Picante: Decentralised, Trustless, On-Demand Commerce

In the famous bitcoin whitepaper of 2008, Satoshi begins by introducing the problem of “Commerce on the Internet”.

The internet was a very different place in 2008. The amount and variety of commerce on the internet was very limited. Indeed, the majority of commerce was not being done on the internet then, nor is it now.

But now, the internet is much more widespread — and “Commerce on the Internet” has therefore taken on new meaning. In particular, many forms of local, everyday commerce transactions in emerging markets are now occurring digitally, with the help of the internet.

Things like ordering dinner from a local restaurant and having it delivered by a local fleet. Or ordering your weekly groceries online. Or having a plumber or electrician come to your house to provide a service.

Likely, Satoshi was not thinking of these complex real world commerce scenarios when he wrote the first paragraph of the whitepaper, as his proposed solution does not solve for them in any meaningful way. He solved peer-to-peer payments with a solution for the double-spending problem.

This was a giant leap forward for digital payments and kick-started the crypto revolution, but local digital commerce requires a lot more than peer-to-peer payments to function in the real world and to scale with real businesses and their customers.

Defining Local Digital Commerce

Local digital commerce as we’ve come to experience it in emerging markets is characterised by 3 key traits:

  • Distance - the goods being transacted are within 20km of the recipient and often the customer and merchant are physically separated
  • Time - the goods are transacted on the timescale of minutes to hours, sometimes days
  • Number of Participants - transactions will normally involve 3-4 parties: a customer, a shop, a delivery fleet, a technology platform

A digital commerce transaction can be broken down into 3 motions or actions that need to be fulfilled for a transaction to succeed:

  • Ordering - the customer needs a way to see what a merchant is selling and communicate an order to them, often this involves a digital storefront of some kind
  • Fulfilment - the merchant needs a way to fulfil the order, which in the case of physical goods means to get the goods to the customer, often involving a delivery service provider
  • Payment - monetary value needs to be transferred to various parties based on business rules and transaction events

As you can see, there is complexity in local digital commerce, and there are many ways for transactions to go wrong:

  • A shop might not have the goods the customer wishes to buy and may not be able to fulfil the order (the out-of-stock problem)
  • A shop may only be able to partially fulfil an order or may need to change the order (with the consent of the customer) thereby affecting downstream events and monetary amounts
  • Fulfilment might not succeed for various reasons, resulting in the goods or services not reaching the customer
  • Payment might not succeed, resulting in participants not receiving the compensation due to them
  • Any of the parties could be bad actors, purposely causing problems and committing fraud for their own benefit

Such failures are not uncommon in local digital commerce and can occur 1-20% of the time depending on the market. Therefore it is necessary for any local digital commerce system to have protocols for handling such events and for governing participants. Often such protocols and governance involve monetary incentives for good behavior and disincentives for bad behavior, as defined by the community.

Why a DeFi Solution is Superior to CeFi, especially in Emerging Markets

DeFi provides a viable, more scalable and overall superior range of solutions for solving the problems posed by local digital commerce as compared to CeFi solutions.

Some characteristics of DeFi solutions that make them better than CeFi, especially in emerging markets, include:

  • Faster payment settlement times - a few seconds or minutes compared to days or weeks for CeFi
  • Lower payment costs - 2-10x cheaper than CeFi
  • Able to build pure code-based multiparty value transfer solutions - no need for accountants manually moving money to various participants’ bank accounts or wallets
  • Able to connect events to monetary values via smart contracts to automate governance and scale incentive alignment
  • Able to hold monetary stakes of participants to disincentivise bad behavior
  • Able to distribute monetary rewards to incentivise good behavior
  • Able to connect to and automate a broad range of financial services desired (or required) by participants such as insurance, loans, financing, exchange and investment

That said, there are some challenges to a DeFi solution that one would need to solve for to gain mainstream adoption among market participants:

  • Stability relative to the native currency, which we assume would largely be fiat initially
  • General hesitance around adopting new technology

We think these challenges are solved initially through a combination of off-chain processes and local partnerships that allow us to prove the core DeFi protocol acceptance across multiple markets before we expand the solution suite and decide to invest resources in solving those in-protocol.

The Protocol

Key Features

  • Peer-to-peer payments
  • Multi-party payouts
  • Automated incentives
  • Transaction insurance
  • Cash-flow loans

Implementation Strategy

We will be developing the protocol using a real-world use-case: the existing TUK service.

TUK currently operates in Thailands 2 largest cities, Bangkok and Chiang Mai. Today TUK is used by:

  • 500 merchants,
  • 900 drivers, and
  • 20,000 customers.

Those numbers grow 30% month-on-month.

The development of the protocol (Steps 1 and 2 below) take place in stealth mode over a period of 6 months. By the time the protocol and token are announced, we will have 50,000-75,000 active wallets.

Step 1: A stablecoin-enabled payment infrastructure.

A beta group of TUKs 500+ merchants and 900 drivers have set up their wallets and are ready to start receiving stablecoins as a form of payment.

The incentive to adopt this technology is high. Today, payouts are manual, error prone, and slow. Instead of waiting a week to 6 weeks, drivers and merchants will receive their payments in real time.

TUK will partner with a third-party to provide painless off-ramp services.

Consumers will have the option of paying in fiat, $sol or stablecoin.

Step 2: The introduction of the $Picante token in a stealth air drop.

The token will be introduced into the TUK platform as a rewards mechanism for all participating parties: Consumers, Merchants and Drivers.

Step 3: A public sale of the $Picante token and release of the protocol.

At this stage TUK users will realize that their tokens have real value.

We will promote $Picante as a first class currency so that transactions and payouts can be made with the token. We will of course continue to provide Picante-based incentives.

Step 4: Insurance and cash-flow loans.