Skip to main content

Payment Liquidity Pool (PLP)

The Payment Liquidity Pool is Pelago's innovative approach to aggregating payments and reducing transaction costs.

Overview​

Traditional payment systems process each transaction individually, incurring high blockchain fees. Pelago's PLP aggregates multiple payments into batched settlements, dramatically reducing costs.

How It Works​

1. Payment Acceptance​

When a customer pays:

  1. Payment is validated by smart contract
  2. Funds enter the liquidity pool
  3. Merchant receives instant credit (pending settlement)
  4. Transaction is queued for batch processing

2. Batch Aggregation​

The pool aggregates payments based on:

  • Time window: Settle every 15 minutes
  • Volume threshold: Settle when pool reaches $100K
  • Network conditions: Optimize for gas prices

3. On-Chain Settlement​

Cost Comparison​

Per-Transaction Model (Traditional)​

ItemCost per TX
Gas Fee$2.50
Processing$0.30
Total (100 TX)$280

Batched Model (Pelago)​

ItemCost
Single Batch Gas$5.00
Pool Fee$0.50
Total (100 TX)$5.50

98% cost reduction through batching.

Liquidity Provider Benefits​

Earning Yield​

Liquidity providers deposit stablecoins into the pool and earn:

SourceAPY
Transaction fees3-5%
Settlement spreads1-2%
Total4-7%

No Impermanent Loss​

Unlike DEX liquidity pools:

  • Single-asset deposits (USDC only)
  • No price volatility exposure
  • Predictable, stable returns

Providing Liquidity​

import { PelagoClient } from '@pelago/sdk';

const pelago = new PelagoClient({
  apiKey: process.env.PELAGO_API_KEY!,
  environment: 'production'
});

// Deposit liquidity
const deposit = await pelago.liquidity.deposit({
  amount: 10000.00,
  currency: 'USDC',
  network: 'stellar',
  walletAddress: 'GXXXX...'
});

console.log('Deposit ID:', deposit.id);
console.log('Pool Share:', deposit.sharePercentage);

Pool Mechanics​

Reserve Requirements​

The pool maintains reserves to ensure instant merchant credits:

Settlement Windows​

NetworkWindowMax Batch Size
Stellar15 min1000 payments
Ethereum30 min500 payments
Polygon10 min2000 payments

Smart Contract Interface​

// Simplified PLP contract interface
interface IPaymentLiquidityPool {
    // Merchant operations
    function submitPayment(
        bytes32 paymentId,
        address merchant,
        uint256 amount,
        bytes calldata metadata
    ) external returns (bool);
    
    // Settlement
    function executeBatch(
        bytes32[] calldata paymentIds
    ) external returns (uint256 totalSettled);
    
    // Liquidity provider operations
    function deposit(uint256 amount) external returns (uint256 shares);
    function withdraw(uint256 shares) external returns (uint256 amount);
    
    // View functions
    function pendingSettlement(address merchant) external view returns (uint256);
    function poolBalance() external view returns (uint256);
}

Risk Management​

Pool Solvency​

  • Real-time monitoring of pool reserves
  • Automatic withdrawal limits during stress
  • Insurance fund for edge cases

Smart Contract Security​

  • Multiple third-party audits
  • Bug bounty program ($500K max reward)
  • Timelocked upgrades (48-hour delay)

Next Steps​