Transcript of Peijiang Zhu Token Economy White Paper Press Conference

Peijiang Zhu:
Thank you for coming here today. I’m going to share ideas and designs about Token Economy of PalletOne. Later, our co-founder and CTO Yi Zeng will also share with us more about PalletOne
First of all, I want to share our experience and my opinions about the whole blockchain system and governance. Before PalletOne, we can see Bitcoin and Ehereum adopt pow or pos mechanism, which are public and allow more people to participate dynamically. Everyone plays a role in the blockchain system. So the demand for governance is relatively lower.
And then, EOS comes up with Dpos mechanism. D means delegate or representative. People need to vote in the community to elect some representatives to achieve good governance. When it comes to delegates, we need to consider how to design this mechanism. Since we understand that the blockchain is a value system based on consensus involving multiple parties, so it is very important to have a representative mechanism.
Our token economy system is also designed around how to achieve great community governance and how to encourage every participant to build up our system. In PalletOne Token Economy White Paper, the first part is governance framework.
First of all, our governance principle. The early-stage governance structure will be promoted by PalletOne core team, which can realize the technical delivery and rapid establishment of the system. We play two roles and are responsible to the PalletOne Fund.
The first is the core team of PalletOne, which is made up of our project team and counselor. PalletOne core is in charge of rapidly promoting the development of our project. We also set PalletOne committee, which consists of community representatives, major ecological contributors, industry experts, KOLs and insightful people. They will jointly make decisions about our ecology, promotion, and our system construction.
In regard to the community, we can say our team is actually from the community. PalletOne community is divided into 3 categories, including governance team, technical management team and token holder management team. All of our committee members can be elected from the community based on influence and contribution and they can jointly promote the construction of our entire system.
From the perspective of the development of the blockchain system, we believe that it is divided into several stages. From centralization to decentralization takes time. At the beginning of the system construction, we still need a relatively efficient system to advance our projects. Therefore, the Fund will play the leading role during the first stage, relying on the core team and consultants to quickly promote the project. During this period, we will focus on communication. After the testnet goes live, the core team will gradually transfer the rights to our community representatives to jointly manage our blockchain system. When the mainnet launches, all the decision-making will be handed over to the community. It’s our general principle that the community is in charge of establishing PalletOne system and setting the strategic direction of development.
In this process, the technical team will design corresponding mechanism. For example, we established our own Forum website (http://palletone.club). There is a point system to record your contribution based on your opinions. And we will distribute PTN (PalletOne Token) to contributors to encourage people to participate in our community governance. We will implement the measures until the governance is completely handed over to our community.
Participants of PalletOne ecosystem include the Fund and the community. In terms of technology, we divide the consensus nodes into two categories. One is the Mediator, which is the intermediary node similar to EOS supernode. As to smart contract execution and cross-chain operation, we adopt Jury consensus mechanism. Consensus nodes in this mechanism are called Jurors. There are also Dapp developers, Token holders, as well as our related stakeholders such as exchanges. These actors are important in our token economy system, so we will pay attention to everyone’s interests, and consider how to motivate them to reach consensus and trust, and avoid evil behaviors.
Mostly, the obligations of the Fund are to promote the development and upgrading of our products, while building our application ecology and investing in related applications. The Fund will develop Dapps in the entire blockchain system, establish the ecology, and maintain the stability of the system. In terms of rights, the Fund can initiate various proposals and receive the forfeited deposit. The forfeited deposit can be used to compensate victims of evil behaviors, or to promote the repair of bugs. These are all guaranteed by the deposit mechanism. All of our consensus participants, which include our Dapp developers, are required to pay a deposit with PTN to ensure not doing evil and participating in the consensus.
Our Fund can initiate proposals to modify the system parameters, design penal regulation on omission or wrong-doings of mediator and Jurors, encouraging them to participate more actively in our consensus system. At last, the rights will be transferred to the PalletOne community. We will set their rights and obligations according to their ability. The handover will depend on the development situation of PalletOne system.
PalletOne community members will create WeChat groups and the technical forum, where they can work together to develop PalletOne ecosystem by initiating various technical improvement proposals and governance improvement proposals. Meanwhile the Fund will issue tokens to motivate everyone to participate in governance. If you have a good proposal, you can publish it in the community, such as the Forum. We will work with our core technical team and the development team of the open-source community to realize the new proposal based on community poll or feedback.
At the moment, there are already some upgraded technical proposals within the technical team. Before the mainnet goes live, the new technical proposals will be posted in our community for discussion. We will advance our new technology vision and governance vision based on the results of discussions and vote.
I just mentioned that the two cores of governance participation are the Fund and the Committee. As to the consensus nodes, we have supernode Mediator and random node Juror. Supernode is the core of our consensus. It is responsible for the maintenance of all transactions or the entire underlying ledger. Users need to pay a deposit to become Mediator candidates. The amount of deposit will be determined according to the discussion of our community. When a user is going to stand for election, he needs to put his deposit into his depostit contract ensure that he will not do evil. At the same time, he needs to stay online permanently, provide good technical service capabilities and network transmission capabilities to ensure the stable operation of the system.
In order to motivate the supernode to achieve consensus, we design a mechanism that Mediators will obtain 2% of annual interest rate of deposit. Also, they can obtain 1% of annual interest rate of all current token as the earnings exclusively. To the supernodes, they need to pay a deposit in the deposit contract and gain revenues of the deposit. At present, our initial parameters is 1% and 2%. But we will discuss in our community later. Based on the development of the system, we will discuss how to formulate appropriate reward consensus and incentive consensus to prevent evil.
In our entire ecosystem, we provide smart contract templates and a developer benefit mechanism for DAPP developers. Later, Yi Zeng will give you a brief introduction on how to support this system. Every DAPP participant will go through a two-step process when managing smart contracts. The first step is to develop and design a smart contract template, deploy smart contract template, and register the template to our system. Then the Dapp developers can invoke our contract template parameters and deploy the template. Under this circumstance, the contract templates can be reused by more people to develop other Dapps.
At the same time, we will design a smart contract store model. All the contract templates entering the contract template store need to undergo a rigorous review, and the developer who provides the contract template needs to pledge part of his Token to ensure that his contract is not vulnerable or not doing evil. In this way, we succeed in ensuring the contract security through incentive mechanism.
In addition, if a user wants to use the contract, he needs to pay a certain amount of PTN to the contract template developer. Thus, the security and usability of the smart contract are ensured. PalletOne team will provide some common contract templates for free to developers, thus forming template usage mechanism both free and rechargeable for specific purposes. The advantage is that a good template can be used by other people in the community, the application becomes more quickly and secure.
We also support exchange on our platform, especially the decentralized exchange. They also charge a fee for the transaction, and can receive compensation for voting using Token. Besides, common token holders play an important like other participants in the application ecosystem. They are obligated to use and maintain our system, not do evil behavior, initiate transactions and use the network. They can also freely exchange all the tokens in PalletOne system and participate in our community governance, including checking the account books. Our supernode adopts Dpos consensus mechanism, which is similar to EOS. Moreover, our supernodes are elected by community poll.
As mentioned above, I’ve introduced various roles and our general governance mechanism. The following will be some details.
In the early stage, the PalletOne Fund will lead our entire project and quickly promote community development and ecological construction. Currently, we will initially issue 1 billion PTN, the smallest unit is Tao. Here we can see that additional PTN will be issued to encourage all parties to form a consensus and build ecosystem together. Our supernode Mediator needs to pay some PTN as deposit and will earn 2% of interest. Besides, the daily interest rate of all circulated token calculated is 1% of annual interest rate.
Jurors, Mediators and developers all need to pay a deposit in the smart contracts. And they can earn a profit from their deposit to get encouraged not to do evil. At the same time, there will be a greater benefit from circulated tokens for the super node. As long as the Mediators pay a deposit, he can get the profit and can also become the Jurors to run cross-chain operation and smart contract execution. In this way, the Jurors can also get the daily interest according to his deposit. Likewise, smart contract template developer can get the deposit interest.
When a community poll is conducted, a Token is a vote. PalletOne adopts UTXO model for Token system, which is different from Ethereum’s model. Based on the UTXO model, token age, transaction records can be easily traced. Besides, there are some corresponding control mechanisms in the voting to ensure that deposited tokens and those Tokens held by our Fund are not involved in the voting. The user pledge margin part is also not voting. All of these mechanisms conform to our overall principles and they can be improved through community discussions based on ecosystem development situation.
Here we can see that after test net goes online, we will start to manage community experiments based on the test net by supporting vote and governance functions. All participants in the experimental governance will receive Token as incentive.
PalletOne trading system is more similar to Ethereum. We have divided the transaction fee into three categories. The first is the ordinary transfer transaction, and the initial fee is 0.001 PTN, which will be collected by the Mediator at witness node. In regard to the usage of smart contract, it’s divided into deployment and execution stage.
As to deployment of smart contract, the transaction fee is 1 PTN. The execution of smart contract involves the execution and verification by the jury and the final witness of super node, so 0.01PTN needs to be collected as the contract execution transaction fee by default. Our smart contracts are a bit more complicated and need to occupy more resources. So we will design some timeouts mechanism and controls to prevent malicious DDoS attacks to ensure the stability and security of our entire system.
These are the key nodes which participate in our entire consensus mechanism and ecological construction process, including super nodes Mediators, Jury nodes, developers, and so on. If a node provides services, he need ensure that he do not have evil behaviors or create loopholes. We need the nodes to pledge a certain deposit, and we will provide incentives for these nodes to ensure that they are benign.
If a Mediator super node fails to produce a witness unit for 24 consecutive hours, it will be removed from the Mediator list mandatorily, and the Fund will put up a proposal to penalize or confiscate the node deposit and the community will vote to decide the final penalty of the node
Likewise, if a Juror node is off-line for a long time or doesn’t sign on a contract after execution, the Fund will also send an application to the community for confiscation of his deposit. The Fund will adopt the opinions of community governance representatives to implement the entire mechanisms, including punitive measures and incentives for perpetrators.
The core of all DPoS-based blockchains is how to prevent consensus nodes from doing evil. Different projects and different systems have different designs. For us, we propose a pledge mechanism to bind their economic interests in the system. Considering their economic demands, they will not do evil. Therefore, a two-way incentive mechanism is established, one is to reward his consensus, one is to punish his wrongdoings.
We referred to the EOS and learned a lesson from them in terms of governance mechanism. And we designed our own Token mechanism. It’s convenient to define a token in PalletOne, since the tokens on our platform are not defined based on smart contracts, but based on API on underlying ledger. In this term, users can operate the tokens on the same level of PTN, which enhance security through the UTXO model.
At the same time, it’s quick to define a Token through a function. We can set the Token property, which can be non-homogeneous token similar to Token ERC721, or homogenized token like Token ERC20. The user can set the property, quantity and parameters of the customized token.
By quickly defining Token, we designed our new token mechanism. We divided the tokens into two categories. One is used for the economic voting. In fact, we use PTN as vote to elect the Mediators. Another type of voting token is for other decision-making polls. We will define a new Toke for every poll. And we can distribute the tokens to the community in different ways. We can distribute tokens according to the token amount, token age, and so on. For example, we will deliver a token to a wallet with over 1000 PTN.
We can also set up whitelists and blacklists to distribute governance tokens to our community members, so as to avoid a voting behavior defect based entirely on the amount of token. For example, the attack from users with large amount of tokens to users with few tokens. We will decide the distribution of voting tokens after community discussions. Besides, the voting tokens will be destructed after the community poll, which conforms to this decentralized voting mechanism. In addition, the incentive parameters including the annual interest rate of deposit can all be modified through community poll with voting tokens.
At the same time, the PalletOne community, including the governance community and the technical community, can put forward PalletOne Improvement Proposals. When a new proposal is submitted, the community will conduct a poll with voting tokens to decide whether there needs to be a new technology upgrade or technical implementation. These decisions are all made by community poll with voting tokens.
Like EOS, we have set a complete governance system. We conduct our community governance through governance tokens and provide technical support for all the decision-makings. The governance experiments will begin after we launches test net.
These are more detailed designs to encourage our users to maintain PTN. Because we adopt the gas mechanism. In Ethereum system, we can see the transaction fee will rise with the increasing ETH price, which is not conducive to the operation and development of our subsequent application ecosystem.
we can see that as the Ethereum rises in value, its gas handling fee will continue to rise, which is not conducive to the operation and development of our subsequent ecological application. We have designed a reward mechanism for users who hold PTN. According to the current design, if a user has 100 PTN, he can trade for free once a day, which means he can get a transaction fee subsidy every day.
In another word, we provide a subsidy of 0.01 per thousand for each user. If a user has 100 PTN, he can do a transaction for free. If he has more PTN, he can have more rewards. This can also promote our entire system to develop quickly and avoid the network deadlock because of high transaction fee. However, if the transaction fee exceeds the reward, the users still need to pay transaction to our Mediators and Jurors.
In addition, in order to encourage users to actively participate in the community voting. The reward tokens will be distributed after the Mediator election.
In addition, in order to encourage users to actively participate in the community voting, we set an upper limit of number of days of holding tokens, and for the days exceeding the upper limit, interest will not be calculated, and the upper limit is 100 days by default. All logics are reflected in the contracts in our system, and they can be changed based on our community vote.
PalletOne establishes the corresponding template and interface implementation for the most common types of tokens, including value anchor token, application ecology token like Ethereum tokens, and equity finance token.
It’s the contract template store in which users can share templates contributed by contract developers. It will bring benefits to contract developers, encouraging them to take a more active part in ecosystem establishment and contract development. The incentive is realized through the two-layer mechanism of contract deployment.
Above are some details about PalletOne ecosystem. All the details are supported by corresponding technology. We believe the governance logics and token logics are still needed to be discussed by our community. Our Token Economy White Paper will also be revised based on suggestions from our community members. We’ve started the construction of governance team. We also established PalletOne Committee with active participants from different communities, people with great ideas and KOLs.
We have also set up community forums to conduct a variety of discussions about our governance technology, technology development and application ecology. Users can get points and level up based on statistics of their posts, replies, reposts. The points and levels will be the reference when the Fund distribute incentive tokens.
We will create a simple mathematical model to continually distribute PTN rewards to participants who take part in our discussions on ecological construction, technology development, and governance. At the same time, we will establish our technical community to encourage people to develop applications PalletOne system. We will establish our own developer incentive mechanism with PTN rewards to realize the quick development of the whole open-source project.
After the test net goes online, a variety of governance experiments will be carried on. Experiment participants will get incentive PTN. Also, the experiment plans can be based on community proposal to promote healthy development of PalletOne system.
That’s the main idea of our Token Economy White Paper. Thank you very much.

