One of the biggest components of what makes DeFi so exciting is the notion of autonomous real-time payments. Whether this is the form of interest from the DSR or cToken on Compound to staking rewards on platforms like Synthetix, DeFi products have continued to propagate the potential for smart contracts to handle the distribution of income opportunities.
More recently, we say the introduction of Sablier – a protocol for real-time payments.
Sablier leverages smart contracts to offer a continuous, autonomous, trustless payment solution. This means that you earn money each second, for the entirety of the life of an agreement.
Remember when I mentioned a while back that with smart contracts we should be able to just replace recurring payments with continuous streams? Looks like someone actually did it… https://t.co/ihu5L1emnc— vitalik.eth (@VitalikButerin) December 18, 2019
How Does it Work?
To get started with Sablier, head on over to pay.sablier.finance.
From here, you are prompted to connect to your web 3 wallet of choice (MetaMask for example). Once connected, users can create a “stream” using supported assets that currently include stablecoins like DAI, SAI, USDC, cDAI and cUSDC. After selecting the amount you wish to pay with the recipient’s address and duration of the stream, a smart contract is created and your real-time payroll is underway.
Upon successfully completing the transaction, Sablier returns a custom link which provides an intuitive mechanism to view the status of your payout.
The receiving party can choose to withdraw funds from the contract at any time while the issuer may choose to halt the payout in the event that the recipient is not holding up their end of the bargain.
Why Does This Matter?
As we just started alluding to above, Sablier provides an interesting mechanism for game theory amongst two parties. Whereas today it can be somewhat difficult to come to an agreement on when someone should be paid for their services (i.e. X% upfront, 1-X% upon completion), Sablier provides a way for both parties to commit skin in the game.
On the recipient’s side, funding is posted upfront, meaning they can be confident that so long as they complete their work as intended, they’ll receive what they were promised. This also provides a mechanism to withdraw funding throughout the course of an agreement, meaning that any sunk costs can be covered immediately, rather than retroactively.
On the issuer’s side, Sablier payments provide insurance that in the event a recipient is not living up to their end of the agreement, funding can be withheld or canceled until progress is being made. Most of us have been in a situation where the output isn’t as desired and it becomes incredibly stressful to ask for a refund or try and remedy the situation. With Sablier, progress can be tied to funding in real-time, meaning that it’s much more feasible for an issuer to incentivize the receiver to head their request (in order for them to receive their full payout).
When Would I Use Sablier?
From a high-level, Sablier is great for any situations in which services are being provided over a finite amount of time. Some use-cases of this include:
Beyond these examples, some more niche use-cases may include:
What’s important to remember here is that Sablier is simply a tool-kit for any variety of uses. The product is by no means limited to just paying salaries, this is just the first *logical* iteration of it.
One of the great things about DeFi is the notion of innovation surrounding concepts like Sablier. We can easily envision a future in which Sablier’s contracts are leveraged by other products to create unique and interesting schemas.
For example, one may choose to use a form of Sablier to pay DAO shareholders real-time salaries for the duration of the time they spend putting together a proposal or doing due diligence with a grant or funding recipient.
Furthermore, Sablier could serve as a more tested solution for funding early-stage products. Rather than giving a team a large lump sum of cash, funders can work directly with recipients to illustrate a clear road-map. In this sense, the recipient is motivated to complete their task while the funder can rest assured their funding is being used to host open-bar boat parties.
For those interested in learning more about Sablier and how to integrate it into your product, we encourage you to check out their documentation here.
Cooper is the Editor of DeFi Rate and an active contributor to leading DeFi media outlets like The Defiant, DeFi Pulse, and Bankless. He works with early-stage teams through Fire Eyes DAO to incubate governance models and grassroots community development. He is an ambassador to Set Protocol and an author of a weekly publication called Token Tuesdays. To stay up with Cooper, follow him on Twitter.