Top Decentralized Payments Projects to Watch in 2021
Payments are big business.
According to McKinsey, the global remittance (read: payments) sector took a projected $7-billion hit in 2020 due to sluggish economic activity stemming from COVID-19. A significant drop, to be certain, but one that will certainly not cripple a payments industry that took in $2 trillion in revenues in 2019.
As upended as lives have been in the past year, one fact remains true: people need to pay. And, as renters, shoppers, and human beings at large become increasingly concerned with health and convenience, digital payment systems play an increasingly critical role in commerce.
The adoption of cryptocurrency, and the desire to use cryptocurrency for day-to-day transactions, will also continue to drive innovation in the digital payments sector. We are already seeing that payments are a significant feature of the decentralized finance (DeFi) ecosystem.
We are betting that the following decentralized payments projects will reduce user fees, make cryptocurrency a more viable medium of exchange, foster more democratic payment platforms, and continue to build the cache of DeFi in 2021.
As a layer-2 scaling platform, Celer Network is a sort of backbone for those who want to build off-chain transactions into their applications. Those who use Celer Network to build blockchain applications can make smart contracts, and smart contracts specifically used for financial (crypto included) transactions, part of their product.
Developers using Celer Network also have access to various dApps which are part of the Celer Network ecosystem. Celer Network exists on top of existing blockchains (this is what “layer-2” refers to) and can be a way for developers to incorporate payments and other features into their blockchain-based product.
Matic Network is a payment network that scales the Ethereum blockchain using secure sidechains. The goal, like other scalability solutions, is to increase payment transaction speeds without compromising the fundamental security of making and receiving payments on the blockchain.
All transactions made on the Matic sidechain are ultimately logged on the Ethereum blockchain. However, the off-chain sidechain allows users to engage in transactions more quickly than they could on the Ethereum blockchain. DApp developers can integrate payment services into their application using the Matic Network, getting the benefit of higher transaction speeds and lower fees without taking their payment systems completely off-chain.
The OMG Network (formerly OmiseGO) is a layer-2 scaling solution for those building decentralized applications on the Ethereum blockchain. The Network proposes several use cases for “transferring value on Ethereum,” with payments and settlements being the leading use case for the OMG Network.
The Network's promise is high speed transactions at 1/3rd the gas fees of Ethereum. It also supports multiple transaction types like one-time and recurring payments and allows for automation using smart contracts. Additionally, the OMG Network can facilitate payment-adjacent services like loyalty and reward payments for users of dApps that incorporate such features.
Sablier is a “money protocol” and a general-purpose protocol for streaming money, specifically, ERC-20 tokens, for those in decentralized finance. Built on the Ethereum blockchain, Sablier allows companies to manage their payroll, and employees to access their paychecks, using cryptocurrencies.
Smart contracts handle payments to recipients, “streaming” money to them as they earn it. Rather than waiting two weeks (or another period of time) for money to come through a check or direct deposit, Sablier puts money in people’s wallets in real-time. Hence their catchphrase “Payday, Everyday”. Developers can integrate the Sablier protocol into their dApps.
The Lightning Network is another layer-2 protocol facilitating payments in the decentralized finance space. At the time of writing, there was more than $22 million in assets locked into the Lightning Network. It is a decentralized network, as it relies fundamentally on smart contracts, and is powered by the Bitcoin blockchain.
Users can engage in payments that are off-blockchain through Lightning Network nodes. By doing so, they are privy to faster transaction speeds, but all transactions are underpinned by the Bitcoin blockchain. This blockchain underpinning provides the immutable record and security that completely off-chain cannot provide.
xDAI STAKE is “The first-ever USD stable blockchain and multi-chain staking token”. That is, it is a payment network for the stablecoin Dai. STAKE is the staking token through which those who contribute blocks (which provide transaction security) to the xDAI ecosystem are rewarded for their efforts.
The selling point for xDAI STAKE is a user-friendly payment network for those who want to send or receive payment through the dollar-pegged stablecoin Dai. xDAI STAKE is not limited to DAI, however - users can bridge any token over to the platform. It also offers transaction speeds as low as five seconds and the opportunity for consensus providers to receive STAKE tokens as compensation.
Groundhog is an Ethereum-powered plugin that facilitates recurring payments through cryptocurrency. It is a “crypto payment gateway for merchants” who offer their customers subscription-style goods and services. Merchants can use the Groundhog plugin to offer clients a user-friendly setup for recurring payments in ERC20 tokens and stablecoins.
Customers can make their recurring payments by funding a Groundhog wallet through other crypto wallets, including but not limited to MetaMask, or their bank account. The plugin is marketed as a way for businesses to remove all barriers to payments by making one-time or recurring crypto payments easy.
Request is a crypto payment solution catering specifically to individuals and businesses in the DeFi space. With this DeFi ethos in mind, Request offers users various crypto payment services that are fashioned in the peer-to-peer mold. All Request features are built with regulatory compliance in mind.
Users of Request can create customized invoices, request one-time or recurring payments using those invoices, request partial payment, and have all of their incoming and outgoing payments recorded on the blockchain. Developers can use various tools from the Request network within their own dApps.
zkSync is a relatively new payment protocol (live as of June 2020) that is worth monitoring in 2021, which could be a critical year for the Ethereum-based payment protocol. It is a scalability solution for the Ethereum blockchain (as are so many of the protocols on this list), aiming to increase transaction speed and decrease costs by taking transactions off-chain.
zkSync offers instant payment confirmation and finality on the Ethereum blockchain within 10 minutes of confirmation. It also promises that funds transferred through the zkSync protocol are just as safe as those transferred on the underlying Ethereum blockchain.
Connext is a layer-2 transaction protocol that provides peer-to-peer payments in an open-source environment. Connext allows users to program and execute transfers of “any currency” using the Ethereum blockchain. The transfers are made off-chain, but any disputes about a transfer are resolved through the Ethereum blockchain.
DeFi Pulse explains that the amount of value locked in V1 of the Connext network has declined, but they have not taken into account the migrations into V2 or, more recently, V3. This is worth monitoring to see whether Connext experiences a rebound in 2021.
StablePay is a payment platform with the mission of reducing volatility. Built using the Ethereum blockchain, StablePay allows users to pay and receive payment online using tokens. Users who receive payment through StablePay will be issued DAI, a stablecoin pegged to the value of the U.S. dollar.
The platform accommodates ERC20 tokens and Ethereum. StablePay is decentralized, with smart contracts governing its operation. Developers can embed the StablePay widget into their website.
Which decentralized payments platform will occupy the role of Venmo or Cash App for the DeFi sector?
As digital currencies continue to expand their footprint as an investment vehicle, adopters may feel increasingly comfortable using their crypto stakes for practical purposes like purchasing Christmas gifts or ordering lunch. Decentralized payment solutions will serve to make crypto payments in all sectors of commerce as seamless as possible.
2021 may be a critical year for DeFi payment solutions. Certain platforms and protocols may become market leaders in crypto payments, while others may prove too clunky or impractical and devolve from promising concepts or upstarts to relics of 2020.
Look for the decentralized payment projects on this list to further distinguish themselves as viable DeFi solutions or to fall by the wayside in 2021.