PKT Independence Day
How anonymous Russians seized control of our project, and how we got rid of them.
I wasn’t sure if I would write this article at all because I didn’t know what value it would bring. But there are a handful of people who I brought into the PKT project, and for you guys, I wanted to finally take the time to explain what actually happened over the past 3 years, what we did about it, and what you can do right now.
For you, this is probably the chart of “well that didn’t work out”, but for me it’s a brief recap of what has been three of the most challenging years of my life.
What you can do
The good news is that after these three years of pain, we finally took drastic action to fix the glitch. We have re-launched the project as an Ethereum token on top of Coinbase’s BASE chain. You can use the keys from your old PKT wallet to claim your new PKT. To do this, you need to install a Web3 wallet such as Metamask or Coinbase Wallet, and you will need to buy some Ethereum on BASE in order to pay the transaction fees. Luckily you can buy ETH directly inside of the wallet, just make sure it is on the BASE chain when you do so.
It might seem scary at first, but BASE chain fees are less than 1 penny so even $10 of ETH will last you a lifetime of transacting, and once you have your PKT, you can stake it to earn more. If you’re not ready to do this right now that’s ok, your airdrop will be waiting for you. But once you claim you will be able to stake your PKT to yield more PKT, and those yields will be the highest before everyone else piles in.
About the Airdrop
The original plan was to airdrop everybody ⅓ of their PKT at launch, ⅓ after 6 months, and then ⅓ after 12 months. But due to a technical glitch and an unfortunate series of mistakes, the coins for the 3rd airdrop got sent into a black hole never to be seen again. So everybody is getting ⅓ less of the new PKT than they had of the old PKT, that’s you and me and everyone. The good news is that because those coins are gone forever, the value of the remaining coins will be that much higher, and also because you can now stake your PKT and yield, you have a chance to get back a lot, if not all, of your lost 3rd.
Staking your PKT
To earn more PKT, all you need to do is claim your airdrop and stake it. There are two ways you can stake:
“Basic Staking” - Lock up your PKT for a period of time.
“LP Staking” - You add PKT and Ethereum to Liquidity Pool and stake the resulting LP Tokens.
The advantage of Basic Staking is you don’t need to add any Ethereum, just PKT.
The advantage of LP Staking is you will yield astronomically more than with Basic.
Basic Staking
When you stake your PKT, you receive what are known as “Yield Credits”, these represent your share of the total yields. As more people stake, more Yield Credits are issued so your percentage goes down.
The minimum amount of time for Basic Staking is 1 month, and when you stake your PKT for 1 month, you get 1 Yield Credit per PKT. If you stake for 3 months you get 1.5 credits, 6 months gets you 2 credits, and 12 months gets you 4 credits.
Because there are no longer any PacketCrypt mining pools in PKT, all of the newly minted coins go to the stakers. This is currently about 900,000 PKT per day.
After October 30th, you will need to also run internet infrastructure in order to continue yielding. Routie products have cjdns running on them, so customers of Routie will automatically qualify, but those who don’t own a Routie device will need to set up a cjdns node or one of the other recognized infrastructure items.
LP Staking
The far more lucrative way to stake is by adding PKT and Ethereum to what’s known as a Liquidity Pool, and then staking the resulting Liquidity Pool tokens.
The Liquidity Pool (also known as a decentralized exchange, or DEX) is a smart contract which allows people to buy and sell PKT without a 3rd party. In order to make that possible, there needs to be PKT to buy, and Ethereum for people who want to sell. So this is where you come in.
When you provide equal parts PKT and ETH to the Liquidity Pool, you receive units of another token called “LP Tokens”. These tokens represent your share of the assets in the Liquidity Pool, and like PKT they can also be staked.
When you stake LP Tokens, you get Yield Credits in accordance with the PKT valuation of those LP Tokens and the duration of the staking, but you also get participation in a one million PKT per day special LP Yield.
Unlike your Yield Credits, the LP Yields have no requirement to run infrastructure, but they will end on August 21, 2025.
Something to take into consideration when adding assets to a Liquidity Pool is that the ratio of PKT/ETH changes over time. When people buy PKT, some of your PKT gets sold, and in its place is left some ETH. If the PKT price increases dramatically, much of your PKT will be sold away. This is called impermanent loss and it can be calculated based on the future predicted price.
However, even as your PKT is sold, you receive a rich reward from the LP Yields and the Yield Credits of your staked LP Tokens are based on the valuation of those LP Tokens at the time they were locked, so as long as you keep them staked and run infrastructure, you can earn Basic Staking yields on them for perpetuity.
How we ended up here
The really short version is that a group of anonymous Russians got control over the blockchain with a 51% attack, they won the support of part of the community, and then they bullied the remaining community into leaving.
When phrased in such simple and matter-of-fact terms, it seems absurd that we didn’t make this move sooner. But like the frog in the pot, it’s hard to know when you can say with certainty that you must jump or else you’ll be cooked.
We founded this project with a culture of decentralization, leaderlessness, and conservatism. When you do something like this, you want to believe that it’s going to work. The first shadow of evidence that the project might be in trouble was something we basically disregarded. If one were to dwell on every possible reason they might fail, they would never achieve anything at all. As more troubling revelations began to emerge, we looked for reasonable justifications of why maybe it’s not that bad, or why maybe it will sort itself out over time.
I am a strong proponent of non-interventionism. It has been shown that we humans tend toward “decisive action”, and that such action usually does more harm than good. But now looking back, from the moment the PKT project became centralized around the anonymous Russians and their shadow mining pool, it was in decline ever since.
If the Russians were as blunt as this all of the time, we would have forked the project long ago, but they showed themselves to be absolute masters of manipulation. They would come and go with different usernames like Florian, Devious, Noel, and Subzero. They would also occasionally introduce fake accounts posing as concerned investors. These “investors” would never have any linkedin or other background, and they would always quite conveniently insist that more control go to the Russians. The promises they made and the stories they told could fill volumes, and I think some people just wanted to believe that there’s a guy on a private jet talking to them and that he was going to make the wealthy beyond their wildest dreams.
What they did undeniably have was an obscene amount of compute power. Power that they could throw into mining at a loss, all the while destroying the value of the coin they were receiving. For a long time, we imagined that sooner or later the economic reality would hit them and they would realize that their antics hurt their wallets. Their endless stream of promises and manipulation also made it all too easy to imagine that “this time would be different”.
But none of their promises ever came to fruition, because before anything could be delivered, they would always go back to attacking, trolling, and generally damaging the project.
When Russia began their invasion of Ukraine, we were concerned because we had heard the rumors that they were running their infrastructure out of Moscow, and we worried that using Russian electricity to mine crypto for sale in the west might be seen as a sanctions issue.
Now mining at a loss, while also working to destroy the value of the coin you receive, is a pretty terrible way to evade sanctions. But that didn’t eliminate the feelings of uneasiness at the thought that maybe the project we had worked so hard for had become centralized in a datacenter in Moscow.
A number of community members became wise to them, and expressed their feelings about the situation, but because the Russians controlled over 80% of the blockchain, they were able to manipulate the mining payouts to buy favor from what was left of the community.
The real straw that broke the camel’s back came in April of 2024, when they announced that they were going to use their mining power to change the rules of the blockchain.
They even created a pull request on github to illustrate the change which they intended to force on everyone. A private discussion ensued and they agreed not to continue, but at this point the damage had been done.
Like a bucket of ice water over the head, all of the things that we had convinced ourselves to believe over the past 3 years suddenly fell apart. It was at this moment that we could no longer honestly stand in front of someone and explain PKT, without disclosing that we had a Russian problem. And it was at this moment that we began to work on what would become the new project, PKT on the BASE chain.
The Aftermath
It took almost precisely 4 months for us to complete and launch this re-invention of PKT, and the relief I feel from this change is astonishing. It is the first time in three years that I have felt truly excited about the future. Once you get used to coping with a bad situation, it becomes harder and harder to point to exactly what it is wrong. It becomes like a vague rain cloud over your head all of the time, just making life that much less worth living.
We have banned the anonymous Russians from all of our community platforms, and now they are relegated to their shady Telegram chats, where they preach the rise of “PKT Classic” and spewing vile hatred toward me and my family. I have tried my very best to get anyone to swap me their PKT airdrops in exchange for more PKT Classic, but even from their small following I have not been able to find one single taker.
There is still some enthusiasm for PKTC, I’ve decided not to turn off the PKTC infrastructure I run for the moment. Of course it’s provided as-is and as-available, and I will no longer maintain the code, but as long as it serves someone and doesn’t cost much to run, I don’t mind leaving it up.
I honestly hope the PKTC community will succeed. I never sold any of my coins, so I have as much incentive as anyone to see them do well. But realistically, the anonymous Russians are the closest thing they have to leadership, and the last three years have shown beyond a shadow of a doubt, the only thing they can deliver is damage. I’m afraid that as next month’s server bills come due, it is most likely that the Russians will disappear and rest of the PKT Classic community will simply give up.
But on the PKT side, we finally have a new way forward. Gone with the legacy UTXO technology and the anonymous Russians, we can now build what we set out to. Our next steps will be domains names, bandwidth leases, and smart contract based elections. All things enabled by the power of Ethereum smart contracting.
Thanks for sticking around.
Caleb