Payment transaction fee without PLM

Shiden Network (Kusama) Proposal
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Introduction

Plasm Network uses PLM as its native token. However, Plasm Network, a Polkadot Parachain, can handle tokens from other chains such as DOT and ACA. Therefore, it would be very easy to use other tokens such as DOT to pay for gas. In this section, we propose to treat tokens other than PLM as gas and to provide the fundamental value of PLM.

Proposal

PLM provides a reason for value by incorporating Lock and Burn mechanisms respectively.

About Lock

  • The PLM needs to be staked to select Collators, and the Collator with the highest amount of staking is selected and rewarded.
    The Collator with the highest amount of staking will be selected and rewarded.
  • The PLM needs to be staked to determine the reward to be paid to each dApps Protocol.
  • The more dApps staked, the higher the reward.

About Burn

  • A portion of the PLM used for commissions will be burned, and a portion will be paid to the Collator as a commission fee.

The current demand for PLM tokens is based on the fact that staking PLM will increase the amount of PLM. Therefore, when a transaction fee is substituted for another token, the following process should be performed “Sell the DOT used as a fee to the DOT/PLM board on the DEX. Then burn some of the PLM obtained and pay some of it to the Collator as a commission fee.” In this way, we can build a structure in which PLMs are bought and supported by other tokens.

Conculusion

The PLM is an inflationary currency, but thanks to the Burn mechanism, it can be bought regularly and also act as a deflationary force. This is the fundamental value of the PLM. In addition, PLMs can be increased by staking, which attracts speculative demand. As a result, the value as a reward can be secured continuously.

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Can you clarify:

  1. “Therefore, it would be very easy to use other tokens such as DOT to pay for gas” - it`s a native function for all Substrate based chains (and we can use DOT/PLM… tokens as a gas fee in Acala e.g.) or Plasm Network only? If so, what is a long term value proposition of this function for Plasm Network?

  2. “Therefore, when a transaction fee is substituted for another token, the following process should be performed “Sell the DOT used as a fee…” - in other words: let say I chose DOT as a gas fee, after transaction for these DOTs are automatically sold and PLMs are bought. Some part of this PLMs are burned and the other part goes to the Collator as a commission fee. I got it right?

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  1. Precisely the same logic can be implemented in all Substrate compatible chains.
  2. Yes.
    To be more specific, we consider the following scheme proposed by @akru as a prototype.
  1. From my side I can propose following scheme(it describes fees only, block rewards is paid in PLM only):
  2. The fees (including gas fees) is constant for PLM.
    It’s possible to pay fee in any supported token including DOT, aUSD, ETH, BTC.
  3. Conversion rates into PLM will be sourced using oracles and XCM.
  4. Fees will be collected into treasury in multiple tokens to make it diversificable.
  5. Governance will decide the time to rebalance treasury portfolio: for example, buy PLM.
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  1. “can be implemented” or implemented “from the box”. It`s a bit different.
  2. “Governance will decide the time to rebalance treasury portfolio: for example, buy PLM.” - governance may decide to not buy PLM it`s a question of probabilities.

I do not quite understand why to increase value of other tokens (DOT/ACA etc) and reduce PLM value.

Can you answer please what is a long term value proposition of this function for Plasm Network and PLM tokens? Help me step forward in my considerations please :slight_smile:

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many developers will like it and they will develop their applications on Plasm network. Developers can use their token for commission. The value for the PLM remains in any case. A good example is the Melonport (Enzyme) project, the commission is collected and burned once for a certain period.

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I partially agree but PLM tokenomics looks not very strong in this case from my point of view. In one hand Polkadot Relay (DOT) chain provides security, in other hand you can pay for fee with DOT, ETH etc.

I think good tokenomics it`s when you MUST use native token to interact with the network.

If payment transaction fee without PLM will be implemented we CAN (but not MUST) use PLM. It worries me.

I would be glad to hear more comments on this topic from core team members.

Thank you.

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I agree it would be good (even great) for dApps developers. But for tokenomics it would be good if only burn mechanism will work automatically (in daily basis e.g) and not by governance decision.

In this case burn mechanism may be activated stepwise:

  1. Initial network launch whith PLM as a gas fee only;
  2. Other basic tokens (DOT, ETH, ACA) as a gas fee actavated by Governance voting when DEX`s will have sufficient liquidity in PLM pairs.
  3. And every new tokens as a gas fee are added via Governance voting in future.
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On the face of it, users do not pay transaction fee using PLM, but internally, all transaction fees are used to increase the value of PLM.
Transaction fees using DOTs buy PLMs with DOTs and then burn the purchased PLMs. This means that there is buying pressure for the transaction fees.

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