The Beginners Guide to Payfair
Have you ever been ripped off trying to buy something online? If you’re buying through an online store or auction market, it’s probably pretty safe. Secure sites with SSL encryption have taken a lot of the dangers to consumers out of the equation, and most people now feel confident purchasing online.
But what about when buying something from someone random online? Without some sort of centralized platform acting as an intermediary, it’s still pretty risky. You basically have to send a payment in good faith and pray that they follow through and actually deliver the good or service you’re purchasing.
Even with the advent of cryptocurrencies, this is still a huge issue that stands in the way of widespread adoption, and the true proliferation of a peer to peer economy. You can send your payment in crypto, but there are still no guarantees.
In fact, it’s even more vulnerable to scammers since crypto transactions cannot be reversed, and since crypto is a bearer instrument, it’s like cash meaning the one holding it, is the one who owns it. This gives thieves the incentive to steal.
There are several centralized escrow platforms for online payments, to help make these kinds of payments more secure. Today, however, we will not be looking at a centralized escrow platform.
Today I’ll be taking a close look at Payfair, a decentralized escrow platform and cryptocurrency exchange built on top of the Ethereum blockchain.
What is Payfair
Payfair (PFR) is a relatively newer ERC-20 token that was only released for distribution in December 2017, after having a small but successful ICO. It has a current circulating supply of 88,999,687 PFR tokens.
Payfair describes itself in the whitepaper as:
“PayFair is a decentralized Escrow platform which ensures the paramount security of all cryptocurrency transactions made between two parties. These transactions include cryptocurrency, FIAT, services and digital and physical goods. “
So it’s a peer to peer payment escrow but it’s also a fiat to crypto gateway to change dollars, euros, etc. into crypto and vice versa, and also a crypto to crypto exchange as well, and also a payment gateway/service.
This allows you to deposit fiat currency, and convert it to various different cryptocurrencies, and then transact with a complete stranger through the escrow system, and have a mediated transaction, that ends with the satisfaction of all parties involved, and the assured delivery of the good or service purchased.
It’s basically a one-stop interface to do all your crypto trades/exchanges/purchases. A rating system helps ensure that people stay honest. At first glance, it looks like a pretty cool idea, and as far as I know, there are no other projects currently trying to fill this niche, which in the crypto world is amazing, because once someone has a great idea, usually ten other clones spring up as competition.
The Payfair Team
Let’s take a look at the team behind Payfair, and see what we can discover. My initial impression from looking at the PFR team is that there is not much info on them.
As you can see from the screenshot, only the founder and the community manager have a LinkedIn profile that you can view, and a closer inspection of their LinkedIn pages doesn’t reveal much about their prior accomplishments, or past projects they have worked on.
The founder Denis, has these skills listed in Russian on his LinkedIn profile, and that’s about it:
- Analytical mind
- Project management
- Product Management
(Translations from Google translate, so I am sorry if they are not accurate.)
The lead developer is available via email, or telegram and the rest of the team members only have a short unverifiable bio and a telegram.
The fact that the team doesn’t have much information about them is a little concerning.
It’s not a deal breaker in my opinion, because this is crypto, and anonymous people like Satoshi, have founded coins like Bitcoin and even Monero, and Mimblewimble were created by anonymous cypherpunk developers, so that is kind of par for the course.
I won’t write this team off, just for the lack of info.
Founder Denis actually addresses this issue in this bitcointalk.org thread.
“Our team doesn’t include influential people or leaders of opinions. We think it is not the most important thing. We managed to unite high-class specialists and create a friendly environment. It motivates us to make the project successful. Our work is achieving hard but exciting goals. It is diverse and useful experience, everyone can fulfill one’s potential. If you work hard, you will get the best version of your idea.”
Since there is not much more to cover for the team, let’s take a look at the platform itself.
The Payfair Platform
Payfair’s platform uses a standard ERC-20 utility token. That means the token is integral to the use of the platform. To run a node, or make use of any of the platform’s capabilities will require users to transact in PFR tokens.
The token does also pay a portion of the transaction fees on the platform for people who run nodes, as well. This allows anyone who feels like staking enough coins to run a node, to earn passive income.
Payfair Trust Node
Payfair has two different kinds of nodes, to ensure the integrity of the network. The first kind of node is called a “Trust Node”.
A trust node is basically a masternode. It’s called a trust node because it makes sure the network’s transactions are secure and recorded on the chain like a common master node does on any other blockchain network.
It basically ensures how trustworthy the Payfair platform is and verifies transactions. Operators of trust nodes can earn a passive income as compensation for their role in the network’s security.
Here is the rundown on trust nodes:
Trust-nodes are awarded for their passive participation in the system. They receive a commission for every successful trade on the platform of which is paid out in the currency that each trade was completed in.
Trust nodes are weighted meaning additional PFR over 10,000 will multiply the payout value. For example, 17,000 PFR = 1.7x payout The advantage of Trust Nodes over other master nodes is that there are no hardware requirements or 24/7 online time. You simply use the signing feature within MyEtherWallet to link your PFR wallet with the PayFair platform, then sit back and enjoy your passive income.
A trust node does not act as the intermediary in disputes. There is a separate node for that. The nodes that settle disputes are called “Escrow nodes”.
An escrow node is different from trust nodes in several key ways. Like I mentioned above, escrow nodes are for the resolution of disputes.
This means that operators of escrow nodes must play an active role in the network, it is not a passive income like with the trust nodes. An operator of an escrow node must review transactions and ensure that both parties are happy with the result.
This ensures that any dispute is settled by a real live person, who runs an escrow node and they will use their discretion to make sure that conflicts are resolved, correctly.
Here is how they describe it in the white paper:
Escrow-nodes are awarded for their active participation in the system. They receive a commission for each successful trade they have participated in of which is paid out in the currency that the trade was completed in.
Escrow-nodes ensure the integrity of a trade between parties (buyer and seller). Escrow (or Guarantor) nodes are secured by PFR tokens, meaning every decision in the ecosystem is ensured by value and is performed by a real person. When this is combined with an Escrow rating system it further supports its ability to rid the platform of bad actors. Current master node systems do not allow participants to connect in any meaningful human-to-human way. PayFair’s “Smart Wallet” technology will allow Escrow node holders to easily connect and communicate with other Escrow node holders (unless they wish to stay anonymous.)
For their part, they will also receive a fee from the transaction. In order for a transaction to be confirmed, it needs 3 confirmations from escrow nodes.
To ensure trust nodes, and escrow nodes, as well as buyers and sellers, are acting on the up and up, they have implemented a peer rating system. So it will be similar to vendors on other peer-to-peer markets.
Buyers can leave reviews for sellers, and also the node operators, rating their experience when transacting, and vice versa. Buyers/sellers/nodes with good reviews will thrive and the ones with bad reviews will not.
The Payfair platform is supposedly running live on Mainnet, but in a beta version it sounds like, judging from this notification on their site:
“The platform works on the main network. Possible delays in crediting funds in your account. And in the near future, the platform will run in full mode.”
Payfair supports the following cryptocurrencies:
Ethereum, Payfair, OmiseGo, VeChain, Icon, EOS, Basic Attention Token, Binance Token, Funfair, Tron and Walton coin.
Payfair also supports 14 national fiat currencies.
The Breakdown of Payfair’s fees
Fees are distributed as such:
- Non-escrow deal (1% fee, without taking into account contractor rating)
- Trust-node — 80% Marketing, supporting ecosystem — 20%
- Escrow deal (3% fee, without taking into account contractor rating) Trust-node — 40% Marketing, supporting ecosystem — 10%
- Escrow-node who made the decision — 50%
It requires 10,000 PFR tokens to stake for a trust node, and a little less for the escrow node. Running a trust node is a little different than a normal master node in that you don’t need to have your tokens staked in a unique wallet that’s online 24/7 like with other proof of stake coins.
You simply connect your MyEtherWallet to the Payfair platform and begin earning passively, and the same goes for the escrow nodes. That makes it easy to participate in running a node and to resolve any disputes and maintain security.
The Payfair Token & Crowdsale
Next, I will analyze the token distribution of the PFR crowd-sale. I mentioned earlier that Payfair is pretty new, they had their ICO at the end of 2017, and the tokens were released to participants in the beginning of December 2017.
They pre-mined 100,000,000 PFR tokens, and they were distributed in the following manner:
As you can see there is a 12-month lockup for the tokens that the team has allocated for themselves.
The team only allocated 11% of the total supply, which is respectable. They are not creating artificial market cap value by sitting on a huge quantity of tokens, and that’s good news for traders.
Now that the token has hit the exchanges, you can buy, sell and trade PFR tokens on the following exchanges, according to the Payfair website:
- Fork Delta
- Ether Delta
- Token store
However, there does seem to be a slight discrepancy regarding its availability on some of the listed exchanges, because I double checked on CoinMarketCap, and they only had 3 exchanges listed currently to trade PFR tokens.
The 3 exchanges can be seen in the screen capture, as IDEX, EtherDelta (Fork Delta), and DDEX. I am not sure what is going on with the other exchanges listed, so we will just have to wait and see. It’s a little inconvenient that the liquidity will be lower if it’s trading on only 3 smaller exchanges.
Overall I like the Payfair project for its uniqueness, there is no other project right now attempting to create a cryptocurrency focused escrow/exchange platform add this to the fact that it’s a one-stop interface that has been simplified for less technical users, and I think we may have a winner.
I also really like the fact that the team is not greedy, they didn’t try to raise an astronomical sum in the crowd-sale. They didn’t keep a huge quantity of tokens, and they are not trying to charge high fees for using the platform.
Payfair is kind of like a distributed, decentralized version of Stripe, Paypal or 2checkout, it fulfills the role of settling any disagreement between vendor and purchaser. The major difference is that it does this in a decentralized fashion, and it does so by incentivizing all the network’s participants.
Payfair is more than just a Stripe or Paypal clone, however, even though it’s escrow function is similar, and it offers payment gateway services for vendors, it also adds an exchange, a fiat to crypto gateway, and community of users which rounds it out a little more than Paypal.
All in all, it’s a unique platform with a proven idea, and it’s already up and running. What remains to be seen is if they can manage to bootstrap a viable user base, and have some staying power in this chaotic crypto market environment.