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Pay-in Exchange Broker Alpha

We’re excited to publish the first version of the Exchange Broker that we’ve been working on for a while in parallel to the RTA in an effort to provide a complete second layer eco-system.

https://github.com/graft-project/exchange-broker

This is the first version of the exchange broker which aims to facilitate a scenario where the merchant or merchant service provider perform the accept, exchange and payout functions. (Future versions of the broker and other components will become further decentralized and separate those functions among other participants in the network)

The broker can run on the RTA Alpha testnet and comes with a nice demo application emulating a POS/terminal accepting testnet BTC and ETH for payment.

Join the Exchange Broker Telegram channel for community-based support and idea exchange.


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Upcoming Wallet Redesign


There are lots of cool features we’re planning for GRAFT and GRAFT wallet in particular. These changes will be rolled out over time as the supporting functionality develops inside the GRAFT network and around it, but we wanted to give you a sneak preview of things to come. 🙂

Improved and Ehnanced Payment Workflow

Those QR codes that you’re scanning off POS actually carry product information inside of them that the wallet can display to the user and store for future recall and analysis.

Rich Transaction Logging

All transactions will be logged – both the sale (RTA) and transfer transactions. What’s more, the sale transactions will store the metadata about the transaction for further analysis.

Improved Login Usability

We hear you – the login needs to be fast and easy, passwords are evil. 🙂

Better Wallet Management

Being able to manage multiple wallets without having to reset the wallet every time.

P2P Transfers connected to Address Book

Ability to launch and manage SuperNodes and Exchange Brokers right from the App

We want to make launching and managing the nodes and brokers super-easy and accessible to everyone.

Integration with CryptoFind

so you can find those locations that accept digital currencies

Integration with ColdPay Wallet / Payment card

Oh, and last but by far not the least, multisignature support in the underlying blockchain and its innovative use with the wallet means that the phone app can still be light without sacrificing security.

As usual, we welcome constructive comments from the community around wallet design and other topics!

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Enterprise Perks and Rewards on GRAFT Blockchain

Paypal recently revealed that it was playing around with payment blockchain for its own internal “perk and rewards” purposes. Quoting the article,

“PayPal’s new blockchain platform rewards employees in crypto-tokens, but they only have value inside of PayPal and the platform. Staff can earn tokens by joining innovation programs and contributing ideas, they can also trade tokens. The token transactions will be recorded on the platform’s blockchain ledger and can be redeemed for over different 100 rewards, or experiences. These range from poker tournaments with PayPal vice presidents, a morning of martial arts with PayPal CEO Dan Schulman to borrowing the dog of the head of the investor relations.”

We at GRAFT have long seen this as one of the most viable early use cases for a payment blockchain adoption by the enterprise, and it (along with merchant loyalty programs) was the impetus behind GRAFT Network’s plans for secondary tokens and virtual private chains.

Going down this path what Paypal and others will likely discover the following:

  1. They will struggle with centralized vs decentralized approach to the blockchain. On one hand, yes, they can spin up a Hyperledger and do their own hosting, but they will be responsible for the security and the uptime – and the stakes are high as this is REAL money that can be traded for goods and services

  2. They will struggle with transaction speed and privacy Should this blockchain be public where everyone can see where their coworker is spending their perk dollars, or should it be private? The answer most likely is that privacy IS important, which rules out Ethereum token solutions. Speed wise, even though Hyperledger for instance provides a good TPS, it’s not a GUARANTEED TPS and is subject to bottlenecks.

  3. They will have to figure out how to store and accept the tokens, meaning that they will have to develop their own wallet and POS/Terminal applications and web plugins.

  4. They will face a question of portability Should these tokens be exchangeable for good and services outside of the immediate “walled garden” of perks (think cafeteria credits, child sitting credits, Uber credits, etc)?

  5. Finally, they will have to think about maintainability People inside corporations leave and move to other jobs, projects get deprioritized, the organizations goes through growth and cuts. Maintaining a in-house system is a big commitment for an organization.


A payment network like GRAFT makes for a good solution for this use case as it provides support for the company (aka merchant) tokens and private overlay networks while leveraging the robust features of the underlying POS-compatible permissionless blockchain network, ready made apps (POS/terminal and wallet) that can be customized by the commercial entity to their needs and branding, and an infrastructure of service brokers that can provide exchange capabilities and various other services and applications.

We invite Paypal and others who are considering offering a “perk money” program based on a blockchain designed for payments to explore GRAFT Network as a potential solution.

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How GRAFT Is Similar To And At The Same Time Different From Visa And Other Payment Card Networks (Part 2)

Slava Gomzin, Co-Founder of GRAFT

In the previous post we reviewed the similarities between GRAFT and plastic card networks. Now let’s review the differences.

Difference #1 – Decentralization

There is such a key property of GRAFT Network that fundamentally differentiates it from plastic cards. Unfortunately, not all buyers realize and appreciate this property immediately because it is not that obvious to the average consumer, especially in developed countries. And let’s be completely honest with ourselves here – not everyone cares about this property – it’s not until you find yourself in, not before your get into a situation that it suddenly becomes very important. I am talking about decentralization.

The card processing consists of several elements represented by multiple corporations: payment networks (Visa, Mastercard, American Express, etc.), issuing and acquiring banks (such as Chase, Bank of America, etc.), and payment processors (such as First Data, Heartland, etc.). Each corporation has its rules and compliance to national governments, which means they can reject any merchant or buyer, anytime. They can put you out of business, make you “persona non grata” – without any reason, notice, or explanation, just because you don’t fit their requirements – by declining your credit card application, decreasing your credit limit, locking your funds, or cancelling your merchant account. Millions of people live behind the “invisible wall” built by those corporations and governments, without access to banking system, i.e. without ability to use credit/debit cards.

Unlike plastic cards, GRAFT Network does not belong to anyone. GRAFT is more a protocol rather than a product due to its open source nature and peer-to-peer architecture. Therefore, the buyers and merchants cannot be either rejected or approved: they simply connect to the network (by downloading free apps) and start using it, no strings attached. But remember that unlike typical ”bare” cryptocurrencies, the features #1 – 4 from above are still there to satisfy both buyers and merchants standards on the same level as they are satisfied by payment card processors, only without centralization.

Difference #2 – Privacy

Another key difference is somewhat related to #1; however, it is completely separate feature, which is achieved by using special additional technical means rather then just solely based on the fact that GRAFT is independent from corporations and governments. What’s really similar to #1 is the fact that for some people this property may not been important at first glance – again, until you get into specific situation when it does become important. This property is absolute privacy provided by GRAFT Network to both buyer and merchant. Unlike plastic cards and most cryptocurrencies, GRAFT’s sender address, recipient address, transaction amount, and transaction fee amount are invisible to everyone except for the sender and recipient themselves. Although payment card networks do not expose the details of transaction to the public, this data is accessible by employees of multiple corporations, can be shared with governments, and can be stolen by hackers. Unlike plastic cards, no employees or hackers can access GRAFT transaction data which is encrypted forever – thanks to strong cryptography and underlying blockchain’s CryptoNote protocol.

Difference #3 – Security

Security is another thing that differentiate GRAFT Network from plastic cards. I spent years working on security of plastic cards payments . This technology was created in 1960s, and improved in 1990s by introducing EMV – “chip and pin” cards. But back then, even in 1990s, people were not very familiar with terms like “cybersecurity” or “hacker”, so the technology was not designed with security in mind. The result – a multi-million industry called “credit card fraud” that flourishes to this day.

I am not saying cryptocurrencies don’t have security issues at all – everything related to computers and network has potential security issues. However, if you manage your wallets and keys properly, the security of GRAFT for both buyers and merchants is much stronger than plastic cards: no chargebacks, no lost or stolen cards with the primary account number embossed on the face of the card, and no hacked point of sale systems with millions and millions of payment card records stolen and sold on dark market.

Difference #4 – Technology

Let’s not forget about technology – payment cards use centralized networks, relational databases, and centrally managed customer and merchant accounts. GRAFT uses decentralized peer-to-peer network, distributed blockchain database, and random wallet addresses which are not linked to customer identities.

GRAFT “inherits” all the positive features of traditional payment card processing networks while offering solutions to negative sides of centralized, insecure, olding technology. Give it a try!

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How GRAFT Is Similar To And At The Same Time Different From Visa And Other Payment Card Networks (Part 1)

Slava Gomzin, Co-Founder of GRAFT

GRAFT Network is often compared to credit and debit card processing networks such as Visa, Mastercard, and other plastic payment brands. Most of the time such a comparison is focused solely on the differences while in fact GRAFT and payment card networks have some (good) things in common. In this post I will try to describe both similarities and differences.

Let’s start with the good things that both GRAFT and plastic cards have in common. GRAFT “borrowed” many good features from payment cards, which have been tried and tested for over 50 years, and become a defacto standard for payments in that time.

Similarity #1 – No cost to the user

Traditionally in cryptocurrency, transaction fees are paid for by the buyer – a practice that goes against the grain of payment workflows in the global merchant space, where transaction fees get charged to the vendor. Just like with plastic cards, GRAFT Network does not charge the buyer a fee for processing a payment transaction. This difference might seem to be insignificant, but in reality it is one of the most important features which positions GRAFT on the right side of the user experience battle. After so many years of plastic card payments, where the buyer is not even aware of transaction fees paid by merchants, Bitcoin and other crypto started “forcing” consumers to pay “network” fees for each transaction including in-store purchases. This setup creates an inhibition to spending and is one of the reasons cryptocurrencies are still not widely supported by mainstream consumers as a payment method at checkout. In some cases, the fees reach an incredible amount, often making the purchase itself illogical. Would you buy a cup of coffee that costs $3 and pay another $1 (extra 33%) as a “network fee” if you can pay just $3 by credit or debit card? GRAFT resolves this problem by charging the merchant instead of the buyer, just like plastic cards do, leaving it to the merchant to price their goods and services accordingly

Similarity #2 – Predictable transaction costs

There is another, more serious problem with cryptocurrency transaction fees: inconsistency. Retail is a tough business with small margins, and it likes predictability. Retailers want to be able to know in advance what part of the revenue they take home and what part they pay to the payment processor. Payment card brands recognized this issue many years ago and resolved by setting very consistent rules. The fees may vary based on amount and type of transaction, but they always can be calculated in advance. The most important rule is that there is always a rule. For example, the processor can charge the merchant 3% + $0.20 for each transaction. If the merchant sells its product for a total of $10,000 today to 100 customers, they know they will pay $320 in transaction fees.

Unlike payment cards, blockchain-based cryptocurrencies usually charge transaction fees based on the size of transaction record in kilobytes. It is impossible to predict the fee as the buyer’s wallet compiles the payment “on the fly” from a number of outputs of previous transactions which varies from wallet to wallet. If GRAFT only “flipped” the fees burden from buyers to merchants but kept the same common cryptocurrency approach to fee calculation, it wouldn’t work for merchants. So GRAFT made the fees predictable, dependant on transaction amount just like payment card brands. The authorization cost of a GRAFT Network transaction (paid to the supernodes supporting the network) is 0.5% of the transaction amount while the settlement (paid to the miners) is a fixed fee of 0.1 GRFT (more details about GRAFT fee structure can be found here). This helps bring predictability, and thus stability to the process, making accepting crypto payments more attractive to the merchants.

Similarity #3 – Special transaction types.

When we go deeper into the specifics of retail – especially the hospitality and gas station business – there are more exotic features of payment systems, and many people, including developers of other cryptocurrencies, have not developed around their existence, leaving big holes for cryptocurrency use in these areas. Most of us, however, are familiar with features such as pre-authorizations from our day to day life as consumers. Payment card brands developed these features because they were vital for many businesses to replace cash payments. Cryptocurrency designers, however, have underestimated the importance of brick-and-mortar business requirements because they focused mostly on online payments.

When you swipe your card at gas station to fill your car’s gas tank, your card is not charged immediately, but instead it is preauthorized for a particular amount set by the merchant or its payment processor; for example, $50. Preauthorization (aka “pre-auth”) ensures that your account has enough money to pay for the gas, up to $50, but it does not charge your account. Technically, you still have the $50, but temporarily you cannot spend it because pre-auth decrements your spending limit. It’s done this way because the pump does not know in advance how much gas will enter your tank (and how much you will have to pay for it). Once you’re finished fueling, the pump sends the exact amount to the network and finalizes the transaction. This operation is called completion because it actually completes the transaction. Completion unlocks the funds previously locked by pre-auth and charges your account for the exact amount. So if you owe the pump $25 for the gas, it will cancel your $50 hold and debit your bank account balance by $25 (or increase your available credit in the case of a credit card).

“Pre-auth”/”complete” mechanisms are also applicable in other big industries such as hospitality – when you check in to the hotel your card is pre-authorized for the approximated cost of your entire stay plus some additional amount for unexpected expenses. When you check out, your room your card is “completed” for the exact amount including your mini-bar charges. It sounds simple but there is a whole infrastructure behind the scenes supporting this. All existing cryptocurrencies lack “pre-auth/complete” functionality and therefore cannot be used as a method of payment at gas stations, hotels, and many other businesses. GRAFT fills this gap and provides a “pre-auth/complete” mechanism similar to plastic cards – thanks to the supernode infrastructure.

Similarity #4 – Real Time Authorizations

Finally, let’s talk about the most important feature provided by payment cards (this could very well have been listed at #1 but it’s important to emphasize the previous three as they are big challenges for the cryptocurrency paradigm that should not be overlooked). Payment cards work remarkably fast when it comes to authorization and preauthorization. Typically it takes a fraction of second (up to several seconds if their processor is slow) to get authorization or pre-authorization from Visa or most other card processing networks. It takes from several minutes to several hours to confirm payment with most cryptocurrencies. Bitcoin itself was designed for online transfers of funds where authorization time is not a critical factor. Bitcoin is more like a bank ACH transfer than a credit card payment. Most cryptocurrencies have followed Bitcoin’s design and inherited this “feature”. In the reality of brick-and-mortar stores, however, time is money, literally, as for these merchants more time spent on every payment means less customers (less revenue) and more cashiers (more expenses).

GRAFT Network processes instant authorizations and preauthorizations using special technology called Real Time Authorizations (RTA) which is accomplished through GRAFT’s decentralized supernode topology. Therefore, payments processed through the GRAFT Network are suitable for brick-and-mortar merchants.

This part is concluded now; in the next post, which will be published tomorrow, we will discuss key differences between GRAFT and plastic card networks. After all, there must be something fundamentally different in the way GRAFT processes payments, otherwise, why would anyone forget good old plastic card and rush to pay with crypto via GRAFT Network?

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CASH, CREDIT, OR GRAFT?

One good question that comes up often is

Do people really want to pay with cryptocurrency?

Some make an argument that people see cryptocurrency as a long term investment and don’t want to spend it on daily items, others say that merchants might be reluctant to accept crypto due to the regulatory uncertainty, yet other say that people are unlikely to pay with crypto due to its volatility.

Truth is, they all have a point and there will be limiting factors on crypto for payment adoption (at least for some time).

However! We want to point out that GRAFT’s main purpose in life is not crypto acceptance per se – but providing a decentralized credit/debit payment network alternative that doesn’t rely on issuing banks and spreads the fees across the network. Crypto acceptance makes a good first use case, but it doesn’t end there. From the user’s point of view it’s a way to have an alternative to traditional credit / debit cards with underlying privacy, reasonable rates, loyalty program consolidation, etc.

Here would be a typical decision tree that a user would be facing at the check out:

A community member had this to say on this topic, which is pretty on point:

Firstly, Graft is not a “Crypto POS” it’s a decentralized payment network that can be used at the POS or as an online payment gateway. We don’t need the widespread adoption of Cryptocurrency as a medium of exchange for the Graft Network to be successful. For example, if the Graft Network ‘today’ was doing just 0.1% of the Visa Network’s transaction, then Graft SuperNodes would be returning close to 300% pa ( SuperNode owners would make exceptional income from SN rewards, thus the Graft price would rapidly increase). However, keep in mind that we are not just going after Visa, we are going after Mastercard, Amex, Diners, Paypal, Western Union …the list goes on.

2018 has seen a rise in the popularity of stable coins to address the volatility issue. There are now over 57 Launched or pre-launched stable coins. Because Graft is a payment Network, not just a payment processor ($GRFT coin acts like a utility token and becomes a gateway to accept other Cryptocurrencies) – so the Graft Network could, in theory, facilitate payment from any cryptocurrency, thus there’s no reason it can’t support a whole basket of stable coins (it just requires the backing of an exchange broker/ liquidity provider). There are also new gen coins coming out with Inflationary monetary policies (eg GRIN) which are designed for the purpose of becoming a medium of exchange (to mimic fiat currencies) . Soon the volatility risk or purchasing/receiving Crypto payments will be a thing of the past. Merchants will also be incentivized to receive Cryptocurrency due to lower fees….

As for consumers: A lot of people have this US/western mindset and still have lots of faith in government-backed fiat currencies. However, go ask the people of Venezuela, Argentina or Turkey how safe they feel holding their own Government backed currencies. If you look through the history of fiat currency, they always collapse/end in hyperinflation. It’s just a matter of time. Sure, widespread adoption of cryptocurrency as a medium of exchange could be years or decades away. However, as already mentioned, we don’t need widespread adoption for the Graft Network to be successful, we need less than 0.1% (between Visa/ MC/AMEX/ Dinners etc).

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Incentives for Full Supernodes

Any network needs to be stimulated to get off the ground. A simple marketplace network might require bringing in sellers when there are not enough buyers, or bringing in buyers when there are not enough sellers. All the prominent networks of today – Uber, AirBnB, eBay, Amazon – faced this issue and were able to overcome it by tapping into existing users or providers of similar services, and by creating extra startup incentives for people joining their platforms.

GRAFT is no exception. It is a complex network with many participants – users, miners, full supernode operators, service brokers, proxy supernode operators, merchants, application developers. Having so many players is both a blessing and a challenge.

Miners represent the first layer of the network (settlement), and they are already incentivized through both network transaction fees and block mining rewards, which do not depend on the number of settled transactions and provide a steady income for miners. Beyond the miners, the next group without which the network will not function are the full supernodes which are critical for real-time authorizations (RTA) and the pay-in/pay-out facilitation.

Full supernodes get paid for performing validations for the network and preventing double-spending while processing authorizations in real time. Their income depends exclusively on the number of transactions that they get to work on as well as the total number of full supernodes in the network. Full supernodes are chosen randomly in each block, with two selected from each of the four tiers for a total eight supernodes, which equally split the 0.5% fee of the transaction they authorize. The problem, however, is that a small transaction volume of the brand new payment network would result in low initial full supernode income, and thus little incentive to run full supernodes before the network volume ramps up.

The good news is that there is a fairly easy way to incentivize the full supernode hosts without resorting to simple airdrop-type incentives or block reward sharing. What we will do instead is send enough RTA transactions across the network to provide a healthy transaction volume until the network is fully ramped up. This way we reward full supernodes for the real work they are supposed to do – validating transactions – unlike most other second layer reward models where masternodes receive passive income for just “being there” (which does little to promote network robustness or self-optimization).

The incentive program is designed to maintain a robust daily transaction volume until merchant-generated RTA transactions reach that level on their own. The number and size of stimulus transactions will depend on overall transaction volume and will be reduced gradually as the network gains momentum. We estimate the cost of this program to range between 50 and 100 million GRFT.

As with any new network, especially one with lots of participant types, the GRAFT Network needs to be stimulated to maintain a level of involvement ensuring stability of the network and availability of network services. We believe that the most critical part needing extra stimulation at this early stage is the full supernode layer. To stimulate the network as a whole, however, we are also considering additional groups of participants that may require stimulus going forward. For example, buyers may need to receive cashback incentives (similar to some credit cards) in order to choose GRFT over other methods of payment available at the checkout.

As always, we’re open to other suggestions from the community.

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GRAFT Development Status Update September 2018

It’s time for another dev update! It’s no secret that RTAs (real time authorizations) remain the main focus for the GRAFT development team, so let’s start from the alpha review.

RTA Alpha

We are excited to announce that RTA transaction now works end to end for the entire sale workflow – it is stable, and takes just a couple of seconds to get approval on both wallet and point of sale as expected. There is still some work to be done before we move to beta release, and there are many ways to do even more improvements. But here is the most important thing: the first instant payment on a private CryptoNote blockchain is now a reality!

The RTA alpha release contains a full set of components necessary to conduct an end-to-end point of sale transaction in real time:

  • completely redesigned full supernode, i.e. the supernode that can participate in authorization sample and approve a GRAFT transaction in real time;
  • completely redesigned wallet and point-of-sale proxy supernodes, i.e. the supernodes that provides an “entry point” to the RTA network and participate in RTA transactions;
  • mobile and desktop wallet and point of sale apps for iOS and Mac OS X redesigned for RTA.

In addition, there is a special testing environment created for RTA alpha testing – alphanet – a dedicated testnet which contains several seed nodes, a miner, proxy supernode cluster with load balancer, and blockchain explorer.

We managed to assemble a very efficient and quite large team of alpha testers – 50+ active members who are able to run both RTA supernode and iOS/Mac clients (wallet, POS). In addition, we have selected an extra “reserve” group of volunteers (also 50+) that will be able to join the testing once it’s extended to the next phases – additional clients for Android/Windows and then beta release.

People familiar with development release cycle know that alpha releases are usually unstable and may lack some features. RTA alpha was not an exception. Once the RTA functionality was released to the alphanet, we discovered issues that we could not see during regular testing. We are able to simulate the real network very well because the alphanet consists of real participants running on different networks and different hardware or hardware abstractions, rather than artificially cloned nodes and supernodes. We really appreciate the patience and positive attitude of alpha testers team!

So it’s time to learn more about the RTA transaction flow, which you will be able to experience in retail stores soon! It is very simple – a couple of clicks (literally) in the wallet app and a couple of clicks at the point of sale app: Figure 1: GRAFT RTA Workflow Between Mobile Wallet and Point-of-sale Apps

Payment Gateway for Merchants and Service Providers

As recently described in the Fees and economics update post, one of the important profiles in GRAFT ecosystem is a Merchant Service Provider (MSP). An MSP’s role is to provide and support payment network services to the merchant, ensure the uptime of the network (usually referred to as Service Level agreement or SLA), provide and manage equipment (e.g. payment terminals), provide reporting, etc.

To enable an MSP to do this, another type of server is needed – one that would:

  • Manage the terminal’s configuration (including wallet address)
  • Handle the MSP specific fee economics for the MSP (an MSP could choose to handle tiers of service differently or charge different fees for different transaction amounts)
  • Maintain transaction reporting and analyyics for merchants

In theory, such payment gateway can be designed and implemented by a third party such as traditional payment processor that wants to add cryptocurrency payments to their portfolio of services. However, we decided to create a “reference implementation” to enable faster adoption rate as a part of our go-to-market strategy.
Since GRAFT is a decentralized payment network, the payment gateway is multi-tenant, multi-instance, open source app, and everyone can host their own payment gateway and become a service provider on the network.

Payment Gateway is this “fifth element” that is supposed to manage the GRAFT payment apps on hardware payment terminals and GRAFT ecommerce interfaces, and link them with the GRAFT supernodes. Since it has transaction visibility, it is considered part of merchant’s ‘back office’ applications. Figure 2: GRAFT Payment Gateway, Service Provider Dashboard Figure 3: GRAFT Payment Gateway, Merchant Dashboard

* Note: With GRAFT network, the merchant can be their own MSP, but would still require the functions of a Gateway in order to manage the terminals setup, reporting, etc.

Upcoming Dev Updates

We’re moving forward with every track on the development roadmap and even pulling some of them forward. An interesting upcoming project, which is currently in design and not even announced yet, is GRAFT ColdPay Supercard. This is a smart card that combines functionality of cold wallet, which can be used with mobile or desktop host app, and payment card, which can be used for making a payment at hardware payment terminals and mobile points of sale. More details about this exciting development will be unleashed very soon. Stay tuned, happy grafting!
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Changes in Transaction Fee Structure: Even More Ways to Earn with GRAFT Network

As the ideas initially set forth in original GRAFT white paper gradually come to fruition, we have to adjust some “game rules” as we get one reality check after another. One of the most important rules in payment processing is the transaction fee structure. Transaction fees are equally important for all players including merchants, buyers, full (RTA) supernode owners, proxy (gateway) supernode owners, exchange brokers, miners, and service providers. After several white paper editions and other adjustments, we propose the following fee structure to be implemented in the GRAFT ecosystem:
  • Full Supernodes RTA Fee (any RTA Tx): 0.5%

    1/8 of this fee, or 0.0625% of the total RTA Tx amount, goes to each supernode participating in the RTA authorization sample.

  • Proxy Supernodes Fee (any RTA Tx): 0.1%

    1/2 of this fee, or 0.05% of the total RTA Tx amount, goes to each supernode in the proxy pair that provides connectivity into the network (wallet and POS proxy supernodes).

  • Wallet Proxy Supernode Fee (non-RTA transfer): 0.1 GRFT

    This small fee is going to be charged by the wallet proxy supernode to the mobile or desktop sender’s wallet in addition to the existing network fee (miner’s reward).

  • Exchange Broker Fee (RTA with altcoins): 0.25%

    Exchange brokers include pay-in, payout, top-up, and interchange brokers.

  • Miner Transaction Fee (RTA): variable

    Determined by the merchant service provider through the payment gateway, but not lower than 0.1 GRFT.

Figure 1: GRAFT Ecosystem Fees

If a particular RTA transaction is processed via the payment gateway, which will be the case for most hardware payment terminals, the fees are set and calculated by the MSP (merchant service provider). This occurs through the payment gateway plugin to the POS proxy supernode using the information about the pay-in and payout currencies as input, and setting a miner fee commensurate with the service level they are obligated to provide to the merchant.

Here’s a table-form summary of various fees in combination with various workflows:

1 2 3
Regular P2P Transfer RTA Tx (GRFT) RTA Tx with altcoin exchange broker (i.e. bitcoin acceptance)
a Sender’s wallet proxy Supernode Reward 0.1 GRFT * 0.05% * 0.05% *
b Full Supernode (auth sample member) Reward N/A 0.0625% ** 0.0625% **
c Exchange Broker Reward N/A N/A 0.25% **
d Miner (settlement) Reward Variable, based on Tx size in KB Configurable *** Min: 0.1 GRFT Configurable *** Min: 0.1 GRFT
e Merchant POS/Recipient Gateway Proxy Supernode Reward **** N/A 0.05% **** 0.05% ****
Total Fee Amount paid by the Tx sender (buyer in RTA) a1 + d1 0 0 *****
Total fee amount paid by the Tx recipient (merchant in RTA) 0 a2 + b2*8 + d2 + e2 a3 + b3*8 + c3 + d3 + e3
Total amount charged to the Tx sender Tx amt + a1 + d1 Tx amt Tx amt
Total funds available to the Tx recipient Tx amt Tx amt – (a2 + b2*8 + d2 + e2) Tx amt – (a3 + b3*8 + c3 + d3 + e3)
Table 1: GRAFT Transaction Fees/Rewards Structure

* wallet proxy supernode can be a proprietary server or a public cluster hosted by a service provider. You can run and use your own proprietary proxy supernode to avoid the proxy fee altogether. The supernode must have a stake in order to be able to charge the fee.

** stake is required for full supernode or exchange broker in order to participate in RTA Tx processing and receive this reward

*** set by the merchant service provider or the owner of the POS proxy supernode

**** POS proxy supernode can be a proprietary standalone server, a part of the merchant infrastructure, or a part of a payment terminal or/and ecommerce gateway maintained by the merchant service provider. POS supernode must have a stake in order to be able to receive this reward

***** does not include the altcoin network fee

You can see that the new fees have been introduced on proxy supernodes—both wallet proxy and point-of-sale/payment gateway (a1, a2, a3, e2, and e3 in Table 1). Those changes will achieve increased decentralization of the infrastructure, which means no more complaints about GRAFT wallet downtime or delays! If you don’t like the proxy supernode cluster hosted by GRAFT, there will be alternative providers ready to serve your wallet or POS. In order to receive the reward, the proxy supernode must demonstrate the unique stake wallet linked to the supernode’s public IP address. The amount of proxy stake is 250,000 GRFT.

Unlike an authorization sample supernode, the proxy supernode will still be operational even without the stake, however an unstaked proxy supernode won’t be able to charge the fee. This option is reserved for proprietary proxy supernodes, so the users with elevated privacy needs can host their own entry points to the network. Without the stake, the proxy reward will be sent to the GRAFT community donation wallet address. This way the total transaction fee, which is assembled from several components, always remains consistent regardless of the status of the proxy supernodes.

Another major change, which was partially proposed earlier, is the flat fee paid to the miner for RTA transaction settlements (d2, d3). The miner’s fee is traditionally calculated based on transaction record size in KB (d1). With RTAs, however, we cannot make the miner fee variable as it would make the total fee paid by the merchant inconsistent and unpredictable, which is unacceptable in most situations. Additionally, we cannot make this fee proportional to the value of the transaction (similar to the supernode fees) because miner fees are visible on the blockchain, meaning the transaction amount could be calculated from a proportional fee (although we may fix this in the future). Therefore, we made it a simple configurable flat fee, with a minimum amount of 0.1 GRFT.

The fees associated with RTA transaction with exchange brokers are the same as RTA fees (column 2) with an extra 0.25% taken by the broker (and paid also by the merchant).

Merchant Fees and Service Providers

The MSP sets a fee schedule that’s consistent with their business model and fees could be structured in tiers with options, for example:

  • Transactions below $10: 2%
  • Transactions above $10: 1%
  • Min transaction amount: $1
  • Miner: 0.1 GRFT
  • Transactions in altcoins: + 0.25%
  • Instant payouts in altcoin or fiat: + 0.25%

Below is an example of a sample $20 altcoin transaction and the associated fees given a reference Merchant Service Provider fee schedule. Figure 2: Example of GRAFT RTA Altcoin Tx Fees and Rewards with Service Provider

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How GRAFT is Going to Conquer the Crypto Payments World. Part 1: Blockchain and CryptoNote

Slava Gomzin, GRAFT Co-Founder

Although we have created a lot of materials explaining GRAFT (both existing features and future developments), including countless technical or semi-technical pages, marketing brochures, blog posts, and educational videos, it’s often difficult to see the whole picture while going through all of the specifics. A focus on the multiple features and their design details can obscure the view of the entire system, creating a so-called “you can’t see the forest through the trees” effect. We are getting many questions from supporting community members as well as potential customers and partners about “the big plan”: what is the ultimate goal, and how exactly are we going to achieve it? Whereas the answer to the first part of this question is quite simple and short, the answer to the second part requires some time and efforts. In this series of blog posts we will iterate through the various GRAFT features and try to explain why they are there, and how they help achieve our ultimate goal: Conquest of the crypto payments world.

Part 1: Blockchain and CryptoNote

Let’s start from the very beginning with the blockchain, or layer one of GRAFT. The blockchain is maintained by a peer-to-peer network of computers, or network nodes. We refer to these network nodes as “cryptonodes” to distinguish them from our “supernodes” (a.k.a. “masternodes” in other networks), which constitute the second layer of the GRAFT network (to be explained in a future blog post). The GRAFT blockchain is based on the CryptoNote protocol, which is the most private blockchain protocol in use as of today. In order to save time and resources, we used the luxury of the open source principle and forked the initial code of the GRAFT cryptonode from Monero — the best implementation of the CryptoNote protocol. In addition to acquiring fundamental privacy features “out of the box”, forking Monero provided a high degree of confidence in our blockchain from day one of the mainnet existence. It’s important to note that the code of GRAFT supernodes, which we create from scratch, is also open source, so essentially everything that we add on top of the previously existing features is also available for others to reuse.

Now let’s go back to the initial question and apply it to the blockchain layer: Why a brand new blockchain and why CryptoNote?

We’ll start with the new, dedicated blockchain: Yes, it would have been easy-peasy to run the GRAFT ICO on ERC20 or a similar token, as most people do these days to avoid blockchain maintenance, mainnet, mining, emission, seed nodes, etc. However, creation of the GRAFT payment network requires our own blockchain because we have to modify the cryptonodes as we develop the supernodes so they will support each other and work together. Without the ability to modify the code, we wouldn’t be able to create the network of supernodes and implement features like real time authorization or exchange brokers on top of any existing blockchain or token platform. In addition, there are features such as payout tokens, loyalty points, store credits, gift certificates, and discount coupons that are required for merchants — all of these are based on the merchant tokens platform, which cannot be built without a dedicated blockchain.

Now for CryptoNote: it’s not just “nice to have”, it is absolutely required in order to be competitive with traditional payment systems such as Visa network or PayPal. Ironically, Visa and PayPal provide much better privacy to their customers than most existing cryptocurrencies such as Bitcoin and Ethereum. Let me explain. When you swipe/insert your payment card at the point of sale terminal, or click the PayPal’s pay button online, there are two entities in the world that are aware of your transaction: the payment network (Visa or PayPal in our case) and the merchant. In reality, of course, there are more organisations that “know” about your transaction because the payment network is more complex. This network includes, at the very least, the issuing bank (the one that gave you the payment card), the acquiring bank (the one that approves the payment), the payment gateway (the one that routes your transaction to the right payment processor/acquiring bank) and the payment processor (which processes the payment and merchant’s payout). However, in any case, this list of organizations is limited because they are under security and privacy regulations, and they have typically implemented some decent security controls that protect your transaction records from prying eyes. Of course, everyone in this list can be hacked or give away your info to a law enforcement agency, but this is a different story (which is, by the way, another good reason to switch to cryptocurrency payments and throw away your plastic cards!). For the sake of simplicity though, let’s assume that random people cannot gain access to your data in most situations.

Finally, let’s see what happens with blockchains. The key innovation of Bitcoin (the first blockchain and cryptocurrency) was the open ledger that is accessible to every node participating in the network because your transaction must be verified to make sure you are not trying to spend your money twice. But this also means that anyone in the world can see your transactions and how much money you have in your wallet! Now, unlike plastic cards, Bitcoin wallets are, in principle, anonymous because transaction records are not directly linked to your identity. At first glance, this feature appears to compensate for the fact that your transaction records are laying there in plain sight on the blockchain for anyone to see. Well, the problem is that there are ways to link addresses to identities. Once this happens, all of your transactions magically become visible forever because the blockchain is always there and it cannot be erased!

Fortunately, there is a solution: the CryptoNote protocol, which hides the sender’s address, the recipient’s address, and the transaction amount , while still preserving the ability to validate each transaction and prevent double spending — and it’s all thanks to advanced cryptography! One day I am going to explain how it works in layman’s terms to unveil the beauty of CryptoNote and its cryptography (the same as I have done to explain RSA and Elliptic Curves cryptography in my book about Bitcoin payments). But for now, let’s just take it on faith that CryptoNote ensures a high degree of privacy for all participants. Moreover, on top of existing CryptoNote features, GRAFT adds even more privacy and hides transaction fees!

Summary of Part 1:

Why a brand new blockchain and why CryptoNote?

The dedicated blockchain allows GRAFT to create a merchant token platform. This is required for features like payout tokens and loyalty programs, and the second layer supernode network, which enables special retail features such as real time authorizations and exchange brokers.

The Cryptonote blockchain protocol provides an absolute privacy to all participants of the transaction, which is required in order to compete with existing payment platforms such as Visa or PayPal that are more private than most exciting (non-Cryptonote) cryptocurrencies.

To Be Continued — Part 2: Supernodes and RTA