Chapter 11: Decentralized Payments
Despite decentralized payments being possible through transfers of ETH or DAI, there is still room for improvement—achieving cheaper, faster transactions, scheduled transfers, conditional payments, and standardized invoice formats, among others. Notable projects involved in the decentralized payment space include Lightning Network, Request Network, xDai, and Sablier.
In this chapter, we will explore the project Sablier, which is intriguing and has the potential to address significant social issues faced by vulnerable groups.
Sablier
What is Sablier?
Sablier is a payment streaming application that allows for real-time or very short interval (measured in seconds) fund withdrawals between multiple parties. Think of it as getting paid hourly for consulting work, where daily contractors receive their wages in real-time as they work. Just as you can listen to music on Spotify, you can also process (stream) funds in real-time on Sablier!
What does streaming payments mean?
Instead of waiting for fixed payment periods (like monthly or bi-weekly), payments are made in real-time during the time frame defined and agreed upon by both parties. With Sablier, recipients can receive their wages in real-time and withdraw them whenever needed.
Why is this important?
We believe Sablier has the potential to help those who live paycheck to paycheck. These individuals are the most vulnerable to wage delays, which can make it difficult for them to purchase essential food items even if the delay is just a few days.
When this happens, they often rely on payday loans—a type of short-term, unsecured loan with very high interest rates (up to 500% APR^15^). The high-interest rates and insufficient income make payday loan providers particularly susceptible to spiraling debt issues. In the U.S., many people have been arrested for failing to repay loans^16^.
Trust
For new remote employees, there needs to be trust that their new employer will pay them for the work they do, making streaming payments particularly useful. When signing a contract through Sablier, both parties can confirm that wages will be paid and verified in real-time.
Timeliness
Traditionally, salaries are paid monthly or bi-weekly, but there may be times when funds are needed at any moment—streaming payments can help achieve this. Employees receiving wages do not have to wait until payday to get compensated—they can withdraw all the earnings they have accrued so far to address emergencies. Additionally, this can help avoid wage delays. Even if employees fully trust their employers, streaming payments ensure that funds will be fully paid by the end of the period!
How it works: an example
Imagine you provide online consulting services at a rate of $60 per hour ($1 per minute). First, you might consider the following options:
- Requesting an upfront payment, which may cause issues for some new clients, or
- Delaying payment, meaning you have to trust the client, or
- Using an escrow service/platform to protect both parties for commission.
However, with the advent of streaming payments, you no longer need to trust either party. You can charge by the minute to ensure that both you and your client receive corresponding value, and if they try to evade payment, you only lose the cost of one minute's time. Essentially, the "trust" aspect of online transactions has shifted from individuals to immutable code (blockchain and smart contracts).
There are already practical use cases—this is exactly how digital currency and blockchain consultant Reuben charges clients for 30 minutes of consulting.
This is Sablier—if you want to start using or testing it, we provide a step-by-step guide on how to use Sablier for streaming payments. Alternatively, you can move on to the next chapter for more information about the next DeFi application.
Sablier: Step-by-step Guide
Step 1
- Visit the website: pay.sablier.finance
- Log in using your Ethereum wallet address
Step 2
- Select a token from the list
- Enter the amount (refund will be issued if the payment stream ends early)
- Enter the ENS domain or Ethereum address
- Choose the duration, for example, 30 days
Step 3
- Confirm the transaction
Step 4
- After the blockchain verifies your transaction, a payment link will be displayed
- Share the data with the owner of the previous ENS domain/Ethereum address
Recommended Reading
- Sablier v1 is Live (Paul Razvan Berg)
https://medium.com/sablier/sablier-v1-is-live-5a5350db16ae
- Sablier The protocol for real-time finance (State of the Dapps)
https://www.stateoftheDapps.com/Dapps/sablier
- Building with Sablier (Sablier)
https://twitter.com/SablierHQ/status/1214239545220386819?s=19
- DeFi Dive: Sablier -- the protocol for real-time finance on Ethereum https://defipulse.com/blog/defi-dive-sablier-protocol/
