Message Embedding for On-Chain Payments (Gordon Liao)

my name is Gordon l i serve as a chief Economist and had a research as Circle uh so I lead a small team of researchers working on R&D development uh mostly in the prototyping uh space of uh what I call utilities are linked to stable coin payment uh we work on a variety of topics including privacy uh including messaging today I'll be presenting on a recent project we released which is rece uh which is a messaging standard for erc20 tokens uh for received invoices and messages so let me just start by saying that you know payments uh stable coins payments included are not just about value transfers uh the transferring of value is a important part of it uh but I think messaging and the ability to embed message and transfer message is just as important so let me start with some examples in the tri space uh in correspondent banking the key to um Swift messaging system is actually a overarching orchestration of messaging standards and how corresponding banks are able to talk to each other uh the actual value transfers between the banks that's updating the ledgers of different banks but if you think about what Swift is uh Swift is this messaging layer I think that sort of messenger layer is often times underappreciated in its importance uh one example of this is uh when China developed its crossb interbank payment system called sips uh which was supposedly a swift killer uh initially it really lacked adoption and for a long period of time I think the issue with uh sips was uh it didn't have the right messaging standards uh so the rest of the world was on this ISO 2022 standard uh but this sip system was on a different standard so Banks were trying to adopt basically fell flat in adopting of course among other reasons as well but messaging was part of the reason now moving into the uh Web Two or web three payment space I think there's an obvious issue of the lack of even just a m in payments for erc20 transfers uh especially if you are thinking about you know uh the consumer Merchant payments in which there requires invoicing or linking of transactions to specific product sales um as well as on the institutional context as I mentioned for things like having the right inter uh institutional standards ISO 2022 uh or traval rule adoption those out require a way of attaching messages uh and embeding it with transactions so really there's a need for web3 transactions to have uh embedding of messages and I think confidentiality and privacy is the key here because you don't want to necessarily broadcast that this transaction is for this Merchant and this transaction is for whatever purposes uh even though blockchain today is open and transparent but you don't necessarily want to tell the world what the transactions are for so today there are some offchain solutions uh none of them are perfect uh for instance somebody who's using crypto as a payment I actually don't know how strap does this uh might place an item into a shopping cart uh there's sign transaction with invoice ID and then if you want to then save those transactions on to blockchain again then you had to kind of post the transaction back or post the invoicing and the messages back onto the public blockchain it's a very cumbersome way to link together uh transactions uh what we introduce is a set of uh smart contracts uh it's it's actually live in testnet uh for embed a message for erc20 tokens uh these are open source smart contracts so anyone could take a look and Fork if you like um and circle research by the way does more of the pre-product exploratory open source type of research so these are all just out for the uh for people to use and U it address some very key uh areas of not only to attach memos memo lines to uh standard erc20 transfers uh but also embedding um private uh messages uh that could be used for info uh for travel rules and Etc uh I think we implemented a version of it uh using pgp uh but other encryption methods uh it's relatively easy to embed so how would reable work for Pure web 3 payments well it's uh imagine if you have a merchant that's selling Goods uh when someone place a good item into a shopping cart inverse ID is generated but now you could actually transfer the token transfer say usdc or other rc20 tokens alongside with the invoice ID uh through this reable contract and that reable contract done sensing the transfer function this also works for uh bulk invoicing and proof of payments uh so uh both invoicing is a concern as well you know if if a merchant is selling many Goods uh perhaps there's a list of items having a way to to securely transfer that information uh is also helpful in this context so REO is a send alone smart contract uh we have the GitHub repo up and also a blog post about it uh so what it is it's uh a basically there's a a couple new functions are introduced transfer with message uh which allows people to embed messages and then receivable contract itself than costal transfer function on rc20 so the workflow is uh for instance Alice in super some Goods uh then it would basically call this transfer with message and embed a encrypted or non-encrypted message um and then reable contract itself calls the transfer from function on rc20 uh this workflow works with uh essentially the ERC 2612 uh permit uh construct uh so you could also permit and transfer with message out in the same step uh um in addition you know this allows for uh instance the merchants to uh perhaps essentially have a third party to poll transactions uh also works with uh gas payments uh ERC 309 uh so you could authorize people to spend on your behalf and have gas list transactions uh with messaging as well the contract interface is rather simple uh there's message to message from um some metadata about what type of encryption key that you're using uh by default we set it to pgp but again you could set it to non- encrypted or something else and then uh there's Cipher Texs that you could include uh through this method I think it's also Worth to know that this is not just for uh embedding messages and invoices for transfers but also you know this actually is a fundamental building block for if you just want want to communicate over blockchain in a encrypted or non- encrypted method you can have back and forth send and receive responses perhaps you're dealing with uh disputes with Merchant perhaps you're just want to send a communication uh pre-purchase uh this protocol will also let you do that so I do have a demo so let me try actually live demoing it um see how it does uh it's a pretty simple front end but it plugs into to the smart contract uh so this is on sapoia already uh it's pretty simple you could connect the wallet um and uh get some test net usdc uh you could select the pre uh Define or basically you had to add in a uh some someone's contact don't have to use the real name and their address uh so I'm going to send it to for instance my colleague Alex couger with a message called how from Denver uh and then it's optional for how much usdc you want to send and you can send that message um of course there's signing and great now the message is confirmed on testet and uh uh the recipient on the other side can read the messages once you connect to the wallet so so this's is message uh that I sent recently but I also uh Reed message from Alex uh a couple days ago or from my colleagues miror so that is the quick demo um by the way the demo interface is also uh we open source that so people can see how it works so that's it uh check out our blog post and demo uh here's a QR code and uh uh on the other stuff that Circle research is working on uh stable coin you know as you know it's right now the smart contracts are relatively simple but we think there so many other features as the previous panel mentioned uh so many other features we could add and we're constantly evolving and thinking about the business model as well um thinking about ways in which we could leverage a smart contracts to generate new ways of um generating Revenue perhaps but also to provide new features to the users thank you so much [Applause]