Cardstack vs SaaS — Part 1
The CARD Protocol Ecosystem
Cardstack can be compared to various SaaS tools from the centralized platforms of the Web2 world. The different parts that make up this well-coordinated Web3 platform, protocol, framework, and ecosystem all work together — not only to enhance the capabilities for the user, but also to make up a full stack that covers countless different use cases.
Card Pay is like Stripe
Stripe is a very popular developer tool that is becoming more and more of a merchant-facing tool, which allows you to create FinTech connections, so that you can accept credit cards and transfer money to bank accounts.
Card Pay is similar to Stripe, but in a Web3 way:
- It is a DeFi payment & reward system that bridges layer 1 and layer 2.
- Prepaid cards give customers a balance they can spend on layer 2.
- Merchants earn revenue via customer payments on layer 2.
- Conversion rates & exchange links are provided by Chainlink.
- The Card Pay SDK is used to settle payments via an EVM-compatible blockchain.
- It is currently deployed to the xDai chain.
- It will launch in Q2 2021.
Read more on Card Pay in our previous blog posts:
Introducing Card Pay: The payment & reward network for creators
Card Pay Protocol: For a New Software Economy
However, Card Pay is only one part of the Cardstack product suite, which is used to build an entire protocol family to cover countless use cases at once — use cases that currently require many different apps in the Web2 world.
Card Pay, Card Bridge & Card Flow
Card Pay, Card Bridge, and Card Flow bring crypto from the world of DeFi into this payment network. DeFi is powerful, as people can create loans and stablecoins, but it’s expensive to transact. That’s why we created the Card Bridge.
Card Bridge:
- It allows you to deposit and withdraw tokens between layer 1 and layer 2.
- You can onboard tokens (e.g. stablecoins) from layer 1 to the much cheaper, easier, and faster layer-2 network.
- Once you’ve earned something on layer 2, you can use the bridge to go the other way and bring your tokens back to layer 1.
- The bridge enables us to conduct exchanges with other blockchains, especially ones in the Ethereum ecosystem.
Card Flow:
- This step-by-step guide helps token suppliers and prepaid card issuers complete their workflows, e.g. bridging tokens via the Card Bridge.
- It comes from the Boxel design system.
- It sequences steps in a thread and prompts you to take the necessary actions.
- It tracks the actions you have taken via milestones and tasks.
Essentially, this workflow system allows people in the Business-to-Business (B2B) sense to be able to navigate the bridge and get to Card Pay.
Card Commerce & Card Space
With this payment system, merchants can create stock-keeping units (SKUs):
- Which products are you selling?
- How many of those do you have in your inventory?
- What is the price?
- Are they priced in stablecoins, USD, or your own community token?
- What types of discounts do you give to people based on their affiliation/membership/payment method etc.?
And with this commerce capability comes the storefront:
- It can be constructed in Card Space (a Web builder that supports the Web3 stack).
- You can create different layouts and themes.
- You can include search engines and collections.
- It is hosted as part of the regular Web and can be visited via a shared link or QR code.
“This connects the Business-to-Business (B2B) aspects of Cardstack — through Card Pay as a common payment and value transfer mechanism — to the storefront that consumers see (B2C). So, most consumers don’t have to worry about the bridge or workflow. They just think about going to a place, see something they like, and then purchase it.” — Chris Tse, Cardstack Founder
Card Reward
Once consumers have completed a certain number of activities — they’ve bought certain products, spent a certain amount, or liked certain posts — they want to be able to get closer and closer to the community that they’re purchasing from; that’s when they can earn rewards and level up their membership.
“This is certainly something we want to build for the Cardstack community, using the CARD token as the community token, to provide rewards for people who spend money and create products.” — Chris Tse, Cardstack Founder
This mechanism can be extended to other networks that provide their own community, their own token, or their own NFTs. This is a protocol that we’re providing, with a capability for data analytics; it looks at the actions you take on-chain and then distributes the rewards efficiently, so you can claim the rewards you have earned. Sometimes you have to pay the gas for it, but it is much cheaper than a mainnet airdrop to 50,000 addresses.
This is based on our Merkle payment pool research. We’re extending that to provide a reward administration program for not only the CARD token program, but also for other communities and projects that want to distribute rewards this way through our protocol.
Card Tally
With modern machine learning and algorithms in the data field — big data, AI/ML — we can even identify addresses that look like spam and prevent those addresses from receiving rewards. So, while blockchain-level smart contracts help to conduct commercial transactions, we are also using that data to inform these analytics that we call the Tally protocol. We can do a voting and governance system based on Tally as well.
Card Advance
With a lot of merchants getting paid and having a continuous cash flow (or stablecoin flow) through this payment network, we can start offering something called ‘merchant cash advance’.
“A person / an entity can purchase the future earning from a merchant in return for a lump-sum payment. So it’s like: ‘You’re making $500 a month. Here’s $5,000. I’ll buy your income for the next several months or years, and then I’ll take 30% of it.’” — Chris Tse, Cardstack Founder
Traditionally, the only people who can provide a merchant cash advance are the credit card terminal companies. Stripe offers a lot of SaaS companies such advances, because they have some consistent SaaS revenue coming in, so they will get an advance on that revenue. The problem is that a lot of those advances come with a very high-interest rate, because the only company that can give you the advance is the company you are using to process your credit card payments, and it is not easy to switch credit card terminal companies.
Yet, thanks to our AI/ML layer, we can add this capability of merchant cash advances to the Card Pay protocol. If there is unredeemed revenue in the revenue pool — which may have been staked by merchants who don’t need the money right away — we can loan that money out to other merchants who need it now. That is all done by the protocol and facilitates a competitive market.
“This is the most DeFi part. And it really requires us to go beyond just doing all the logic on smart contracts, but actually consider doing things in a combination of on-chain logic and off-chain analytics. That combination of crypto and smart contracts and transaction processing and analytic processing I believe is the next frontier of what you can do, especially if we want to compete with the Web2 providers. Because a lot of what makes Google, Facebook, Twitter, and even Shopify powerful is that they have this data infrastructure, so that they can offer these kinds of data-driven products.” — Chris Tse, Cardstack Founder
Card Catalog
The Card Catalog will use Card Advance to fund software.
“Cardstack is a decentralized software ecosystem. It’s not just about building a payment system so that people can pay each other. By building a payment system, having our own kind of economy (like having a game that has its own V-Bucks or Roblox dollars), we can now use that currency or that type of community point system to incentivize new development.” — Chris Tse, Cardstack Founder
One way to incentivize new development is to give people a lump sum payment upfront and say, “Please build me this software module for tracking customers for $5,000 USD.” Thereby, that person is purchasing 20–50% of the developer’s revenue from subscriptions or royalty for the next number of months or years.
This Card Advance capability, which is driven by our Tally system and modeled after our reward program, is actually the way we will fund a lot of the development that will grow the decentralized SaaS layer (using the community as a kind of guidance and a source of capital).
Learn More
This article is Part 1 of our “Cardstack vs SaaS” series. Part 2 provides a closer look at Cardstack’s product suite as compared to the different SaaS tools people use today.
Watch the full video here:
Interested to learn more about Cardstack?
Check out the resources below:
Introducing Card Pay: The payment & reward network for creators
Watch the video | Read the article
Introducing Card Space
Watch the video | Read the article
DeFi Payments with Card Pay
Watch the video | Read the article
2021 Roadmap: Card Pay, Card Space & Card Catalog
Watch the video | Read the article
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