Dai Card - Revolutionizing Transactions on Ethereum Network with Almost Zero cost

in #stateofthedapps3 years ago (edited)

Last month Connext Network released Dai Card on Ethereum Mainnet. It's a brand new innovation on making micro transactions over Ethereum network scalable and GAS free.

What is Dai Card?

Dai Card is a non-custodial browser-hosted wallet for making low cost and instant micro payments over Ethereum blockchain.
With Dai card, you can make instant offchain, trust-minimized DAI payments to anyone who is connected on its hub.

Currently, you can deposit a maximum of $30 in ETH or DAI and use this amount to make instant and secure payments to anyone. To differentiate with various wallets, it's called a Card as it functions like a debit card which can be topped up with balance that can be spent anywhere.

How to get your own Dai Card

Dai Card has one of the simplest web interface and is made for the non-techies in mind. One you visit its website, a window pops up to save your 12 words mnemonic phrases for backing up your card.

Then you come to this not so beautiful but very simplistic interface:

Dai card.png

Just click the top left corner and you will be revealed a QR code with ETH address where you can send some ETH and / or DAI. Some ETH worth about a dollar is needed for the initial GAS.

You can send any amount of ETH but the card accepts only a maximum of $ 30 worth of ETH and the rest is automatically refunded back. However there is no forced upper limit for DAI payments.

All ETH payments are instantly swapped into DAI. As you know, DAI is a stable coin with a soft peg to USD so its value is always equal to almost 1 USD. Thus as soon as your payment is realized, a dollar equivalent balance gets loaded on your card. You will see your card balance in dollar terms.

Now your DAI Card is ready to make payments against your collateralized funds. Just click on SEND button to send payments to any DAI card user. If you are sending a payment to a non-DAI card user, you can use the LINK button and insert his / her / their ETH address. A link will be sent to them. A link create an unspent payment which can be redeemed by anyone that has a corresponding secret. A DAI card will be automatically set up for the recipient.

There are no GAS charges applicable for sending payments to anyone from your balance. And cashing out your balance in DAI is also free.

Payments are instantly transferred offchain. Hence it doesn't need any GAS for it.

How does it work

DAI card uses Indra payment channel hub to transact value off-chain through https requests. The payment channel hub automatically opens channels with users and route payments among them. So rather than sending funds onchain that is very costly and time consuming, you send the hub a signed state update. If the hub has enough payment then a corresponding signed state update is generated in recipient's channel. Thus a transaction can occur instantly.

Unlike plasma and sidechain implementations, this is a completely noncustodial process. The best part is that here, your funds can always be withdrawn from the system, even if the hub gets censored or shut down completely. Thus assuring security and minimizing trust.

What I feel about DAI Card

To me, DAI card is a ray of hope for scaling up Ethereum blockchain without compromising on security and network congestion. Using channels for settlement and the non-custodial, trust-minimizing appeal puts them ahead of various sidechains and plasma implementations. Channelized networks are best suited for such wide layer transaction settlements.

The technology and coding part sounds very exciting. But when I first visited their website, I didn't find it any appealing. Some improvement in its design and user interface may give it a more professional look. The Dai Card website doesn't have any in-depth information about the product or its creators. It would be good to integrate it with their Medium blog or Twitter & Telegram channels. Although Discord link is hidden under SUPPORT button under SETTINGS, it would be a good idea to make it more conspicuous.

12 word mnemonic phrase is not completely visible even if we go to Settings to look up for backup words. This makes it difficult for saving them manually. We first need to click on copy and then paste it somewhere to reveal them. This is very frustrating.

The product has some trust assumptions and it's still a trust-minimized solution and not a truly trust-less process. Payments themselves are trusted and a hub can intercept payment while the transaction is in flight. But since it's been used for micro payment transactions only, the risk is minimized to the value of transaction. But this shouldn't be used as an excuse and needs to be worked out.

Operating this with just one hub makes the whole system very centralized. This needs to be addressed too to make it more practical and acceptable.

Link payments and other offline payments are trusted and not trust-minimized. However, maximum transaction allowed for Link payment is capped at $10, in my opinion, it should be brought down to less than 10 cents instead. Once recipient confirms and sets up their DAI Card, the actual payment should be sent.

But the fact that it's still a nascently developed idea and has launched a minimal viable product only, I hope developers are working on to eliminate these issues to make it more acceptable. I'd like all users to keep in mind that this software is still in beta version and use it accordingly.

I also hope that a mobile app is offered soon for making the use of DAI Card more convenient.

Overall, I'm excited to see this development for Ethereum chain. It's really not competing to any web wallet but actually a complimenting technology. Perhaps other web wallets would like to integrate this as a card for micropayment services and for making recurring payments without spending any GAS.

If you ask me to rate this dapp at the current state of implementation, I'd give them a rating of 3 stars out of 5 stars. But I'm hopeful to see some spectacular improvement to it in the near future.

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