Circle launches Refund Protocol for safer stablecoin payments

Circle, the transmitter behind USDC, launched a new intelligent contract platform called Refnding Protocol, aimed at bringing reimbursements and resolution of disputes to Stablecoin payments.

The company announced the launch in an April 17 blog on its official website. Traditionally, Stablecoin transactions act more like cash payments, without any option for users to challenge a charge or request a refund once the payment has been sent. There is no easy way to obtain a refund in the event of a problem.

The circle reimbursement protocol modifies this by allowing users to send payments via an intelligent contract which temporarily holds the funds. If there is a problem, the buyer can request a refund and a referee, a trial third party, can help pay the dispute.

The arbitrator can only approve payment or a refund and cannot move the money to another address. Due to this arrangement, the funds remain No-guardianThis means that no party has a total control over them.

The system allows early withdrawals. If the seller wishes to access the funds before the expiration of the locking period, he can agree to pay a small sum outside the chain. A digital signature is used to validate this chain agreement, offering flexibility while keeping the fair and transparent process.

The reimbursement protocol is designed for ERC-20 tokens and includes integrated support for locking, reimbursements and dispute resolution. Circle says that the objective is to make payments in waves safer and more useful in daily transactions.

However, the company recognizes certain challenges. It can be difficult to configure a reimbursement address in advance when users rely on childcare wallets or Fiat onramps. In addition, the protocol uses more gas than a typical token transfer, which could be a problem for companies that manage many transactions.

Circle’s reimbursement protocol is a huge step to improve the reliability of stable payments despite these compromises. It offers a minimized trust solution for real world problems, all without giving too much power to a single part.