How it works

Understanding the difference between building your own multi-chain payment stack with bridges and using Paygrid's chain-abstracted infrastructure is crucial. Here's how Paygrid flips the payment process in favor of operators who do the hard work of facilitating the payment:

What Is Chain Abstraction?

Chain abstraction means providing a consistent user experience even when interacting with multiple blockchains. With Paygrid, the focus of chain abstraction is on enabling payers, payees, and operators to interact with each other without worrying about the underlying blockchain networks involved. Payers simply sign a chain-abstracted payment intent (CAPI), for example:

  1. Payer Initiates Payment:

    • Wants to pay $100 USD.

    • Chooses preferred token and network (e.g., Token A on Chain A).

    • Signs a single transaction without gas fees.

  2. Operator Processes Intent:

    • Packages and sends the chain-abstracted payment intent (CAPI) to Paygrid.

    • CAPI includes payee details, destination, and any additional operations (e.g. calling your contract on settlement).

  3. Paygrid Executes Payment:

    • Payee is debited for Token A on Chain A.

    • Payee receives Token B on Chain B.

    • Operator receives margin fee on-chain if set.

    • Any additional processing logic is executed off/on-chain if present.

How does Paygrid enable chain-abstracted payments?

Paygrid is an accumulation of various important developments in Web3. It combines intents, solvers, and payment-specific optimizations done across the entire stack. Paygrid is designed to protect the operators, payers, and payees' interests from the moment of signing the CAPI all the way to final block inclusion as it navigates its way through the dark forest.

  1. Intent Submission:

    • Operators send a CAPI to a Paygrid node, not directly to a blockchain.

    • We offer a Paygrid node by default with our SDK hosted by us, but you can run your own self-hosted node for more advanced benefits and control.

  2. Intent Processing:

    • Paygrid node breaks the CAPI into execution intents.

    • Intents are batched for efficiency.

  3. Solver Competition:

    • Solvers compete to process intents.

    • Solvers factor in costs and desired profit margins.

  4. Optimal Execution Selection:

    • Solver with the best execution wins, considering:

      • Lowest cost to the user.

      • Speed of execution.

      • Reputation and past performance.

  5. Final Settlement:

    • Paygrid captures the payers funds.

    • Solver executes the transaction on the destination chain.

    • Funds arrive to the payee.

    • Solver captures the payers funds at a later time optimizing for efficiency.

    • Post-execution logic is handled if present by Paygrid.

How are chain-abstracted payments better?

  • Better User Experience:

    • Simplified Process: Connect wallet, choose token, sign intent with no gas fees required.

    • Gas Abstraction: Operators have freedom to choose who will cover the fees and it can be paid by the same payment token or another ERC20.

    • Wallet-Agnostic: Works with existing EOAs and smart contract wallets.

  • Pull Payments Model:

    • Infrastructure Handles Complexity: Users aren't burdened with bridging or swapping.

    • Instant Action: Funds are fronted instantly, settled later.

  • Intent-Based Transactions:

    • Focus on Outcomes: Specify desired results, not execution paths.

    • Cross-chain by default: Allows for optimal routes and better execution that are generally available only to the most well-funded and sophisticated players.

  • Optimal Execution and MEV Protection:

    • Private pool: Protects from negative MEV attacks.

    • Competitive Solving: Leads to better execution and pricing.

    • Batched Settlements: Reduces costs and increases efficiency.

  • Lower Latency and Failure Rates:

    • Avoids Bridge Delays: Transactions aren't directly interacting with fragile bridges.

    • Dedicated Nodes: Transactions are processed through dedicated Paygrid nodes that do nothing else but your payments for improved reliability.

  • Atomic Execution of Intents:

    • All-or-Nothing: Either the entire intent is executed, or nothing happens.

    • User Assurance: Prevents partial executions and ensures consistency.

    • Fallback Mechanisms: Execution defaults to standard methods, matching current industry practices.

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