conduct bullish investment strategies?

Yes. But, they don't YOLO into highly speculative trades.

RAGE QUIT

Rage-quit is the process where a member of a DAO exits part or all of their stake, leaves with a proportional share of the assets in the DAO's treasury, and quits their participation. But what may seem like a good idea in the moment may not be the best bet for the long term. An impulsive decision to throw in the towel may not serve you well if you haven't considered what it will take to find something new or if you give up more than you have to gain somewhere else. Hence, take a reflection and decide.

VOTING To vote, distribute your voting power among pools. The aggregate distribution of responses will be used for calculations.

Enjoy your voting power.