Pay Protocol is expected to leave a stunning mark in the history of blockchain by presenting an innovative token economy. Pay Protocol is not only a clear solution to the recent concerns on centralized payment systems, but it also leads the payment trend within the continuously expanding crypto market, setting itself aside from competitors.
The project’s innovative token economy is noteworthy in particular. The key participants of Pay Protocol’s platform are merchants, customers, validators, and wallet providers. When customers make purchases from merchants, validators verify the transaction and manage the ledger. Pay Protocol’s token economy is as follows. The platform’s service fee structure is kept transparent by giving decision-making rights to the merchants. Customers receive rewards based on the amount they contribute to maintain and support Pay Protocol’s ecosystem. A portion of the fees will be paid to validators for their work to maintain Pay Protocol. As the ones that actually propose how much Pay Protocol’s service fee should be, validators will compete to propose lower fees. Wallet providers on the platform prioritize user convenience. For better accessibility, Pay Protocol will work with third party wallet providers.
Pay Protocol’s tokens “Pay” are also a key element to pay attention to. On the platform, Pay tokens can be used for the following purposes. Customers use the tokens to purchase products and services from merchants. They must purchase with Pay tokens to receive the tokens that are issued as rewards. By staking Pay tokens, merchants get access to various features of Pay Protocol such as low fees and the ability to change their payment cycle.
The merchants are authorized to vote on the validators and decide who will become validator candidates. Unlike other payment systems where card providers and payment gateways determine the service fee, Pay Protocol gives such decision right to the merchant and creates a transparent fee structure. Merchants are able to provide additional benefits to their customers which correspond to the amount of Pay tokens they stake. These benefits are paid in addition to the customer payback pool the platform already has, allowing merchants to easily attract new customers. This compensation system encourages both merchants and customers to use Pay tokens.
A customer refers to a general user who purchases products and services. When the customer purchases Pay tokens from the market using fiat currency, they bear the differences in market value. To encourage customers to use the token, a portion of the customer’s payment amount is stored in the payback pool and paid back to the customer periodically. Further, some of the newly issued tokens also accumulate in the pool, giving even more rewards to customers. A certain percentage of the fee from each transaction is collected in the customer payback pool. The accumulated funds are then distributed to customers at regular intervals, and the amount distributed is proportional to the volume of the customer’s transactions. This ultimately encourages customers to purchase with their Pay tokens.
The validator is responsible for verifying and recording each transaction and maintaining the transaction history. Validators receive Pay tokens as a reward for their work, which come from Pay Protocol’s service fee. The fee paid to the validators is set as a percentage of transaction volume, which will be determined through competition among the validators. The lowest fee rate will be applied, which will not exceed 1%. Validators are nominated by merchant votes. To be nominated, the validator must stake the least amount of computation power and Pay tokens. Tokens are initially paid to bring the first validators into the system. Merchants are given 30 votes and can vote for 30 validator candidates. The top 31 nodes that receive the most votes become the validators that will start verifying and recording transactions. These transactions are tracked, synchronized, and stored by other validator candidates, particularly the 32nd to 61st nodes. However, these candidates are not authorized to approve real transactions. The node selected as the validator suggests the platform’s fee for each given period. The fee setting period is the period of time during which the service fee is fixed, which is done once a month. The next fee is determined during this time, and the fee is always limited to the range of 0~1%.
Pay Protocol is distinguished from other competitors by providing an innovative token economy of merchants, customers, validators, and wallet providers. In addition, it’s leading the industry of decentralized payment systems. The outlook of Pay Protocol, a leader of the new payment trend in the blockchain and crypto markets, is much anticipated.
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