Why Air Protocol?
We’ve just completed a reference implementation of the Air Protocol on the Stellar blockchain (we’ll be pushing the code to the Air Protocol GitHub soon, so please join us there; in the meanwhile you can watch our Air Protocol Mesh technical demo.)
Given our imminent alpha release, we thought it’s high time to explain what the AP is, why we built it, and why we think it can unlock the economic potential of the Internet.
Who Are We?
We are bitcoiners who fell in love with bitcoin when we understood that it was money that cannot be debased by the whims of politicians and central bankers.
We are Mexicans (Yes, even Tim) who lived through the devaluation of the peso in 1994 and have watched the peso lose purchasing power against the US dollar every year, as corrupt politicians play games with the savings and wages of hard-working Mexicans.
We are developers who have built platforms and apps that connect Bitcoin to banks and crypto to e-wallets.
Air Protocol Genesis
The Air Protocol was conceived when President Nicolas Maduro attempted to stop Venezuelans from using Airtm, a bank-and-crypto-connected e-wallet that Jorge and Tim co-founded, along with Ruben, Ton, and Josh.
Airtm adoption soared as the Venezuelan Bolivar plummeted against the dollar because Airtm’s peer-to-peer exchange made it easy for Venezuelans to save in dollars and access cryptocurrency. In 2017, Airtm became the most reliable source of USD/Bolivar exchange rate according to Professor Steven Hanke, esteemed professor of applied economics at the Johns Hopkins University, and the world’s foremost expert on hyperinflation and currency boards. This was due to the large number of peer-to-peer exchanges that occurred every minute on Airtm.
Maduro didn’t like that Airtm was undermining his terrible monetary policy and rigged exchange rates. He put all the Airtm co-founders on a state terrorist list and announced Operation Paper Hands (Manos de Papel) to attempt to block and intimidate Venezuelans from using Airtm. In response, we announced Airdrop Venezuela to donate $1MM in crypto to Venezuleans.
Maduro’s attempt to censor Airtm also made us determined to replace the single point of failure of Airtm’s centralized peer-to-peer exchange with something more robust, extensible, and open source.
Eighteen months later, the Air Protocol is live on Stellar, with more implementations in the works.
We have put everything we’ve learned since falling in love with bitcoin into the Air Protocol, a crypto⇔ fiat exchange protocol that we believe could power a trillion dollar marketplace for assets, goods and services, while at the same time enabling onramps to freedom all over the world.
How Does the Air Protocol Work?
Marketplaces are a hallmark of human civilization, but existing Internet solutions exclude billions of people and have high fees. Giant payment networks and ecommerce platforms ban people they don’t like and prohibit whole industries.
The Air Protocol solves this problem of access and censorship of the online exchange of assets or services. It leverages smart contract-capable blockchains to make it safe and easy for strangers to buy, sell, and exchange goods and services.
The Air Protocol makes it easy for anyone to build a peer-to-peer marketplace that uses an onchain escrow of cryptocurrency to facilitate trust-minimized and censorship-resistant peer-to-peer exchange. This not only enables crypto/fiat exchange but also fiat/fiat exchange (via back-to-back Air Protocol exchanges) which we believe will unlock the economic potential of the Internet.
The Air Protocol is a self-healing mesh network for encrypted communications between buyers and sellers. The mesh is comprised of nodes of Dapps, users, and dispute resolution systems running the Air Protocol implemented on a public blockchain. Users make proposals to exchange assets or services.
For example, Lucy wants to sell Stellar Lumens in exchange for Pesos in her Argentine bank account. Her proposal is broadcast to all connected nodes of the mesh, including the arbitration system she wants to use in the case of a dispute. Any other application or user connected to the Air Network can see the offer and accept it or send a counter-proposal.
Let’s say Ricky accepts Lucy’s proposal to exchange Argentine pesos for Lucy’s Lumens. Ricky also accepts Lucy’s choice of judging system in case there is a dispute about their transaction.
Once the proposal is accepted by Ricky, Lucy begins the settlement stage of the Air Protocol exchange by sending her Lumens to a smart contract that creates an on-chain escrow. Ricky can confirm that the escrow is created and completes the offchain settlement via a bank transfer of Pesos to Lucy’s Argentine bank account, details about which he received via the Air Network.
Once the Pesos are in Lucy’s account, she can release the Lumens escrow to Ricky, which he receives at the Stellar address he provided Lucy via the encrypted Air Network.
If Lucy doesn’t receive the Pesos bank transfer, she can initiate an adjudication process provided for by the Air Protocol. This sends the transaction to a judging system that Lucy and Ricky mutually agreed to use during the negotiation phase of the transaction. Te judging system decides whether the Lumen escrow gets released to Ricky or back to Lucy based on evidence provided by the parties via the Air Network.
On-Ramps to Freedom
Using the Air Protocol, anyone with a networked device will be able to offer their goods and services for sale to a global marketplace at free market rates. It will also empower entrepreneurs all over the world to create online exchanges and marketplaces that bring together Makers and Takers for asset exchange and the sale of goods and services, with any disputes resolved via mutually-agreed arbitrators who will judge the off-chain performance.
The Air Protocol’s mission is to bridge banks to bitcoin and to connect buyers to sellers in a global market that unlocks the commercial potential of the Internet.
Bitcoin made Airtm possible; Airtm made the Air Protocol possible.
The Air Protocol will make bitcoin and other cryptocurrencies available in places where crypto exchanges have been banned.
We are building onramps to freedom that we believe will unlock the economic potential of the Internet.