Chainlink, a decentralized oracle network, has recently launched its new Payment Abstraction system. This system aims to streamline payments for Chainlink services and enhance user experience.
What is Payment Abstraction?
Payment Abstraction is a system that enables users to pay for Chainlink services with various digital assets like gas tokens and stablecoins. This new system simplifies the payment process by automatically converting users' tokens into LINK, Chainlink's native token.
How Payment Abstraction Works?
Payment Abstraction operates through a multi-step process, efficiently converting user payments into LINK tokens. Initially, users can pay for Chainlink services with a variety of tokens, such as ETH. These are then consolidated onto a single blockchain and automatically converted to LINK using Chainlink Automation and decentralized exchanges like Uniswap. Afterward, the LINK tokens are distributed to Chainlink service providers.
First Application: Chainlink Smart Value Recapture
One of the first practical applications of Payment Abstraction is the Chainlink Smart Value Recapture (SVR), enabling DeFi applications to capture maximal extractable value from their use of Chainlink data feeds. Aave is the first protocol to integrate Chainlink SVR, receiving a portion of liquidation profits, shared between the Aave and Chainlink communities.
The launch of Payment Abstraction is a step towards simplifying the payment system and enhancing Chainlink's economic sustainability, facilitating user payments and contributing to the long-term growth of the Chainlink ecosystem.
