sub2 protocol

Introduction

Sub2 is a permissionless, trustless and immutable protocol for creating and managing on-chain subscription payments with ERC-20 tokens. The protocol outsources the processing of payments to the public. Anyone can act as a processor and earn fees from processing payments, ensuring automation through financial incentivization.

Differences to traditional payment processors

Traditional payment processors are centralized entities which are paid for processing subscription payments at regular intervals. This is a permissioned system where both the sender and recipient have to be allowed to use the system and the permission can be withdrawn at any moment for any reason. Moreover, this system comes with the risk of failure to process payments as it consists of central servers.

Instead of having a central payment processor, sub2 auctions off the processing of payments to the public. Anyone can process a due subscription and get rewarded in fees that would normally have gone to the central payment processing company. This network of independent processors eliminates the single point of failure and ensures that no one can censor the processing of payments for arbitrary reasons.

Why subscriptions on-chain?

Sub2 was created as a solid foundation for on-chain recurrent payments, embodying the principles of permissionless access and immutability. Inspired by Ethereum's core values, sub2 aims to make financial services accessible to all, fostering inclusivity and security for users worldwide.

Permissionless architecture means that the protocol is fully open to the public, with no mechanisms to restrict usage - anyone can create and manage their subscriptions. This contrasts sharply with traditional financial systems that typically impose access restrictions based on location, financial status, or age.

The protocol's immutability ensures that it cannot be upgraded or altered. No entity has the power to halt contracts, reverse transactions, or modify the protocol's operations in any way. However, protocol governance has the authority to propose and vote on changes to subscription fees going to the protocol. This governance mechanism is transparently communicated to all participants, ensuring that any fee adjustments are made democratically and fairly.

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Why now?

Sub2 is set to release on all major Ethereum L2 networks starting with Base. The recent EIP-4844 made interacting with L2s significantly cheaper and is now at a point where processing even a <$10 subscription is cheaper than the fee paying for a traditional web2 payment processor. This means that we can now create subscriptions with all the benefits of being on-chain while still being cheaper than traditional solutions.