The Token Economics behind trustless, borderless business
Updated December 30, 2020
There’s no doubt the world is getting smaller. Globalization has revolutionized trade and now it is revolutionizing services.
The legal sector has remained stagnant in comparison to the evolution of most industries. There are various reasons for the slow transformation, but is primarily due to the differing legislation across the world making cross-border contracts difficult to enforce. PAID Network solves this issue through its smart contract technology and token economics design.
PAID is the world’s first borderless, civil legal system powered by Polkadot and DeFi.
Understanding the Flow
To understand the store and transfer of value in our model, it is best to first understand the definition of a token. In legacy business terms, it can be defined as follows:
“A unit of value created by an organization to self-govern its business model, empower its users to interact with its products while facilitating the sharing and distribution of network rewards, benefits, and fees.” — William Mougayar
Token economics describes the policies governing the minting, distribution, and flow of tokens between members of the ecosystem. These interactions form the backbone of the supply and demand token economics of The PAID Network.
PAID’s goal is to ensure we provide maximum utility and value flow back to our users.
William Mougayar’s three-tenet model helps visualize token value creation. Each PAID token can perform multiple roles, serving numerous purposes.
PAID is for Utility
Each PAID token acts as the core utility within the ecosystem and will be used in the following ways:
Access and Subscriptions
- Purchasing agreements and contracts.
- Purchasing of subscription services and payment of associated fees.
- Staking earns the user rewards.
- Provision of lending and insurance products to secure agreements.
- Escrow services between parties upon SMART Agreements being fulfilled.
Reputation and Governance
- Immutable blockchain reputation scoring, based on good or bad business. transaction history, ensuring unbiased opinion.
- Staked community arbitrators incentivized to quickly resolve disputes.
- Dispute resolution through proof of stake.
- Fees generated for successful arbitrators.
PAID’s Economic Model
Below highlights how PAID will generate revenue through its services and products:
- PAID will collect a percentage of fees generated by stakers.
- PAID will collect a percentage of fees created by users of the products.
- PAID will collect subscription fees for accessing the SMART Agreements platform and products.
- PAID will collect a percentage of fees generated as users engage with escrow services.
- PAID will collect a percentage of fees generated as users engage with arbitration services.
- PAID will collect revenue generated as projects move through the DAICO process, paying fees in order to access listing and DeFi services.
- Tokens generated by DAICO projects will be dropped to stakers.
- Community members will need to stake in order to gain access to and participate in presale opportunities and airdrops.
- 25% of all network transaction fees are burned to support deflationary goals of attracting capital.
- The token burn will also put upward pressure on price due to decreased supply and the assumption of stable or growing demand.
After burning, the remaining revenue generated through the platform will be distributed as follows:
• 25% returned to stakers.
• 50% retained by the PAID treasury.
PAID tokens are inflationary in terms of distribution, and deflationary in terms of token burns and staking.
PAID’s inflation and deflation mechanisms establish a balance between the contrasting effects of tokens entering the system via token reward distribution, and the deflationary effects of token burning.
PAID tokens will be burned until the total supply of tokens reaches 50% of the initial total supply, 297,358,728 tokens.
After five years, the inflationary model of PAID will conclude, becoming a completely deflationary token in a deflationary system.
PAID’s Token Flow Model
The PAID network can function and monetize from day one with its secure, signed-to-chain contract service.
A prospective PAID user can download the app, pay the access fee, and begin using the service. Access fees will collect in the “general reserve” account that is managed by PAID’s Treasury. Payments from fiat onramps will be used to buy back tokens on the open market in order to burn 25% of the purchased supply. 25% will be returned back to stakers and the remaining 50% to the PAID Treasury.
All PAID token holders at network launch are allowed to earn a 30% APR on their holdings. This will help incentivize network and product usage. The remaining token holders who did not partake in the private sales will also be incentivized to stake their tokens through this same 30% APR on exchanges.
PAID has made 30% staking rewards possible through an exclusive allocation of 30% of total token supply for these incentives.
Also, users who refer other users to the network will enjoy a referral bonus paid from the separate 25% “growth and referrals” token allocation.
$908,000 (40%) of the proceeds from the initial token sales, together with another 20% of tokens are allocated to a dedicated, “research” token reserve, to fund the development of services to be rolled out for phase II.
The existing contract-signing infrastructure continues to operate, with added upgrades that support four extra DeFi services:
· Escrow services
· DAICO fundraising
The PAID Network will provide users with the infrastructure that makes these services available but will play no centralised role in deciding the terms on which these services are delivered. It will be the users themselves who choose the prices for exchanging these services .
Users will be required to stake tokens to participate in the formation of insurance pools, receiving airdrops, or participating in DAICOs. Escrow loans and purchasing of an insurance policy do not require users to stake their tokens. Staking will take place for the duration of the contract, and users will pay a fee to the PAID Treasury for use of the network.
The regulation and risk mitigation for these DeFi services is done by the PAID community through two complementary services:
Arbitrations can be called whenever the outcome of any contract or reputation review is in dispute.
Arbitration will require the participation of three randomly-chosen arbitrators from the arbitration network, requiring them to stake tokens during the process. These staked tokens are at risk of being lost if arbitrators’ judgments are deemed unfair or inadequate. Staking, together with arbitration service fees, helps to incentivize honest, high-quality service, while generating fees for PAID’s Treasury.
The collection of network fees for the use of PAID’s services ensures that the Treasury can sustain operations, maintaining service quality, future investment growth, and user rewards. This is achieved by channeling fee inflows toward three uses:
1. 50% is used to finance further development of the network, ensuring it is maintained to the required standard.
2. 25% is burned to support value, growth and attracting capital inflow to the network.
3. 25% is redistributed to all token holders to share a common reward for the value jointly created by using the network.
PAID Token Distribution
15% of the total token supply has been allocated for sale and distribution through four fundraising rounds. Early investors will enjoy the benefits of lower prices and longer vesting periods.
PAID tokens to be offered at $0.0150, targeting funds raised of $500,000. Seed round tokens unlock in month two, distributed over nine months.
PAID tokens to be offered at $0.0250, targeting funds raised of $750,000 and a market cap of $497,000. 10% of Private A round tokens unlock at listing, the remaining 90% will be distributed over six months.
PAID tokens to be offered at $0.0350, targeting funds raised of $700,000, and a market cap of $696,000. 25% of Private B round tokens unlock at listing, the remaining 75% will be distributed over three months.
PAID tokens to be offered at $0.0420, targeting funds raised of $249,000 and a market cap of $835,000. 100% of Public round tokens unlock at listing.
Advisor PAID tokens to unlock in month two, distributed over twenty-four months.
Team PAID tokens to unlock at month twelve, distributed over twenty-four months.
Research PAID tokens to unlock at month seven, distributed over sixty months.
Ecosystem, Growth, and Referrals
Ecosystem growth and referral PAID tokens to unlock at month two, distributed over sixty months.
Exchanges and Market Making
100% of exchange and market listing PAID tokens distributed at listing.
Early staking PAID tokens are disbursed to stakers at 30% APR.
General reserve PAID tokens to unlock in month seven, distributed over sixty months.
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