A protocol providing 7% peer to peer cash back using stablecoins

Hi Everyone,

This is Warren from the Malus . I recently received a grant from The Graph in their third wave of grants, and I would like to share what am building. Malus is a protocol that provides spenders with 7% cash back on their purchases (including NFTs) without using a credit card, debit card, and no KYC. It enables sellers to gain interest on money they would have lost giving discounts.

One of the biggest issues we are still facing in this industry is actually paying for items using cryptocurrency. In most cases, we still need to send back our funds to centralized exchanges then to a bank to purchase what we need. However, while some exchanges are providing crypto debit cards, they’re still not solving the major issues.

  • Users are still subject to KYC requirements. Which means that If they don’t have any forms identification, they can’t pay for anything using cryptocurrencies.

  • Your funds can be frozen at any point by an exchange which stops you from paying or transferring out.

  • No centralized exchange is invincible to potential hacks. Mt.Gox and Binance are a few examples.

  • When you pay for anything using these crypto debit cards there are some serious privacy issues. Your transaction history is collected by these same exchanges.

These are all the same issues we face when we have a regular bank account using a debit card or credit card. However, the lure that catches most users are the cash back rates on these cards. If we could create a protocol that provided these same rates or better, it gives users an alternative option rather than only a centralized one. When there is a decentralized option, users are more likely to use that solution. We’ve seen this with the trading volume on some DEXs passing that of Coinbase.

Creating a solution for this problem required a lot of research and testing. To get a better understanding of the application, you can always read our Docs .

  • By allowing sellers to deploy store smart contracts, where each smart contract follows the same set of rules, we can write specific rules that would benefit both the sellers and the customers. The general rule all store smart contract would follow is using Aave’s aTokens as collateral for the sellers. This would incentive the sellers not to give discounts but rather to use aTokens as collateral. This enables them to receive interest on money they’re losing giving discounts. As for the customers, they would receive 7% of their purchase in the form of mTokens which would be fungible at all store smart contracts. mTokens would be used to unlock the aTokens sellers currently have as debt.

  • In terms of identification and description. ENS names would be used to identify store smart contracts. Since anybody would have the ability to deploy a store smart contract, the potential for scams is a very serious issue. To solve this, ENS names would be verified on the store smart contracts. Verification is currently only manage by myself, but a DAO could be used to provide verification in the future. Other description could be added to the store smart contacts such as country, city, street, website, and type of business (Example NFT). This would help use filter for business.

  • The Graph is the major key component in making this project possible. Since Anyone would be able to deploy a store and add information to it such as location, we needed a noncustodial solution to store information about the store contracts. Otherwise, we would end up in the same problem of collecting KYC information to name your store smart contract. By using The Graph’s decentralized protocol, all information about the stores can be stored off the main Ethereum blockchain without any custodial storing that information.

  • In terms of privacy, all store smart contracts can be recycled. This essentially means a store smart contract can have multiple different owners over it life span contributing to its transaction history. The helps sellers by not associating with any specific contract address for too long, and it enables sellers to not have a transaction history to any one specific business.

  • Gas fees work wonderful when paying. In fact, while testing out the application, it would cost 18% your original gas price to make a stablecoin payment in the best case. However, this number quickly changes to 50% for USDC. This means that if it originally cost me $10 to send USDC, it would cost me $15 to make a 7% cash back payment. Which means that I can still pay for something as low as 215 USDC, I receive 15.05 mUSDC all on Ethereum. Because of the changes in stable coin gas price, the core of the protocol focuses on USDC, USDT, and DAI.

After months of researching and working on this, our alpha is officially live for testing on the Rinkeby testnet. With a total of $52k in grants from both The Graph and Aave, this will help with auditing the smart contracts. You can always test out our Subgraph and read our subgraph docs.