Stakeholder

A deep dive into Sphere's "true" on-chain subscriptions 🔗 1. The missing link in web3 payments Pull payments, where customers authorize businesses to directly withdraw money from their bank account or card, have been one of the most difficult payment problems to solve on blockchains. Think about the most common subscriptions in your lives. Whether it’s Netflix or Amazon Prime, once you approve a subscription, these companies can withdraw from your card or bank account without your explicit approval each time. Subscribe and forget. There are several reasons why this is challenging on blockchain. High gas fees, latency, and signing issues have historically made recurring payments infeasible. Imagine your $7 Netflix subscription became 10–20% more expensive due to gas each month and you had to approve again every time — assuming low congestion. An obvious non-starter for most. 🤔 2. What about account abstraction? Even with new advancements like account abstraction, which lets smart contracts sign for users and allows gas sponsors, there’s still a lot of setup involved. Further, it’s still unclear who should cover the gas. Some solutions include setting up centralized networks to cover gas fees or using an escrow-like system, occasionally with variations of token standards. 💭 3. Hasn’t this been done before? Escrow-style “subscriptions” have been one of the biggest misnomers within the industry. Although it is true that funding an escrow account and cranking that escrow periodically to disburse funds is a form of recurring payment, the UX is completely different from normal subscriptions. Users must effectively pre-pay for their subscription to fund the escrow, continuously keep track of their escrow balances, and sign additional transactions to cancel or renew. This complicated process requires precise account management from users, and more importantly is capital inefficient — imagine having to pay for all 12 months of Amazon Prime up-front just to get started with a yearly “subscription”. Whether advertised as “real-time streamed payments” or otherwise, customers must fundamentally pre-lock up assets that merchants then claim through signing transactions each billing period. Although some have explored solutions like token allowances, there’s a lot that can go wrong. Malicious merchants could drain wallets of unwitting customers without proper controls — akin to a DeFi exploit. ✅ 4. Sphere, Solana, and the solution Fortunately, newer high throughput blockchains like Solana have cheap enough fees, low enough latency, and built-in account abstraction to make “true” on-chain subscriptions possible. The real challenge isn’t just the subscription, but ensuring smooth billing, proper merchant behavior, and a developer experience that is a single API call: no proxies necessary. At Sphere, we’ve spent the last year creating a protocol that enables merchants to offer their customers subscribe and forget — no escrow, token wrapping, relayer networks, or confusing token standard forks necessary. It is available via API, and can be directly invoked by any other smart contract through CPI. The way that it works is simple. Customers approve future purchases up to some limit that the merchant sets, and then non-custodial payments are programmatically transferred directly to the merchant each billing cycle by our smart contract. For maximum flexibility, merchants still have the option to choose escrowed-style subscriptions if they wish. But the key is that they now have the choice of a better user experience — Sphere also provides a separate web portal where customers can freely view and manage their existing subscriptions, just like you might find in a traditional platform like Stripe. We recently released this product with @multisig, the default multi-sig on Solana, and with @Sollinked_com, an up-and-coming web3 social media app. If you’re interested in on-chain subscriptions, please get in touch. ❗5. Why does this matter? Given all this context, why do “true” on-chain pull payments matter at all? Aren’t escrow-based subscriptions good enough? Well, subscriptions have become the dominant monetization platform from ecommerce to gaming. Offering subscriptions increases purchases due to convenience, cost, and recurring revenue streams for platforms to build better products. Convenience is listed as a top reason for consumer adoption, and churn due to poor user experience (e.g., more clicks and accounting) is well understood as a problem — especially in web3. Visa’s exploration of account abstraction identified recurring payments as one of the exciting new unlocks. As user experience improves across vectors from custody to app interaction, we’re excited to announce this contribution to the payments experience on-chain — getting one step closer to a web2-like experience with all the benefits of decentralization. Read more on our Medium: medium.com/@spherepay/true-o…

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