Deep dive into the Paycrest protocol architecture, participants, and core components
The Paycrest protocol is a decentralized payment routing protocol designed to bridge the gap between digital assets and real-world financial systems. This overview covers the core architecture, participants, and key components.
Paycrest exists to solve the fundamental problems with cross-border payments in emerging markets:
High costs from legacy intermediaries and fragmented liquidity
Slow settlement due to closed banking networks
Poor user experience with complex compliance requirements
Limited accessibility for underbanked populations
Our solution enables near-instant fiat/stablecoin conversion via a decentralized network of liquidity provider, with zero transaction fees for senders and embedded compliance through user-friendly flows.
Our mission “To accelerate the creation of democratized payment systems of the future” is reflected in every aspect of our protocol design:
Decentralized Control
No single entity controls the flow of funds or user access. The protocol operates through a network of independent participants.
Universal Participation
Anyone can participate as a sender, provider, or developer. No gatekeepers or exclusive access requirements.
Transparent Operations
All transactions are visible on-chain with complete audit trails. No hidden fees or opaque processes.
Local-Global Integration
Local payment solutions work seamlessly with global networks, preserving local context while enabling global reach.
This mission drives our technical decisions, from the multi-chain architecture to the developer-friendly APIs that make integration accessible to everyone.
Sender creates a payment order on the Gateway contract with recipient details, amount, and rate.
2
Aggregation
Aggregator indexes the order and matches it with suitable Providers based on rates, limits, and availability.
3
Provider Assignment
One or more Providers are assigned to fulfill the order, with the order potentially split across multiple Providers.
4
Fulfillment
Providers execute the payment:
Offramp: Provider delivers fiat to the recipient via PSP integration.
Onramp: Provider receives fiat from the sender via local payment rails.
5
Validation
Offramp: Provision node validates fulfillment by checking the status of the fiat transfer via PSP APIs.
Onramp: Aggregator validates fulfillment by confirming the onchain stablecoin transfer to the recipient.
6
Settlement
Offramp: Smart contract releases escrowed stablecoins to the provider after successful validation.
Onramp: Fulfillment, validation, and settlement occur in one step: after the provision node confirms fiat receipt, the stablecoins are released onchain to the recipient.
7
Refund
If the order cannot be fulfilled, funds are automatically refunded to the sender. No manual dispute process is required.
The Paycrest protocol implements a zero-fee experience for senders:
Sender fees: Optional fees that sender businesses can charge to their users
Provider fees: Competitive rates based on market conditions
Protocol fees: Fees paid to aggregators for order routing and coordination
Network fees: Gas costs for blockchain transactions
Providers earn fees by:
Bid-ask spreads on currency pairs
Volume-based incentives for high-frequency providers
Quality bonuses for reliable fulfillment
Geographic premiums for underserved markets
Fee Structure Clarification: In the current beta phase, Paycrest operates the only aggregator, so aggregator fees are paid to Paycrest. As the protocol scales, multiple aggregators will compete for order routing, similar to how Ethereum validators earn fees for adding transactions to blocks. This creates a decentralized marketplace where aggregators earn fees for providing order routing services.
If an order is not fulfilled, it is automatically refunded. The aggregator does not handle disputes directly. If an order is stuck, communication between senders and providers may occur via a decentralized messaging protocol (e.g., XMTP).
Direct contract interaction (for advanced/offramp use cases)
The Paycrest protocol is designed to be both Web3-native and accessible to traditional financial applications. The modular architecture allows for different deployment models while maintaining the core benefits of decentralization.