Pylon Tokenomics Summary
TOKENOMICS UPDATE SUMMARY
PYLON NETWORK
JUNE 2020
PURPOSE
This document is intended to serve as a written summary of the updated tokenomics, which were recently announced by Pylon Network, via the official Telegram channel (see video here).
The updated tokenomics will be followed by more details on specific aspect of it (which are highlighted in this document), as well as an update on the current version of the Token Paper (which currently does not reflect any of the updates contained in this document).
Therefore, all information contained in the document should be taken in conjunction with the Token Paper.
SHORT INTRODUCTION TO THE PROJECT
Pylon Network has developed a blockchain that is fast, secure, scalable and has minimal energy requirements — designed to be the digital communication platform in the energy sector. This platform will enable increased participation of distributed assets in the energy markets in order to transmit data efficiently, track and certify the source of energy, and enhance customer engagement, including provision of new Digital Energy Services (also referred to as DES).
Pylon Network’s vision is to digitalize the energy sector to make it simple for everyone. The team’s mission is to enable any energy player to offer personalized digital services with minimal interactions for consumers and energy businesses alike.
The value of Pylon Network will be epitomised by Pylon Token (hereby referred to as PYLNT) and Pylon Coin (hereby referred to as PYLNC). PYLNT will serve as ownership of the blockchain responsible for its security and decentralisation whereas PYLNC becomes the true utility representing the value of user energy data stored on the Pylon blockchain (hereby referred to as Pylon Neutral Data Hub or Pylon NDH).
Pylon Network has incorporated PylonData, which is building a range of DES to demonstrate the purpose of Pylon Blockchain technology. This company is currently focussed on the use case of Collective Self-Consumption (hereby referred as CSC) in Spain but is soon set to expand into other countries in Europe. Pylon Data will act as a Pilot for other energy players to ultimately start building DES using Pylon NDH.
Figure: Overview of Pylon Network’s ecosystem & Pylon’s NDH infrastructure.
Pylon Network is continuously interacting with various actors in the energy sector which allows them to validate its use cases applying blockchain technology. At the same time, they get a tremendous amount of learning which is being used to further enhance their blockchain technology and the tokenomics surrounding it. Pylon published an initial version of the token model in February’ 2019 (see Medium post). Since then, Pylon has demonstrated its technology to various entities (energy communities, municipalities etc) in Spain and participated in many Business conferences across Europe.
Based on the learnings from the energy market and speaking to the Pylon community, a need was felt to revisit the original token model.
Our aims have been to:
A. Examine how to best address the short term needs of the PYLNT community and reflect the value of the current traction in the energy sector, coming from PylonData (for-profit). Evaluate all the available options (and barriers) from both operational & legal perspectives.
B. Clarify the significance of PYLNT in the Pylon ecosystem in the longer term.
C. Clarify the significance of PYLNC in the Pylon ecosystem in the longer term.
D. Clarify the role and intrinsic value of PYLNC and the surrounding infrastructure (i.e. federated nodes) and the relationship between PYLNT & PYLNC.
E. Offer further clarifications on how Pylon plans to disrupt the energy sector in the longer term (starting from EU).
THE ROAD AHEAD: TOWARDS THE FULL DEPLOYMENT OF PYLON’S ECOSYSTEM
The updated tokenomics described, are carried out in three (3) stages, leading to the long-term, full deployment of Pylon Network’s ecosystem, around Pylon NDH (as described in Introduction).
The following schematic provides an indicative break-down of the actions for each stage, as well as the implementation period for each stage. Please note that the timeframes are indicative and can therefore be subject to changes and adaptations in the future.
Pylon is going to take the Bottom Up approach i.e. interact, learn and adapt to achieve the long-term vision. Although the path to success may be longer, we believe this is the only way which will allow us to deliver value to our customers and establish the much-needed trust which is currently missing in the energy sector.
Figure: Indicative timeline of the three implementation stages
BUSINESS PLAN — HIGHLIGHTS
Before delving into the token update, we wanted to provide a quick summary of what our marketing strategy is about expanding into other countries outside Spain. The recent regulations around CSC and Local Energy Communities (hereby referred as LEC) have presented us with a huge opportunity to implement this use case in Spain and at the same time, expand into other countries which have this potential.
· Everything starts with our competitive advantage: minimal interaction for accessing the (raw) data.
· On top of that, we develop services and digital tools that utilize these data as the foundation of their operation.
· We focus on Electricity Retailers and Municipalities as strategic channels to deploy CSC schemes.
· Working with ESCOs and solar panels installers to develop new partnerships and services for the energy market.
· Via this model (B2B), we are building the tools and services addressed to consumers, LEC and CSC schemes, while accumulating energy data in Pylon’s NDH.
*Please note that the below represents our current plan based on the traction we are seeing in the respective countries. However, the below will not limit us to expand into other geographies if we see a right opportunity.
TOKENOMICS UPDATE — HIGHLIGHTS
The tokenomics update is broken-down in the following three (3) categories:
1. PYLNT Reward Program
2. MainNet & Federated Nodes
3. PYLNC significance and Distribution
The following sections contain more information regarding the changes that are brought in each of the categories, including information on when they are to be expected.
HIGHLIGHT #1: PYLNT REWARD PROGRAM
• Our priority and main incentive are not to realize the value of the token. We are working for our business model to succeed, which may have positive impact for our token holders.
• PylonData is building the DES on Pylon NDH for the energy market and will continue to build more use cases to demonstrate the benefits of Pylon Blockchain.
• We have previously communicated that we will be sharing a % of the net profits (not dividends) generated from Pylon Data with all PYLNT holders who ‘Opt In’ to participate in the program. After extensive discussions with our legal team, due to the legal terms set forth in the ICO terms and conditions agreement, the program in its current form can be extended only to ICO investors. Further details about this program will be shared with ICO investors. “Please, if you are willing to opt in, and fulfill the requirements in this summary, read carefully the new agreement, our team will send you”
• We understand that majority of our community may not benefit from the above program. However, Pylon truly values the support of its community and are always willing to address their concerns. So, in addition to the reward program, we are going to provide the following benefits to all PYLNT holders:
o Federated Node Discount at Mainnet Launch:
§ All interested parties who would like to form a Federated Node at Mainnet launch and Whitelist themselves will receive a 30% discount on the amount of PYLNT they are required to stake. Refer to Highlight #2 below for more details.
§ Please note that this benefit will only be available for nodes participating in Mainnet launch. Anyone who wants to setup a node after that will not get this discount.
o Pylon Coin Burn till Full Ecosystem Launch:
§ All PYLNT holders will be eligible to earn PYLNC rewards once Mainnet is launched. They will be free to sell these PYLNC on exchanges. However, the demand for these coins may not be realised till the full ecosystem is live i.e. when multiple energy players start building on Pylon blockchain.
§ Till such a time, PylonData will be the only company onboarding energy communities onto Pylon NDH through the CSC use case.
§ Every Local Energy Community (LEC) that is onboarded by PylonData will be required to pay an annual fee (fiat or crypto) to access user energy data from NDH. The exact amount of fee to be charged will be communicated once finalised.
§ This fee will then be used to buy back the PYLNC from the exchanges to provide the much needed liquidity for those who want to sell their PYLNC. The PYLNC bought through this process will be sent to a burn address which will result in them being removed from the PYLNC circulating supply. Our goal is to keep this process fully transparent to avoid any legal complications. We will share full details of this once reviewed with our legal team.
§ Further to above, Pylon team will commit to not sell any of its PYLNC rewards from its federated nodes till the full ecosystem is launched
§ This program will be discontinued at full ecosystem launch as it is believed that there will be sufficient demand in the market due to the presence of multiple players who want to purchase the PYLNC from the exchanges.
HIGHLIGHT #2: FEDERATED NODES & MAINNET
Federated Nodes
• They are responsible for synchronizing and storing all the information on the blockchain — block headers and energy data of the users. At the same time, they are also responsible for maintaining the platform, certifying and validating all operations/transactions and for the creation of new blocks
• Anyone can become a Federated Node on Pylon NDH by staking an amount of PYLNT as deposit. The staked PYLNT will be returned only when the owner wants to discontinue the node.
• We want to encourage more people to setup nodes as it will make Pylon more decentralised. So, we want to ensure that the barrier for entry to form a node is amicable for everyone. Our current thought process is that 5.000 PYLNT need to be staked for a node.
• We are currently working on a governance model that defines the rules around when someone can become a node or leave the network or how a node can be penalised for malicious behavior. The details of this governance model will be shared in due course.
• As mentioned in the PYLNT reward program section, we will release a Whitelist for all PYLNT holders to express interest in becoming a node. Whitelist participants will receive a 30% discount and will be part of the first nodes when MainNet launches.
• The Light Nodes (present in the original token paper) are abolished now and hence, will not be receiving any PYLNC rewards.
Mainnet and Transition to Full Ecosystem
• We are working aggressively to onboard our first customer under the CSC use case. This onboarding will result in the launch of Pylon Mainnet along with the beginning of commercialisation phase. As per the current timelines, we expect this to happen before end of 2020. However, there will be a series of activities that will happen between now and Mainnet launch (e.g. whitelisting /setting up of Federated nodes etc) where we expect more active participation from our community.
• After the launch of MainNet, the federated nodes go live, PYLNC begins its distribution among the Federated Nodes and the PYLNC Reward Program participants, signifying the initiation of the transition stage.
• During the transition stage, we validate several hypotheses & use cases regarding the implementation of PYLNC in the Mainnet. Note that during this stage, the only service provider utilizing Pylon NDH is Pylon Team (in the use case of collective self-consumption).
• As we exit the transition period, the ecosystem around Pylon’s Neutral Energy Data Hub is deployed at full, with multiple stakeholders being able to utilize and interact with it. At this point both the value of PYLNC and the federated nodes is fully expressed within the ecosystem.
HIGHLIGHT #3: PYLNC SIGNIFICANCE AND DISTRIBUTION
Pylon Coin (PYLNC) Significance
· Since Pylon’s blockchain (Neutral Energy Data Hub) is open source, any provider (of digital energy services) will be able to connect their service to Pylon’s blockchain via an API.
· Their services will utilize the Pylon NDH as a source of raw energy data, which have previously been uploaded by consumers and remain in their control.
· With Pylon blockchain technology, this means that consumers’ data remain at their control and that consumers are the only ones who can authorize other parties from the network (e.g. businesses, digital service providers) to access their data for their purposes (i.e. to offer a digital service with added value, back to the consumers).
· In this form (and within what essentially becomes a consumer-centered energy data marketplace), PYLNC will play the role of reflecting the value of the energy data and trace / allocate their utility / value by the participating stakeholders.
· Pylon coin can only be mined on the Pylon blockchain
· Any entity that would like to interact with the Pylon blockchain will need to pay PYLNC as a transaction fee (i.e. gas) once full ecosystem is live.
· An entity will either need to stake PYLNT (individually or as a Federated node) to receive PYLNC or buy them from the open market via exchanges.
Pylon Coin (PYLNC) Distribution
· The total supply of PYLNC will be limited to 100 million which will be mined over a period of 16 years.
· It should be noted that a predefined percentage of PYLNC will be premined at Mainnet launch and shared with PYLNT holders. 80% will be distributed to Federated nodes and 20% will go to PYLNT holders who have not staked as a federated node
· As mentioned in the original token paper, once mainnet is up and running, 80% of block rewards go to Federated nodes and remaining 20% will be allocated to PYLNT holders who have not staked as a Federated node
· The PYLNC rewards per block also varies from one year to another. See below diagrams for more details
PYLNC Rewards Example
WHAT WILL FOLLOW?
Our current focus is on ensuring that all information about the updated tokenomics is not only available and easy-to-find, but also rigid, simply explained, and easy to understand.
To achieve this, we will enter in an open dialogue with the community and establishing feedback loops as we move forward.
The following steps will be taken in the short term, aligned with this focus:
1. Series of AMA sessions via own channels and external crypto-communities. (Next AMA, 4th June 18:00 CEST, to be confirmed by social media channels)
2. Create and circulate more content on aspects of the tokenomics with particular interest (drawing outcomes from AMA Session).
3. Communication with ICO investors for PYLNT Reward Program.
4. Launch of PYLNT Reward Program.
5. Release the Whitelist for Federated Nodes.
6. Updated Token Paper — reflecting all updates on tokenomics.
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