Originally founded by a Stanford Research group in response to the ever-growing centralisation of PoW network mining around a small subset of node operators, Pi network is a new form of L1 blockchain network enabling mining for everyday people through the leveraging of a custom version of the Stellar Consensus Protocol (SCP) enforcing network decentralisation through the integration of individual devices such as mobile phones, laptop and computers.

Why using Pi network?

• Enable casual users to earn tokens through simple daily KYC procedure on the Pi mobile app

• Better throughput than PoW network such as Bitcoin thanks to the leveraging of the SCP

• Fair and meritocratic token distribution proportional to the daily network support of each active participant

Pi Network architecture

As mentioned above, the Pi network consensus algorithm is built atop the Stellar Consensus Protocol designed by André Mazière and currently implemented within the Stellar Network. However, at the difference of this latter relying on a set of trusted nodes run by well-known corporations such as IBM and the likes, Pi network made the architectural choice of relying solely on a decentralised network of nodes composed of individual devices ranging from mobile phones to computers.

Furthermore from a design standpoint the Pi blockchain is leveraging four core network roles:

• Pioneer — Users of the Pi mobile app who simply confirm that they are not bots on a daily basis through connecting and signing on the app.

• Contributor — Users of the Pi mobile app contributing and providing a list of pioneers she knows and trusts enabling in aggregate the build-up of a global trust graph.

• Ambassador — Users of the Pi mobile app introducing new users to the app

• Node — Users that are pioneer, contributors and also running the Pi node software which runs the core SCP algorithm taking into account the trust graph information provided by the contributors.

Pi Features

Currently the project being still in its pre-release phase, the core team hasn’t developed any additional features outside of the core blockchain stack. However, as per the whitepaper, the core team is planning the future development of a full suite of features building-up on the current existing Pi mobile app:

• Pi attention marketplace — Scare Instagram like social media channel open to any pioneer to post their content and further build-up the community liveliness with debates, pools, exchange of media …

• Pi’s Barter marketplace — Development of the existing Pi mobile app in order to enable each pioneer to sales goods and skills to other member of the Pi ecosystem.

• Pi App store — Development of a dedicated app store enabling builders to bootstrap their dApps launch using the existing Pi community.

Pi Governance

Mindful of the necessity of having a lot of flexibility in the development of such a protocol, the core team has assembled a governance scheme evolving with the development of the Pi ecosystem and user base.

As such, in the first stage of development while the overall user base remains under 5M members, the Pi project will used a provisional governance model resembling off-chain governance models currently employed by other protocols such as Ethereum or Bitcoin in order to enable the core team to guide at best the development of the protocol. Then, following this first stage, once the Pi ecosystem will reach its target of 5M members, a provisional committee will be formed based on prior active agents contributions and be charged with the responsability of leading the future development of the protocol.

Pi Cryptoeconomics

Main token metrics

The network being still in its early stage of development the Pi token is not currently listed on any exchanges nor tradable for any currency. Nonetheless, it is interesting to note that in order to bootstrap interest for the project the team launched a test version of the token which will become later on redeemable for live Pi token once the network will reach its mainnet stage in order to reward early supporters of the project.

Note: In order to avoid any amlicious attack on the network during its pre-mainnet phase with agents spinning up multiple wallet address in order to perform parallel mining, the core team develop a really tight KYC process relying on manual verification from other active agents of the Pi network (video, picture, ID papers …)

Token utility

The design being still in the midst of profound development, nothing can be asserted here with absolute certainty regarding the full range of utility functions that the Pi token will indeed fulfill upon mainnet launch. Nonetheless, for now as per the project documentation it appears that the Pi token will at least fulfill the following core utility functions:

• Governance — Grants voting rights on governance vote

• Mining rewards — Grants proportional rewards to all agents actively supporting the network

• Fee payment — Enable users to prioritise the processing of their transaction in the case of high throughput on the network

Token allocation

As per the protocol documentation, the Pi network exhibits a max supply of 100 billions Pi tokens allocated as follows:

• 20 billion for pre-mainnet

• 45 billion for future mainnet

• 5 billion for liquidity pool

• 10 billion for foundation and community grants

• 20 billion for core team, vested based upon the percentage of coins unlocked at given time on the network (4 billions unlocked during pre-mainnet corresponding to 20% of the 20 billions tokens unlocked during pre-mainnet)

Observation: Extremely inefficient token allocation creating a worrying token problematic as well as a massive front-loading situation at the benefit of the core team given that as per the current token vesting schedule the team composed of roughly 30 people has received 4 billions tokens leading to approximately a stack of 130M tokens per team member against only a potential stack of approximately 571 tokens per active users if we take the last report of Pi active users boasting 35 millions active agents.

Token emission

The token emission policy of the network is governed by the following equation:

Total Max supply = Mining Supply (M) + Referral Supply (R) + Developer reward (D)

where:

The mining supply correspond to the aggregate amount of minted Pi token created for each new users joining the network up until the 100 millionth new user.

The referral supply corresponds to an additional protocol incentive minting a a fixed amount of Pi tokens as a referral bonus for both the referrer and its referee that gets reallocated equally to both parties over their lifetime on the network.

The developer rewards minted alongside each new Pi coin minted for mining or referral purposes in order to build a protocol treasury growing proportionally to the size of the Pi network and allowing the future funding of the protocol development and grants program.

Pi Ecosystem

Pi Team

Dr Nicolas Kokkalis, Head of Technology
https://minepi.com/team/member/1

Stanford PhD and instructor of Stanford’s first decentralized applications class; combining distributed systems and human computer interaction to bring cryptocurrency to everyday people.

Dr Chengdiao Fan, Head of product
https://minepi.com/team/member/2

Stanford PhD in Computational Anthropology harnessing social computing to unlock human potential on a global scale.

Ecosystem current state

As of now given the early stage of development of the project, there is no ecosystem per se developed around the Pi network.

Roadmap

The roadmap published by the team is pretty opaque to say the least. Indeed even though it gives the major direction of the project there is no indication of the current state of the core development and no available github repo to audit the code implemented by the project raising again the problem of the opacity surrounding the project and casting somewhat of a shadow concerning the claim of future AI integration for the app users given the pretty basic state of the technical stack currently experienced by app users.

Pi network roadmap (as per the whitepaper):

Phase 1 - Design, Distribution, Trust Graph Bootstrap.

The Pi server is operating as a faucet emulating the behaviour of the decentralised system as it will function once its live. During this phase improvements in the user experience and behaviour are possible and relatively easy to make compared to the stable phase of the main net.

Note: All minting of coins to users will be migrated to the live net once it launches meaning that the livenet will pre-mint  in its genesis block all account holder balances generated during Phase 1, and continue operating just like the current system but fully decentralized.

Phase 2 - Testnet

Before we launch the main net, the Node software will be deployed on a test net. The test net will use the same exact trust graph as the main net but on a testing Pi coin. Pi core team will host several nodes on the test net, but will encourage more Pioneers to start their own nodes on the testnet.

Phase 3 - Mainnet

When the community feels the software is ready for production, and it has been thoroughly tested on the testnet, the official mainnet of the Pi network will be launched. An important detail is that, in the transition into the mainnet, only accounts validated to belong to distinct real individuals will be honored. After this point, the faucet and Pi network emulator of Phase 1 will be shut down and the system will continue on its own forever.

Conclusion

Despite being conceptually interesting from an architectural and network design standpoint, the questionable cryptoeconomic design of the Pi network creating a massive token front-loading for the core team as well as the overall opacity regarding the current development and state of the project are raising many red flags which will undoubtedly hinder the interest of potential investors in the future. Consequently, instead of a breaking new L1 protocol reap for future success it appears better to consider the Pi Network as a good proof of concept of what is possible to create using the SCP consensus algorithm and a good theoretical foundation for future similar protocols integrating better cryptoeconomic and governance design

Disclaimer: All information/documents contained in this blog rely solely  on my personal beliefs, and do not constitute professional investment advice.

Be careful in your investment and do not invest more than you can afford to loose.