Crypto isn’t decentralised? The Importance of Full Node Infrastructure, with Michael O’Rourke of Pocket Network


Crypto isn’t decentralised? The Importance of Full Node Infrastructure, with Michael O’Rourke of Pocket Network

October 2020

Posted by

Roland Spencer

Creative Producer

Roland is also responsible for the identification and implementation of new creative strands, with a specific focus on building community, communication and content strategy, and overseeing community output and engagement for the team....read more

Michael O’Rourke is founder of Pocket Network, a decentralized API protocol, and marketplace. We talk about the history of node infrastructure in public blockchain networks, the problem of increasing centralisation and the importance of democratising the use of full nodes.

We address; could Jeff Bezos switch off crypto via AWS (Amazon Web Services), due to its reliance on cloud infrastructure, why sustainable decentralised public blockchains need incentives like the POKT token, designing governance in the Pocket DAO, and the power of gamification.

Posted by Roland Spencer - October 2020

October 2020

Posted by

Roland Spencer

Creative Producer

Roland is also responsible for the identification and implementation of new creative strands, with a specific focus on building community, communication and content strategy, and overseeing community output and engagement for the team....read more

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Jamie Burke 0:13
You’re an early stage web three founder apply to our award winning accelerator programme base camp at Outlier ventures.io slash base camp, we write your first $50,000 check and give you access to 200 mentors, including many of the leading web three founders, and a network of 1000 of the world’s leading investors and exchanges. We’ve helped over 30 startups from 15 countries from all around the world, raise 100 and $30 million in growth funding. It can help you fast track product market fit and where relevant the launch of your token economy. So today, I’m really happy to welcome CEO and co founder of pocket network, Michael rook. Pocket network is a decentralised infrastructure for developers who want to build peer to peer applications. So the idea is you could connect any app to any blockchain through infrastructure that’s actually decentralised. And we’re going to talk a lot about that later. And the idea being that that can allow for exponential growth of crypto currencies, and a more accessible environment for people worldwide. More specifically, pocket is a blockchain relay network for decentralised infrastructure and full node incentivization. Again, full node being the operative word, in order to allow for sustainable levels of decentralisation in public blockchain infrastructure. So the reason why I’ve got Michael on the show is to address the question how decentralised is crypto really, decentralisation is obviously a measure that is important to regulators, as well as users and kind of crypto Gs. And the argument is that at an infrastructure level, there’s a lot of centralization happening in nodes. And also a reliance upon the cloud. And this became very topical recently, where pomp, asked the debate or asked a question and started a debate, which was could Jeff Bezos just switch off most of Crypto and daps via AWS, their cloud hosting service. And so effectively, he was proposing that most apps are not censorship resistance. So I’m really looking forward to kind of covering a lot of these things. Welcome to the show, Michael.

Michael O’Rourke 2:29
Yeah. Thanks for having me, Jamie. It’s a It’s a pleasure to be here.

Jamie Burke 2:32
So there’s lots of exciting things happening over pockets. You received your first investment from a Dao managed through a theory and ventured out, which is interesting. We’ll touch upon that little bit later. You’ve subsidised relays on behalf of the metamask user base. You’re now subsidising decentralised a theorem network access of my crypto users up to 1 million requests a day. I believe the last monthly stats I don’t know that was for October was six and a half million relays within the first week. Is that right? Or was that just even the first week of September? I can figure that out?

Michael O’Rourke 3:08
Yeah, that was in September. Actually, we’ve we’ve we’ve gone up quite a bit from France. Since then, we’re actually doing about three to 4 million requests a day now. Going to the net. Wow.

Jamie Burke 3:21
Oh, wow. Well, congratulations.

Michael O’Rourke 3:23
Yeah, thank you. It’s been a long time coming. And we’re really happy to see the system in action.

Jamie Burke 3:28
So you know, the the challenge with full node infrastructure is it’s not sexy, it’s often kind of overlooked. But as we’re going to discuss today, it’s incredibly critical to the mission of crypto. And so you know, I really want to navigate that with you go go deep into it, to help people understand why they should care. And we’re gonna, you know, talk about realistically, how much will they you know, should they care as as Crypto scales and things like DeFi scale. So, to summarise your origin story, as best I can, again, feel free to elaborate if I get something wrong, you studied at University of South Florida graduating in 2015, a Bachelor’s in international studies, you actually did become a loan analyst at suncoast, credit union, and in 2013, to 14, and then you became effectively a lead developer from 14 to 17, primarily in iOS. So in April 2017, you co founded pocket network. So what made the leap from doing kind of app development to mobile app development into creating your first web three startup and I guess, caring about the the mission that now motivates you to kind of allow for this full node infrastructure to exist?

Michael O’Rourke 4:51
Yeah, absolutely. So So, you know, me personally, I’ve been in Bitcoin since 2013. So I’ve been interested in the crypto space for quite some time and I actually had remembered seeing vitalik present aetherium at the Miami Bitcoin conference in 2014 in Burma and thinking that this was vaporware. And and that, you know, you know, Bitcoin was was was everything at the time, password of 2016. I mean, my co founders who also worked at this startup, started playing around with smart contracts. It was right after the DAO hack happened. I remember that kind of grabbed our attention. And we started playing around with solidity ourselves, and near the end of that year, used to service that we’re all very familiar with called Avira, and really kind of saw the benefits and the importance of what they were offering as, as an API to, for us to be able to kind of experiment and build applications on Ethereum. And and that’s kind of that that was kind of the seed of the idea. It’s always been a belief and a thesis of ours that we believe there’s going to be hundreds if not thousands, of independent blockchains in the future. And behind pocket, you know, it’s really important to see the this infrastructure exists behind these these cryptocurrencies, all the need this kind of service infrastructure service. So I kind of see that the idea of, Okay, how do we build a protocol that can provide infrastructure for developers and the substrate that we ended up on was incentivizing people to run full nodes. And in pockets case, we are incentivizing through a very specific function of providing RPC access to blockchain developers.

Jamie Burke 6:43
Could you explain RPC for the listeners.

Michael O’Rourke 6:46
So an RPC is the set of functions that you want to be able to call. So when you get your balance, when you want to see the state of a smart contract, you’ll effectively call an Ethereum full node, you’ll send a request an ethereal node, for example, once called F, call f underscore call, or F, get transactions, or get balance or something along those lines. That’s kind of a set of functions that’s made available by an aetherium full node. So if you’re running, if you’re familiar with guests, for example, every guest node has a full has the open RPC, and pocket just exposes that full RPC through the protocol.

Jamie Burke 7:29
Got you. So the argument is that developers have been forced to rely on centralised infrastructures to connect block chains to date, resulting in rising prices, limited access, and the unreliability that comes with centralization and presumably, some security risk as well. And the, you know, I’ve seen you make a fairly balanced argument that, you know, cloud itself, like, you know, reliance upon AWS is not inherently bad, but that you, you think there needs to be a kind of more balanced mix of multicloud. But you also propose that this kind of era of self hosting by hobbyists and dap developers is coming to an end. And rightly so most developers just want to focus on building that businesses and want some kind of more hosted solutions. As well as the growing complexity of, of running a node B, that evolving technology, stacks, governance, security, and most importantly, lack of incentive to do it. And I’ve seen you speak very eloquently about the history of node infrastructure and in particular, full nodes. from, you know, the past this kind of hobbyist era, to this centralised present, I think it’d be great context for the listeners for you to give us a summary of that, that journey.

Michael O’Rourke 8:56
Yeah, yeah, I think it’s important to understand really, where pocket is coming from in that context. And I think you have to go back all the way back to to the very beginnings of Bitcoin, I would say in one line, that’s a famous, it’s pretty well known meme within the Bitcoin community. And it’s don’t trust verify where where, you know, you run your own Bitcoin full node, you can verify all the transactions, you can verify your own balance, right by sinking your own note to the network without having to trust anyone else to give you your Bitcoin balance. And as time went on, we started to see a trade off occur. And I actually think that coin base was one of the first you know, mainstream applications to, to really take this trade off and run with it. And that was, when Coinbase was founded. They made the explicit trade off and hey, we are going to run your Bitcoin full nodes for you and provide you your balance and be able to send you your balance and that trade off. There is effectively a web to paradigm where you know, you have the application, the business runs or servers. And in cryptos case, these servers and databases are all open source. So as a result, we’ve seen a strong consolidation in just a few companies running most of the infrastructure for the industry. Because as you said, developers would much rather focus on their applications than then building this infrastructure. And as time has gone on, as the Bitcoin and aetherium clients have gotten larger, more unwieldy, that that is an even stronger disincentive for developers and other applications to run their infrastructure. Particularly when when, you know, frankly, these these blockchain clients are more optimised for, you know, resiliency and these peer to peer networks, and not you know, speed and querying data, right, specifically. So So as a result, it’s really become a specialised thing to to really host these full nodes, so that applications can be built on them. So what we have today, as a result is is kind of this these decentralised networks where, you know, at the consensus and base layers, they’re very censorship resistant, but we’re seeing a kind of bottleneck effect, where were a lot of this data is being sent to just a couple infrastructure providers, which are then hosted on on the cloud. So So you’ve actually got a couple hops, that, you know, you’ve got these these, these full notes that are not, you know, no, it’s not like I can, you know, no, we don’t have optimised databases here with with these crypto full nodes. And you’ve got kind of a very large set of, of expensive infrastructure that you need to run to be able to host applications at scale. So as a result, we’ve got this kind of web two paradigm on top of this new web three, vision that we hope there’ll be a very strongly believing,

Jamie Burke 11:49
and so maybe we could go into some of the constituent parts of pocket and how what pocket does is different. So I know that it’s not just Ethereum, you know, you currently support algorand Matic and Solana. And you kind of highlight that it’s not only just the kind of technical complexity, but also considerations around governance. And so as networks are rolling out more complex forms of governance, presumably, there’s a degree of centralization in in that as well in terms of how nodes are operated. But it’d be great to understand a little bit about pocket its constituent parts. And then, you know, specifically how how you manage considerations around centralization of governance as well.

Michael O’Rourke 12:36
Yeah, yes. So pocket taking step back pocket is is its own blockchain. It’s built on the tender mint consensus engine. And we’ve we’ve forked the cosmos SDK into into an architecture that that suits pocket. So so fundamentally, it’s a two sided marketplace, we have developers who need this RPC access for their applications at scale. And instead of paying a monthly fee, to a provider that is running on on some cloud infrastructure, a developer would instead buy our native cryptocurrency, stake at once. And that gets some locked in amount of throughput. And and what the protocol does is coordinate people running full nodes all around the world, matching them with the users of that developers application sets the other side of the marketplace, the supply side of the marketplace, where anyone running a full node with the requisite stake, to participate in the network, because that, of course, keeps them honest. In pocket, if you lie about the amount of relays or if you have inconsistent data, you’re subject to get slashed by the protocol. So so that’s the other side of the network. And effectively, you’ve got this virtuous cycle between developers and people running node providers, or people acting as providers for for the network. And touching on on the governance of pocket. We’ve thought and design this a bit differently than then than most. I think the most protocols that you’re seeing today, we kind of see this as, frankly, we’ve seen we’ve seen pocket more of a designing kind of a digital jurisdiction. So instead of of having, you know, people with the highest amount of tokens, having stronger votes, we’ve designed a more permissive system, where, you know, if you’re part of this digital jurisdiction, that sits on top of the real worlds that very much interacts with the real world, as long as you can prove, you know, you’re you’re buying in terms of knowledge, or contributions to the network, you’re more much more likely to have a vote in the system. So we don’t really and it doesn’t, it’s not dependent on how much pocket you own. It’s really dependent on, on on frankly, your knowledge of the system in this in this capacity, which which I’d be happy to dive into a little bit later as well. But but as a result, you know, we’ve we’ve made sure to design a system that has checks and balances, where we’re, you know, no one party between developers and nodes has too much power.

Jamie Burke 15:12
Understood. And understand that there’s specifically to relay mechanisms that that form the kind of foundations for pocket

Michael O’Rourke 15:23
to relay mechanisms. So developers just access the network. And and in this case, just request the data. So it’s either reading or writing data from the network, and in pockets case, and frankly, most decentralised applications, about 99% of requests, or reads, whereas you know, 1% or less are, are these rights. And fundamentally, what happens is, I’m actually as a developer, I’m actually querying data from five nodes at one time. And as a result, I can then cross check that information. If one node, you know, answers with with a number for let’s say, I’m asking for a balance. And for other notes answer with the number 10. I will that one node who responded with an inconsistent answer is subject to be slashed by the protocol. So it’s kind of how we’re able to keep the integrity of the data that that that developers and applications are requesting.

Jamie Burke 16:22
And so, you know, obviously, you’re you’re kind of very close to effectively the traffic, what’s being used, and and where, especially in the context of this in the fact that you’re blockchain agnostic. So and you mentioned earlier, this belief in this multi blockchain universe effectively, I guess, a web three stack of specialist protocols, how are you seeing that stack evolve in terms of usage and traffic? And, you know, do you think that there will be a winner takes all or do you think that there’s going to be, you know, specialist protocols for particular functions within this web three stack?

Michael O’Rourke 17:03
Yeah, that’s a great question, I definitely see this space evolving in a way where I think we will start to see much more specialist protocols, solving very specific problems. I think there’s a lot of advantages to to this. And And right now, what I what I’m saying is almost like a, like almost a race, in terms of costs. So I’ll give you an example here. For us, it was much more cost efficient, as a protocol to design pocket as its own blockchain, it originally was actually a set of smart contracts on aetherium. And unfortunately, do the gas costs and so on and so forth. I made much more sense to be you know, quote, unquote, closer to the metal, in terms of, of the granularity in which we could design, you know, things like the rewards, and so on and so forth. I think there is opportunity for various types of protocols to get large enough network effects on existing generalised smart contract platforms. And as block space becomes more fungible, particularly with all these other, you know, General smart contract platforms, I could definitely see that being likely. That said, when you’re dealing with network effects, central aetherium, and you have a, an additive protocol, like pocket that’s not necessarily built on aetherium, but fundamentally helps the protocol, I think we can start to see, we will start to see a constellation of various protocols that that that, frankly, do this, right. You know, for example, you know, at least in the infrastructure side, right, there’s two really interesting protocols, in my opinion, the graph and another protocol called Marlin network, which are infrastructure protocols that are solving, you know, very different problems in pocket. Right, that helps, you know, for example, make data easier to read or in Marlins Marlins case, improve the networking between between nodes on these decentralised protocols. So I definitely says particularly with the with the explosion of para chains that we’re seeing in Cosmos based blockchains like pocket, I think there’s going to be a much larger impact than then we’re currently seeing

Jamie Burke 19:20
right now. So why was it that you chose Cosmos specifically, obviously, you know, there’s the big debate at the moment is, you know, whether you go with cause muscle or polka dots, or was it a timing thing, or was it kind of some specific technical or governance considerations that were important for you?

Michael O’Rourke 19:38
Yeah, I think that for some of it was timing. At the time when we began building pocket core Cosmos was already live and having seen their consensus engine in action and the way that they designed Cosmos SDK, it was a pretty good fit for us. But there are some other considerations like for example, just Something as simple as Cosmos being built and go, as opposed to rust in for, for polka.in terms of, you know, even you know, thinking about who’s building on it, who, you know, who knows go versus rust and things like that. But for us the most important impact was the fact that we saw the tenement consensus in action. And working right, which gave gave us confidence in in building an tendermint. In that respect, you know, another consideration was, you know, we feel like pocket can have an impact where we can support our own security as as a protocol. So, so while we could have done a pair of chain just completely independently, without part of the kind of shared security model, that wasn’t super clear to us at the time, so so we just opted to go with the tenement.

Jamie Burke 20:53
Recently, you were I did it was a grant was an investment that was received from from venture down. So that’s a decentralised autonomous organisation that effectively makes investments and grants. Is it just investments?

Michael O’Rourke 21:07
Yeah, it was an investment. They they purchased tokens as as investors. And what’s really interesting about venture dow is they are one of the founding members of the pocket dow. So you’ve got a dow, effectively representing a vote in the pocket dow as a founding entity, which is, in my opinion, really cool and really exciting. And I think we’re gonna start to see more of that in this space as well. Was that

Jamie Burke 21:35
they bought the token in market, or was that in a kind of an unstructured round?

Michael O’Rourke 21:40
Yeah. So we began our public sale a couple months before we launched main net. So So at this point, we’re, we’re able to sell to anyone, but they specifically purchase pocket as a part of the sale before we reached me net. So that means that they have a Genesis allocation, and alongside the other previous staff, purchasers, before we launch me in that as well,

Jamie Burke 22:08
interesting, so there is a dow, were one of the participants is another dow, which I think speaks to. And that’s gonna be really interesting to see how that plays out. So could you tell us a little bit more about how pocket dow works? And you know, did you? Did you design for kind of an initial level of how did he design for centralization or decentralisation? And in the context of being an evolving business in an evolving market?

Michael O’Rourke 22:40
Yeah, yeah, no, great question. So So it’s important to note that that pocket, so there’s three real aspects of pocket backing the government, first off, so so the first R is the economic policy. So one interesting thing about cosmos and tender mint, is, it’s pretty easy to heavily parameterize the protocol. So what that means is, people can submit transactions to adjust the monetary policy of the protocol or some other parameters, for example, you know, the staking amount, how long people need to stay for, you know, the inflation, really just about anything in the protocol is parameterised. So that’s the first piece that the the DAO governance, the second piece is the Treasury. So, so very much really inspired from other protocols like like dash, for example, 10% of all the inflation goes to an on chain Treasury, that is that is governed by the pocket dow. And that’s important, which I’ll note in a minute. Why, but or how that’s managed. But, um, that’s the second piece is the Treasury. And the third piece is, of course, protocol upgrades. And I want to, I want to put protocol upgrades into different buckets, because the first two don’t need permission from the nodes to make changes. And, and when I talked about checks and balances, I actually think it’s really important distinction in the context of pocket network, because we’ve seen a history of, of, you know, the mining nodes, or the full nodes, you know, from proof of work to proof of stake chains,

you know, potentially, you know,

holding hostage to the protocol, when, when potentially the greater population wants, wants or needs, you know, wants a change made. So, I want to highlight those, those two, or that distinction. But with protocol upgrades, right, the doubt, May, May, May make a vote, which is, of course, you know, comprised of nodes and developers, but you also need a second approval there from the actual nodes to upgrade their software. Right. So a proposal might go through, but nodes also need to, you know, upgrade their pocket software, you know, in the, in the case of a protocol upgrade. So, those are the three main ways in which in which I It can be governed by the DAO. And particularly on the parameterization of the protocol, I want to put in here, I want to throw in the pocket foundation as an important entity here, because the the, the pocket foundation is unique in the space, because it’s a Cayman entity, there’s three directors, myself is one of them with, with two others, completely independent of pocket network Inc, as a bootstrapping mechanism. And what’s interesting about the foundation is that we are


the Dow can actually hire and fire the directors and supervisors of the foundation. And this is embedded in the creation documents in the Cayman entity. So so we are subject to, frankly, the Cayman courts, if the Dow makes a decision, you know, if the Dow wants to kick me out, they certainly can as a foundation director. And that’s important, because this is a, a kind of middle ground for us in terms of having these checks and balances, and being able to move forward when certain technology is there to be able to do, for example, parameter trades changes autonomously. So right now, when the Dow makes a decision in, for example, we want to change some parameter about nodes, the Dow makes a decision, and then it’s, it’s the, it’s the foundation’s job to go ahead and actually change that parameter on chain. So so we’ve got a nice kind of ecosystem here of three parties that, you know, keep each other in check in this capacity. So So and in terms of how people can participate in the Dow, in the first phase, we had our founding members, we had five members. And since then we’ve we’ve championed in three new members on this is very much inspired from the venture dow. But in the future, which we’re actually launching this in the next couple of weeks. We are also learning from from meta cartel, you can actually see their influence here. But we’ve created a game an anti civil game, where as participants, you know, whether your developer node goes through your normal process of processes of interacting with the network, we have a set of benchmarks, and, frankly, goals that you hit that help that and once you reach a certain level in this game, you then automatically can claim a vote in the Dow. And that’s really important for us, because what this does is allow for anyone to participate and ensures that those who do have those who do have votes are, you know, deeply bought into the protocol and understand what is, you know, what they’re voting on? Right. So So, for us, it’s really exciting. And it’s something that we’re actually super excited to launch next couple weeks.

Jamie Burke 27:50
Yeah, I mean, that’s really fascinating to hear the process of evolving governance and kind of overlaying different games to better coordinate or incentivize certain behaviours. And I’m, I’m personally very interested in how NF T’s begin to play a role in, in kind of loyalty and gamification on on top of governance. So where does this all play out? So let’s say, you know, what, what does success look like, for pocket in terms of his impact on on the industry? And then I guess, as a consequence, that is wider impact on society? What’s the big vision?

Michael O’Rourke 28:34
Yeah, yeah, I’ll tackle those are, those are two great, great questions, I’ll tackle the first one initially, so so I think we’re already seeing so this thesis of many chains come to fruition. And I say that because, you know, we’re seeing so many of these pair of chains get launched alongside these Cosmos independent chains. And on top of that, we’re seeing sharted kind of architectures, for example, scale, or to where, you know, if your scale developer actually building on a completely independent, you know, layer two, chain, right? And, and how is that data going, you know, who’s gonna run the nodes for that, right, um, that’s a really important piece. And, and there could potentially be hundreds or thousands of these various sharted, you know, layer two chains, right? So as a result, I see pocket, providing the base infrastructure for all of these protocols, providing opportunity for frankly, anyone to come in. And this is kind of goes to the larger impact on actually learning to be a DevOps expert. The amount of people who have come into pocket with very little DevOps experience and that have, you know, frankly levelled up into becoming pros at this point, is incredible. And, you know, a part of that comes with tooling and the difficulty in which people can participate in networks like pocket previously, before pocket in my opinion, the secret sauce of these No infrastructure companies, you know, has always been kept closed source. And and now there’s a collective incentive to improve this tooling. As a whole, and as a network and as an industry. And I think with protocols like pocket, we are going to see a massive investment in these, you know, infrastructure, Legos, if you will, where people can, you know, pick and choose the tooling that they want, based on the scale that they’re, you know, able or willing to run, and effectively see a much for proliferation of more people running infrastructure, because in the end, it’s the reason not enough people do it, or none of people are able to, because it’s just frankly, difficult. And as these incentives start to kick in, we’re gonna see a lot more investment and research and, and tooling to help improve this. And frankly, I think that’s a big reason why we see some of this, you know, centralization today and infrastructure just because you know, that the incentive hasn’t been there previously to improve it for for just anyone to be able to use it.

Jamie Burke 31:03
Michael, it’s been great having you on the show, and it’s a really important mission, and I wish you all the success with pocket, it’s gonna be interesting to watch. Certainly how the network evolves, and the games play out from a governance perspective. So good luck, and thanks for coming on the show.

Michael O’Rourke 31:21
Yeah, thanks for having me, Jamie. It was a pleasure.

Jamie Burke 31:25
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