Please click to read Part I and Part II of the “Understanding PLR Utility” article series.
Introduction
The Pillar Smart Wallet provides a powerful, decentralized key manager allowing for many keys and personas tied to a single smart contract that stores your assets. It also provides for secure, permissioned access to the Pillar Payment Network, and the frictionless transfer of any supported asset including cross chain. A decentralized relayer network and the use of meta transactions further reduce complexity. These features all work together to reduce adoption friction and increase user experience — and they are all powered by the ownership and use of a single token: PLR. The PLR token is a meta-token that serves as the primary unit of account powering the Pillar platform utility and its ecosystem of users /services.
Defining Utility
In his essay, Tokenomics — A Business Guide to Token Usage, Utility and Value, William Mougayar proposed the following categorization for token utility based on three primary tenants: role, purpose and features.
Let’s analyze the PLR token (paying particular attention to the functionality outlined in Part I and Part II of this article series) through the lens of Mougayar’s definition to better understand how it will provide utility to its owners.
Right: Owning a token bestows a right that results in product usage, a governance action, a given contribution, voting, or plain access to the product or market.
PLR Token: ✅
Value Exchange: The token is also an atomic unit of value exchange inside a particular market or app, resulting in the creation of a transactional economy between buyers and sellers.
PLR Token: ✅
Toll: Just like paying a toll to use a freeway, the token can be the pay-per-use rail for getting on the blockchain infrastructure or for using the product. This also ensures that users have skin in the game. It can include running smart contracts to perform a specific function, paying for a security deposit, or plain usage fees in the form of transaction fees or other metered metric.
PLR Token: ✅
Function: The token can also be used as a lever to enrich the user experience, including basic actions like joining a network, or connecting with users. It can also be used as an incentive, if it is given in return to begin usage or for on-boarding.
PLR Token: ✅
Currency: The token is a very efficient payment method and transaction engine of choice. This is key for enabling frictionless transactions inside these closed environments. For the first time, companies can be their own payment processors without the cumbersome or costly aspects of traditional financial settlement options. Tokens offer a much lower barrier for processing end-to-end transactions inside a given market.
PLR Token: ✅
Earnings: An equitable redistribution of the resulting increased value is part of what blockchain-based models can enable. Whether it is profit sharing, benefits sharing or other benefits (such as from inflation), sharing the upside with all the stakeholders is expected.
PLR Token: ❗️- Not directly. Only through network growth, increased utility and resulting valuation.
Features
Payment for Services
For services and businesses that are willing to accept cryptocurrencies or tokens, but do not have the infrastructure or expertise to handle processing of these assets, Pillar provides a option for merchants to accept payment, as well as manage their portfolio and customer relationships from a single interface. This is particularly relevant for existing web2 applications and services that may be evaluating a transition to blockchain, but do not want to deal with the infrastructure headache.
Network Fees
Pillar will utilize meta transactions to allow users to pay for network fees directly in PLR instead of ETH. Transaction messages are signed by the user and submitted to a secondary relayer network that is incentivized to post them on chain.
Pillar Payment Network Access
The Pillar Payment Network (PPN) is a private payment channel network. Pillar acts as the hub between all users generalizing the escrow process. By staking PLR, users gain access to the PPN enabling free, instant and private transactions.
Synthetic Asset Collateral
All users on the Pillar Payment Network are able to transfer any asset supported by the platform by drawing down against their PLR stake value. Users are able to send any asset, even cross chain, without needing to directly own it ahead of time solely through the ownership of PLR.
Native Token Payments
As Pillar begins to integrate numerous service providers, merchants and dapps natively on the platform, its likely some of those projects will require payment in their own native token. Pillar users who don’t directly own that token, can opt to pay for the service by drawing from their PLR stake value. The provider will receive their native token as payment without requiring users to purchase it first.
So how exactly will this work?
All Pillar users will start with basic features and functionality including asset management, social connections, chat, 24/7 support etc. However, in order to access the enhanced functionality outlined in Part I and Part II, users will be required to stake PLR tokens in their wallet. This stake balance can be drawn down to exchange with users and pay fees, but it will need to be topped off in order to maintain premium account features — similar to a checking account that requires a certain balance be maintained otherwise users must pay a fee for services.
Pillar users will be able to operate the wallet platform, manage assets and identity, transact with other users, access enhanced functionality, open payment channels, exchange any supported synthetic assets and cover network fees entirely using the PLR token. Technically, there will be no need for another token to participate or enjoy the benefits of the Pillar platform.
Initially, there is no staking threshold or balance required, but network value inherently increases with the size of a user’s token stake. There will also be no lock up of tokens upon staking. Users can settle their balance at any time and withdraw their tokens. By lowering the barrier to entry with no minimums or forced lock up periods, Pillar hopes to encourage as many users as possible to join and enjoy the full benefits of the platform. This will help to keep PLR tokens spread across many wallets, facilitating network effect and increasing the overall value for all users.
The core utility of the PLR token is staking which unlocks the enhanced functionality provided by the platform, particularly the Pillar Payment Network. Allowing service and network fees to be paid in PLR further reduces friction and increases user value. As more users join the network, the number of staked tokens grows decreasing the open market supply. As Pillar integrates new services and dapps onto the platform, the number of use cases increase along with token utility. A growing network of services brings new users to the platform, with each staking PLR, placing further demand on the token and increasing its value along with the network’s.
Conclusion
While its easy to label Pillar as ‘just another wallet,’ that categorization doesn’t capture the true intention or goals of the project. The Pillar Project was born out of a passion to restore personal data ownership and fiscal control back to the hands of the individual. In turn, it anticipates this will fundamentally reshape the concept of identity and our market interactions with decentralized services. Pillar’s goal is to be the most intuitive, yet powerful platform to assist you in navigating the emerging web3 frontier and the ever-evolving digital economy. The PLR token is the fuel that powers the platform and provides its many benefits. As originally proposed by David Siegel in the Pillar Project Gray Paper:
The Pillar Token is a Meta-token. [It] will power the entire ecosystem, giving an instant business model to many projects that can tie in. This is the beauty of a token: you may need a service exactly once and you won’t need to sign up for it, you’ll just pay in pillars and you’re done. It should be easy to pay for what you want, using whatever currency you like. We plan to make it so you can pay in pillars for everything.