A Look Inside the WorkChain.io Protocol

Published in

WorkChain.io

9 min readJul 13, 2018

The WorkChain.io Protocol is what makes automated, real-time payroll on the WorkChain.io platform possible. “But how does it work?” I hear you ask.

“How does it transform slow traditional payroll into something instant? And how does it give workers around the world access to cryptocurrency payments instantly?” All great questions. Which we’ll answer now.

How the World Gets Paid Today

Before we get into the nitty gritty of the protocol, a quick recap of how traditional payroll works. This’ll help with context.

Here’s how most of the working population gets paid…

You go to work, complete your shift (or hours). Your work is checked off by your manager, provided to HR who eventually process it and instruct the bank to deposit your earnings. By now, this is usually somewhere between two to four weeks later.

Broadly, that’s four individual steps involved in paying or getting paid. Keep these in mind, because we’ll come back to them in a moment.

Now, what WorkChain.io does is bring this whole weeks-long process into real-time. And this comes with major benefits. One, workers get instant access to earnings. Two, employers can automate payroll.

All sounds great, right? But how does WorkChain.io make this possible? The answer: the WorkChain.io Protocol. Let’s take a look at it now.

Using Blockchain to Process Payroll in Real-time

We’ve imagined a better way to process payroll for years. But it’s only recently that technology has caught up with our ideas. Now, finally, with blockchain technology we’re able to automate payroll and make instant payments.

Blockchain has multiple technological traits that the WorkChain.io protocol relies on to make this possible:

1. A Distributed Public Ledger — A ledger is similar to a database, but in the case of blockchain it’s public and users can add, share and verify data on it. And transactions can be recorded and viewed.

2. The Consensus Model — Via the blockchain consensus model, the network has to agree on data added to the ledger before it’s recorded. This ensures truth in data because once its agreed to its time-stamped and recorded, making it immutable. This removes the need for a central authority — in other words, network decentralization.

3. Self-Executing Smart Contracts — Blockchain’s distributed ledgers enable the creation of “smart contracts” that execute when specified conditions are met.

4. Decentralized Payments — Cryptocurrencies allow instantaneous payments to be made on a blockchain network without a reliance on third-parties like banks. This is possible because of the peer-to-peer trust blockchain creates.

Ok, so those are the fundamentals of blockchain technology. A good primer for understanding the WorkChain.io protocol, which we’ll get into now.

What is the WorkChain.io Protocol?

The WorkChain.io Protocol creates a seamless system for automating payroll and allowing it to work in real-time. To achieve this, WorkChain.io connects all the steps of payroll into one flow from work validation to payout, creating a new ecosystem along the way.

How WorkChain.io Protocol Uses Blockchain Technology

To automate payroll and make it instant and in real-time, we need certain things:

(Note. The bracketed text is what this step traditionally involves.)

1. Work records linked to individual employees (An employee clocking in/out, or submitting a time/attendance sheet)

2. A way to validate work records to create “proof of work” (A manager manually verifying an employee has worked)

3. The ability to trigger payments based on this proof of work (HR or Payroll processing time and attendance weekly, bi-weekly or monthly)

4. A decentralized, frictionless mode of payment (Banks processing payments)

As you can see, each of the above represents a step in the traditional payroll cycle. But, instead of relying on someone saying they worked, having it verified by a manager and then authorizing payments via a bank, the entire process can be done using the blockchain.

How Does the WorkChain.io Protocol Work in Real-World Terms?

Essentially, the WorkChain.io Protocol condenses and automates the four-step payroll process we know today.

Zoomed out, the four stages of getting paid can still be conceptualized as part of the WorkChain.io protocol. But they’re simplified, automated, decentralized and instant. And practically imperceptible.

1. Work Records

The first step is getting trustworthy work records linked to individual employees. To do this, WorkChain.io needs to give each user a unique profile and build these records against it as evidence that they have completed their shift, hours, task or job.

WorkChain.io uses a unique individual identifier known as a workID to link work records with individuals.

2. Validated Proof of Work

It’s not simply someone saying they have worked. Proof of this work is needed before work records are time-stamped and verified on the WorkChain.io platform.

Workhain.io gets this validated proof of work by integrating with existing HR, workforce management and payroll systems. Through these integrations, WorkChain.io can access an employee’s work schedule, confirming when they have worked before writing this data as a validated work record connected to their workID.

3. Auto-triggering Payments

With validated work records generated, the WorkChain.io platform has immutable proof that someone has worked. This lays the foundation for auto-triggered payments using smart contracts.

A smart contract is pre-funded just like an escrow to be held and released after the agreed amount of work is done, and then confirmed. It gives workers complete transparency that the funds they are promised exist, and then they are immediately released once the platform has proof of work.

4. Decentralized Payments

Payment is the final step in the payroll process. Centralized bank processing and delays hold back typical speed of payment. But, with cryptocurrencies (in our case stable coins, such as TrueUSD), payments are decentralized. They take place instantly and directly between employer and employee because there is trust and agreement created by the WorkChain.io protocol that the work has been completed.

Protocol Participants

There are three participant categories in the WorkChain.io Protocol that create the seamless end-to-end payroll process that happens in real-time:

Employees
Validators
Funds Providers — Employers and Lenders

They’re each involved in the work validation to payout flow. Let’s take a look:

Employees

Naturally, at the center of instant payroll are employees: the people who do the work and need to get paid. They must have a unique identity to which work records and payments can be linked. This requires them to create a workID, to which their hours, shifts or tasks are permanently linked.

Validators

Validators are systems that can provide information (proof) that someone has worked. This will primarily come in the form of the number of hours worked or attendance, as this is how the world typically works. However, with the increasing shift to objective and results-based work, validators will also be able to provide proof of work connected with an objective, task or result being completed.

Any type of time tracking or shift scheduling system can provide this time information, for example Humanity.com or WorkPuls.com.

Funds Providers (Employers and Lenders)

For employees to get paid, the funds have to come from somewhere. Thin air isn’t an option. So, there are two sources the money comes from: one, directly from employers; or, two, from lenders. Here’s how it works.

Employers — Option one is employers paying employees by running payroll through WorkChain.io directly. In this case, instead of paying traditional payroll processing fees and relying on banks for payments, they’ll simply stake tokens on the WorkChain.io platform (more on this in a moment) to make stablecoin cryptocurrency payouts. It will mean almost no cost to run payroll. In this scenario, onboarding employees to WorkChain.io will be mandatory.

Lenders — If an employer isn’t using the WorkChain.io platform, this won’t prohibit employees getting paid instantly. When an employee does work for a non-registered employer, their pay will be advanced through lenders and later recouped when they get paid by their employer.

This will have higher cost for employees than if they are receiving money directly from their employers due to transaction fees. WorkChain.io will be the first lender on the platform and in future organizational and peer-to-peer lending will exist.

The Role of WorkChain.io App Tokens

The basic token model that the WorkChain.io ecosystem uses is the work token model, in our case using native WorkChain.io App Tokens (WATT). Through this model, a service provider stakes (AKA bonding) WATT tokens to earn the right to perform work for the network.

Why Staking Tokens is Necessary

The probability that a given service provider is awarded the next job is proportional to the number of tokens staked as a fraction of total tokens staked by all service providers.

Staked tokens are also used to disincentivize bad actions on the platform. If any party tries to cheat or fails to perform the job, they will be penalized through the loss of tokens from their stake.

Following this model, all external parties will need staked tokens to access the WorkChain.io ecosystem as well as to perform work. Here’s the motivation to stake tokens for WorkChain.io users:

Employees — If an employee is getting paid directly from their employer on WorkChain.io, they need only the single token to access the platform. However, if their employer is not using our system, funds will be advanced from a lending pool. Employees who stake WATT Tokens will get first priority to the funds available through the lending pool.

Validators — To be able to provide more validations (proof of work records) validators will need to stake more tokens. Similar to API services where different tiers allow a different number of requests per second.

Employers — To enable real-time payroll for their employees, businesses won’t have to pay a monthly subscription or payroll processing fees. But they will need to stake a certain number of tokens equal to the number of their employees on the WorkChain.io platform. Staked tokens also provide premium access on the platform.

Lenders — To be first in line to loan money, lenders will need to stake tokens. By staking tokens both users and private and institutional lenders will get priority access to the top-rated lending opportunities. Plus, receive first access to new product functionality released on WorkChain.io

More Work on the Network = More Rewards

What’s extra special about the WorkChain.io protocol is that Lenders and Validators earn rewards for the work they perform on the network. The more work they perform, the more rewards they get.

It’s a unique model that incentivizes network participation and creates an increasingly vibrant ecosystem. The bigger the network becomes, the more work there is to be done, and the more rewards on offer. It’s a self-perpetuating network effect.

Ultimately, the WorkChain.io Protocol gives workers greater financial control. A choice when to get paid so they can manage life’s expenses. For employers, it’s an automated, seamless work validation to payout flow that reduces time and processing fees, ultimately making payroll more efficient.