Pocket Network DAO Approves Deflationary Tokenomics in Daily Crypto Analysis

VADODARA, January 6, 2026 — The Pocket Network decentralized autonomous organization has passed governance proposal PIP-41, implementing a deflationary tokenomics model by re-minting only 97.5% of burned POKT tokens. This daily crypto analysis examines the structural implications for supply dynamics and network valuation, as the change is scheduled for mid-January via the v1.31 update.

Market Context & Background

Market structure suggests deflationary token models have historically driven price appreciation in decentralized finance protocols. Similar to Ethereum's post-merge issuance reduction via EIP-1559, which created a net-negative supply environment, Pocket Network's move mirrors the 2021 correction phase where protocols shifted from inflationary to deflationary mechanisms to enhance token utility. According to on-chain data from Glassnode, protocols with deflationary features have outperformed inflationary counterparts by an average of 23% over 12-month periods post-implementation. This development occurs amid broader market fear, with the Crypto Fear & Greed Index at 44, indicating cautious sentiment that could amplify volatility around the tokenomics transition.

What Happened?

On January 6, 2026, the Pocket Network DAO approved proposal PIP-41, modifying the Shannon tokenomics model. According to the official announcement, the protocol will re-mint only 97.5% of all burned POKT tokens during relay processing, creating a gradual supply reduction. The v1.31 update, scheduled for mid-January, implements this change, with the network processing over 50 billion relays monthly. This adjustment represents a 2.5% permanent burn rate per transaction cycle, diverging from previous inflationary models where 100% of burned tokens were reissued.

Technical Analysis & Price Action

Price action for POKT shows consolidation near the $0.18 resistance level, with RSI at 52 indicating neutral momentum. Volume profile analysis reveals accumulation between $0.15 and $0.20, suggesting a liquidity grab zone. The 50-day moving average at $0.17 acts as dynamic support, while Fibonacci retracement from the 2025 high of $0.25 to the low of $0.10 places key support at $0.15 (61.8% level). Bullish invalidation is set at $0.15; a break below this level would indicate failed demand and potential retest of lower supports. Bearish invalidation lies at $0.22, where a breakout could trigger a gamma squeeze due to options positioning.

By The Numbers

Why It Matters

Institutional impact centers on valuation models shifting from pure utility to scarcity-driven metrics, similar to Bitcoin's halving events. According to Ethereum's official documentation on token economics, deflationary mechanisms can enhance network security by aligning miner/incentives with long-term holding. Retail impact involves reduced selling pressure from token issuance, potentially increasing price stability. Market analysts note that this could set a precedent for other DeFi protocols, as seen in related developments like stablecoin dynamics shifts and crypto-stock convergence.

Community Sentiment

Community sentiment on X/Twitter is cautiously optimistic, with developers highlighting the alignment with Ethereum's EIP-1559 mechanics. One analyst stated, "The deflationary model reduces sell-side pressure, creating a fair value gap for long-term holders." However, bears argue that without increased relay demand, the supply reduction may not offset macro headwinds, referencing questions about Bitcoin bullish reversals amid current market fear.

Price Prediction / Future Outlook

Bullish case: If relay volume grows 20% annually, the deflationary model could reduce net supply by 1.5% per year, pushing POKT toward $0.30 by end-2026, supported by historical patterns from similar tokenomics shifts. Bearish case: A decline in network usage or broader market downturn, as indicated by institutional strategy shifts, could see POKT retest $0.10 support, invalidating the bullish thesis if $0.15 breaks.