Spree Merchant Settlement
Merchants often face delayed payment timelines when accepting credit card payments or loyalty points. These outstanding balances are “receivables” that might not settle for days or even weeks. The Spree Merchant Settlement Protocol solves this cash flow gap by enabling stakers to purchase or underwrite these receivables at a discount, giving merchants near-instant liquidity in exchange for staker yield.
By pairing real-world pending invoices with on-chain liquidity, Spree broadens access to factoring — turning receivables into tradeable assets and creating a robust market for short-term yield.
Merchant Settlement Example
1. Tokenizing Receivables
A merchant calculates the total value of its pending receivables (e.g., $50,000 of unsettled credit card transactions due in 30 days).
The merchant issues a corresponding amount of Unsettled Debt Tokens (UDT) — here, 50,000 UDT, each representing $1 of future settlement.
These UDT are minted within the Spree Merchant Settlement smart contract on Solana, ensuring full transparency and an on-chain record of ownership.
2. Merchant Sells Receivables at a Discount
Merchants list their newly minted UDT on the Spree Credit marketplace, effectively putting them up for sale at a discount.
Stakers, who have capital in Spree Points (SP), choose to buy these tokens if the discount rate aligns with their desired yield.
For instance, the merchant might sell 50,000 UDT for $47,500 in SP—accepting a ~5% discount to get cash today rather than wait 30 days.
3. Receivables Pay Out
The unsettled payments eventually settle — e.g., the credit card processor disburses the $50,000 after 30 days.
These funds route into the Spree Merchant Settlement contract through the Spree Node operator that facilitates the connection between the Merchant and Spree.
The contract automatically redeems the 50,000 UDT at their face value of $50,000. The difference between the purchase price ($47,500) and final payout ($50,000) is the stakers’ profit.
4. Staker Yield
Stakers effectively lent $47,500 for 30 days and received $50,000 in return—netting $2,500 (~5%).
Annualized, that yield can be substantial if repeated monthly.
The exact discount/premium is set by an on-chain Bid/Ask mechanism operating similarly to how Uniswap's v3 AMM's "concentrated liquidity" works.
APY Pricing & On-Chain Order Book
Bid/Ask Order Book
Stakers post bids for yields they find acceptable. For instance, a staker might say “I’m willing to buy UDT at a 6% annualized discount rate.”
Merchants list their receivables at a certain discount. The market matches if the staker’s required discount aligns with the merchant’s offered price.
Liquidity On Demand
Merchants can access immediate funding by choosing the best available discount (similar to choosing a factoring service in TradFi).
This marketplace automatically matches settlement market buys with merchants, forming a competitive environment that typically lowers merchants’ effective cost of capital over time.
Risk & Reputation
The discount generally reflects risk: a merchant with a robust settlement history might get a tighter discount (e.g., 2–3% for a 30-day receivable), while riskier merchants might need to offer a steeper discount.
Stakers can review each merchant’s on-chain reputation score, default history, or track record of successful settlement.
Additionally, Spree Node operators can publish data about the merchant publicly to provide insight to the ecosystem. This can automatically be used for on-chain risk algorithms or agentic traders.
Why This Matters
Merchants Gain Instant Liquidity
No need to wait days or weeks for payment finality. Cash flow improves, enabling better operational flexibility.
Stakers Earn DeFi Yield Backed by Real-World Assets
Instead of purely speculative or volatile crypto lending, stakers can lock capital into relatively short-term, real-world receivables.
Yields are derived from actual merchant revenue streams, offering a diversifying alternative to typical crypto lending markets.
Decentralized Factoring
Traditional invoice factoring or receivables financing can be expensive or gated by large financial institutions.
The Spree Merchant Settlement protocol democratizes access, letting a global pool of stakers provide liquidity at competitive rates.
Technical Underpinnings
Solana Smart Contracts
UDT Minting: The settlement contract mints and tracks Unsettled Debt Tokens.
Settlement & Redemption: An escrow-like contract receives the final settlement from credit card processors or loyalty programs; upon receiving funds, it automatically redeems the UDT. This is facilitated by the Spree Node operator that connects Merchants with Spree.
Market Order Book: Stakers place bids via an on-chain AMM/order book, while merchants list receivables. The contract executes trades once the bid and ask meet.
Security & Validation
Staked Operators: Node operators in the Spree Network stake SPREE tokens, verifying the authenticity of merchant claims and the receipt of real-world funds.
Dispute & Governance: Should a dispute arise (e.g., merchant claims not honored by an external party), the Spree governance framework determines whether stakers should be refunded or if the merchant’s stake is to be penalized.
Default Risks
If underlying receivables never settle, stakers risk losing their initial capital outlay.
Merchants must stake or maintain good standing. Bad faith or repeated defaults can lead to protocol-level sanctions or refusal of future financing.
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