We held an AMA with dapps.co to answer some questions about payroll and vendor payment solutions for DApps. The AMA took place on Twitter spaces with Tarusha Mittal (Co-founder, Dapps.co), Nitin Gupta (Growth Head, Dapps,co), Ashish Sood (Head of Product, Polytrade) and Milind Bansia (Head of Strategy, Polytrade). If you weren’t able to join, here is the full recap so you don’t have to listen to it over again:
Q. Why are crypto-based payments or invoicing solutions so important for DApps?
This is a basic problem that every builder faces. Payroll or vendor payments solution, which is you know, facing both ways like it’s fiat as well as, you know, crypto in nature because a lot of vendors, as well as a lot of team members, prefer receiving the remuneration or for the services rendered in crypto, and platforms that are solving this, are quite a few. At least the ones that you know are seamlessly solving it from end to end. You know, I have at some point used Bitpay, Exodus and obviously, you know, there is some problem or the other that comes when you’re using such platforms, but why I think it is becoming important that is more of a philosophical question as to why web3 is like so becoming so big and becoming so promising and more and more people joining in because ultimately that is where people feel that the world is heading where the world is heading towards more decentralisation. So having platforms that facilitate that and give the users convenience, because crypto is a lot about convenience as well becomes very pertinent as you’re growing your platform.
Tarusha Mittal, dapps.co
See if we’re trying to create an ecosystem where we are going to converse or interact with multiple forms, so we definitely need solutions for them. Payroll is one, vendor payment is another like many of us have failed, numerous issues coordinating with so many other companies here and there. But the basic issue always precedes and I think that is where so these are the problems that people aren’t able to focus on because they are looking at the initial phases right now. Some are focusing on user acquisition, and some are using thinking about running the DApp itself, but they aren’t looking at the problems which are payrolls and vendor payments. People go in different ways through legal implications through regulatory issues and everything. So I think as in when web3 is going to be huge like as it is, it could go 10x from here right now. So, these kinds of solutions backend solutions will be very much needed, and people are slowly and steadily starting to realise this. So I think these are very, very important solutions. If not right now, they will be needed during the journey.
Nitin Gupta, dapps.co
The interaction that I have with dApps, most a lot of them are either getting the revenue on crypto, right, so now after treasuries are getting filled with crypto, it’s much easier for you to start making payments in the same currency on the same chain instead of moving on to fiat. Apart from that, crypto is also like a global ecosystem, so many dApps have, you know, global vendors or global teams. So say if you want to hire somebody across the globe, it’s very difficult to get the fiat setup and similarly if you want to work with market makers or marketing agencies, these could be based anywhere and they also want to get paid in crypto, and for many dApps that are just starting, you know, setting up entities in every jurisdiction is it’s not that easy for them to do that and then get a bank account even in some jurisdictions. So generally, these are some of the issues why, you know, dApps need to start looking at solutions since they have to kind of make these payments in crypto itself and say if you’re making money in crypto and then you have to off-ramp you know, and getting onto Fiat, that’s a huge cost. And if on a recurring basis, if you pay 3% to 5% every time you pull out a Fiat and then make a payment or make your payroll, it’s a huge cost on a dApp. So those are some of the, like the issues that I see. You know, since there’s a global ecosystem, I think the most natural way is to do it is via crypto.
Milind Bansia, Polytrade
I feel that this is also very pertinent because you know I keep saying that blockchain technology is like the second greatest equaliser after the internet. So you know, if you are getting somebody to work in this space, then at least that it should, it should be about ease when it comes to taking payments when it comes to crypto or be it fiat but if it is crypto and if somebody is looking to get paid in crypto then you know there is a certain amount of ease that is there because you don’t need to really open a bank account go to your bank to receive payment and in an XYZ currency. The financial system, the traditional financial system, by default, excludes a lot of people to get into that system. And that is why there are so many people that are bankless and crypto solves that and solutions that kind of help bridge that gap, making it easier further for people to be able to receive money in an organised manner.
Tarusha Mittal, dapps.co
Q. What should a new DApp keep in mind to start making vendors and payroll payments?
I think payrolls and all very important in the overall ecosystem right? If you don’t get paid in crypto then the journey of the cycle should happen without us doing some trades and getting money. Having said that, I think the most important aspects of this journey will be the security and volatility of the asset. So I think security is very important because while you’re signing a transaction, you truly need to understand what you’re signing for. So having these solutions actually help that. They mitigate that risk. Hence it is very, very important. Doing bulk pays to 100 people together, ensuring that you’re doing it in one transaction and also being secured over it. Very important for overall growth. Secondly, I think the volatility of the asset is something that people really need to be careful about. So right now, if you’re doing it in stablecoins it is well and good, but if you’re doing it in other assets, it is a very big treasury management solution also.
Ashish Sood, Polytrade
Q. Do you think that payroll and vendor payments matter in small startups? Or do you think it’s actually for a midsized or a big company?
It matters across the board, depending on where you’re hiring the talent.
Tarusha Mittal, dapps.co
It matters a lot, not only because of any other reason. You need to keep track of what you’re doing. There needs to be accounting, bookkeeping, everything that comes with these payroll, things that we’re building. It’s not only that, today, I’m managing excels to keep a track of where I’m paying. I think we need to be past that situation.
Ashish Sood, Polytrade
It’s also important to think long-term and I don’t think a lot of current crypto founders think in that way. But you know, for like web2 companies, when you start operating, start creating some history, some track record so that you can, you can leverage that in the future, right? So I think that DApps need to start thinking long term and to start thinking about how can they make their credit history you know, all these solutions are not out there. But from day one, if you build that over the next three, five years, it can you know, help you raise funding and can help you unlock credit maybe in the future, but that long-term thinking is important for us to get into because in web3 it can be even better. Right? It’s not just like you’re saying this was my balance sheet or this was the revenue I made. It’s really verifiable on chain, as long as you keep the right records. So I think to Ashish’s point, it’s one part of normal term thinking when you’re building a company that you do this meticulously.
Milind Bansia, IVY
Q. How is IVY different from other vendor and payroll solutions?
I’ll just introduce Polytrade and IVY for those who don’t know. So at Polytarde we are essentially a trade finance company, a decentralised solution where we fund real-world invoices with DeFi funds and IVY is our small solution to start even getting credit to on-chain companies, right. So, on IVY users can come create an organisation, they can raise invoices or raise payrolls and start developing the credit history and through Polytrade we hope some of these invoices will also get funded via Polytrade’s protocol. So overall, I think we are taking a little longer-term view on this and I hope it’s helpful to a lot of DApps and founders out there.
Milind Bansia, IVY
Q. What are some differences between paying in crypto vs paying in fiat?
Okay, see, it’s not complicated to answer, but it depends on which jurisdiction or which company you’re actually utilising. What is your corporate structure like to make the payout? There are certain countries that have jurisdiction that you really do have to perhaps declare, what you know you are paying out in. That would ultimately come down to where your company is and how you’re making the payments, up to what amount are you making that payment like India has a certain limit right for foreign remittances. If you are paying it out in some other currency, even if you’re paying it in crypto, then you know, you would have to do some kind of an LRS when you’re using like a ramp or a gateway.
So those are considerations that will actually come down and be very particular and peculiar to each individual platform. And the main differences see when you’re doing it via fiat, it’s straightforward so to say because everybody understands this. But it is not straightforward at all, I think banks really make you jump a lot of hoops but if you have like a bank account detail even if it is in India, or if it’s abroad then you do Swift or you do like any NEFT or RTGS and make the transfer for the payment or the remuneration but when it comes to crypto then you would need to get the wallet address of that person and you need to specify which token are they really taking that remuneration in. So it is easier with crypto you know the details of how much or what you are kind of sharing with the government that will depend completely on the jurisdiction.
The main difference is, I think is obviously on the taxes as well, that vendors and team members they kind of prefer at times in crypto because then they have to declare less income and they can save on the tax. Again this is not financial advice. I’m not condoning, you know, not paying taxes. But this is just the general view. Right? That people take partially in fiat and partially they take in crypto to save on taxes. And that is absolutely okay. But from the company perspective, you need to be a little mindful as to which company you’re using, Where’s the jurisdiction? Which bank are you using? What platform are you using? So that kind of comes down to the jurisdiction of the company that you’re utilising or the bank that you’re utilising because there are companies that will use the fiat to turn it into crypto and then make the payout. Otherwise, hands down. crypto is way easier to save on tax and you know, as a company also as an individual also, and it’s quick and its efficient.
Tarusha Mittal, dapps.co
Q. What do you feel about the Indian budget for 2023?
So before the budget was ended, you know, everything was ended. Everyone was like okay, sometimes no news is good news. But after everyone got the paper and everything budget was actually not discussed, but mentioned in the final paper. So, whosoever is not going to pay their TDS, will be having some penalties. They can get jailed for up to six months. And there will be an interest of 15% also on the amount that hasn’t been paid in TDS so while it wasn’t actively mentioned in the speech itself, crypto was a part of the entire budget. So that’s another aspect.
Nitin Gupta, dapps.co
I think I may be one of the only people saying this, but I think I’m happy. It is one way of showing that at least they’re considering it, number one. And number two, for me it’s a form of payment, not evasion like we need to run the country. If we all shift to crypto and stop paying taxes, infrastructure, and everything else goes. There will be an economic tumble, right? It gives us fast, secure, decentralized payments and we love that concept. But reality is something that we live in. At least for today, I think that is the way to move forward, at least for the country, where we are 1.4 billion people 20% of the world population. And we need that money to run that country. So again, that’s my view again, just a point of view.
Ashish Sood, Polytrade
Q. Does Trade Finance exist in web3?
Trade Finance is not truly present on web3 today because we still need to build credit. We still need to build the credibility of companies to underwrite them. There still needs to be proper acceptance of crypto between the supplier and the buyers. But it is getting there for sure. The first credit that we did was underwritten this person on the volumes that he has on his contract, and the presence he has in web2. But having said that, if you see the people that they are paying right now, are not somebody who gets paid in 30-40 cycle. Right? They are getting paid in 15 days, month ends and all that stuff. So trade finance is something that will be built up more, the more the better acceptance we have for crypto in the ecosystem, we will see a better use case. Having said that, we truly need to build an identity with all these aspects, infrastructure for trade finance before we truly start financing.
Ashish Sood, Polytrade
I kind of concur with what Ashish said earlier, but I also feel that as the space matures, we would see more use cases and it will become more pertinent. But beyond that, I don’t think I have an opinion on this topic. Very honestly, because I feel that you know, it is not very prominent right now, but that doesn’t mean that it’s not important. It will slowly become really important.
Tarusha Mittal, dapps.co
Q. Can Dapps.co customize their vendor and payroll processes?
Absolutely, I think depending on the solution that we’re using mostly all platforms, you know, kind of allow you to do that and if you are asking me whether Dapps would have like a layer which would deal with this, not necessarily directly, but we would have a commerce layer that will help developers in commercialising their app, because I strongly believe that you know, web3 needs to, it is maturing with every cycle but as we move forward, there will be the developers they should start thinking about their idea and their problem statement with a token. And that is why there is a very strong need to be able to commercialise their application without having to launch a token themselves, which is what we are going to solve as well.
Tarusha Mittal, dapps.co
Q. How DApps can access credit for vendors or employees?
I think for companies to actually accept credit for now, they will let us get access to the data that they have in web2. Today, they will not or they will need to create a collateral-type situation, which obviously, that doesn’t make sense with credit. Payday loans are something that can obviously come in first before anything else. So if all these solutions that we’re talking about, build a track history of a person who’s getting paid regularly, that’s where the first credit can walk-in, that’s a payday loan. And I think one of the biggest problems that we see with credit is not actually underwriting, if there are 20 people on this call and we can get 20 names to underwrite. But the problem is recourse if there is not a payment, how do you get that money back? And if he runs away, how to get that money back? So if you’re living in a society where we want to be anons, there has to be a way to report the situation till the time we are not truly there, the risk appetite needs to be really high to get into that particular journey.
Ashish Sood, Polytrade
Q. Any learnings from web2 that Polytrade and Dapps.co brings to web3?
Atleast for trade finance, we have understood that there is a lot happening, right? In web2 there are inefficiencies between banks that we realise because of not having a central system to communicate with each other. So I think that is one of the learnings that we truly believe and we build a system on it. Where let’s say a good example is getting invoices refactored, banks don’t talk to each other, and their invoices are getting refactored that’s loss to the overall system. But yes, I think what we have learned from web2 is exactly so we’re first trying to create a wheel and then we improve it. But having said that, we have tried to just grow with whatever we’ve learned from there. Building the basics first.
Ashish Sood, Polytrade
Well, I think a lot of my experience in web2 has translated into what I’m doing in web3. I genuinely believe that technology changes with a very fundamental principles of doing the business or running a platform or scaling an application is the same right? Well, it’s not very different. Like I understand that, you know, we rave and rant a lot about community in web3 and that is because of one particular main reason because you know, there is anonymity in web3 and then there is decentralisation. So you don’t really get to communicate or engage with your user in the conventional methods or the conventional ways where which would be available to you had you been building in web2.
So those become like side challenges, but ultimately what you are looking for as a builder is our users. You are looking for more adoption for your product. You’re looking for the basic diligence to be done, right, the basic compliance to be right, you’re running a company, so anything that you know you’re doing in web2, is very similar to web3. So go back to the same point we talk about community in web3 because there is no way to engage with our existing user base as we would with web2 so the community becomes big and that becomes a very defining difference when it comes to web2 and web3 and that is at least touted as a major difference but I don’t feel that is a very major difference because even the greatest products or the brand names, you know that have survived decades upon decades, they have survived because they do have a community it might not be a community, but there are those raving ranting fans which is why those brands are still alive.
Tarusha Mittal, dapps.co
Q. How does making payments to vendors work in crypto?
Right now, what we see is most of the dapps or founders in web3, they are doing everything manually. Payroll happens through their Metamask, or Gnosis. Vendors will kind of send you messages, with the amount, token and wallet address, chain on Telegram or email or they’ll be using Quickbooks to add these details in the note section and I think that all needs to change because there’s a lot of friction over there to do all of this manually. In crypto things cannot change, its immutable. That’s a big friction in doing things manually which needs to change. Also, there are scams, I was talking to one of these market makers and they had stopped invoicing via Telegram because of the impersonators that would impersonate their clients. These are a few nuances why DApps should move to proper products and solutions, IVY can be one of them.
Milind Bansia, Polytrade
Q. Are payroll and vendor payments relevant to NFT companies as well?
So, if you are an NFT company so you will have vendors who would be helping you market the NFTs or vendors who are helping you create these NFTs, these could be artists or design agencies. If you are selling luxury NFTs to high-net-worth individuals, you can invoice them via IVY. On both sides, it can make things easy. Your client might be on another chain, he has different currencies, IVY helps you swap, bridge and avoid that kind of friction and helps you sell easier.
Milind Bansia, Polytrade
Q. How is dapps.co using payments and payrolls?
Right now on dapps, we have our communication layer live which is basically like it’s on a freemium model. So we don’t have payments coming in from the partner projects but that would happen in essence in crypto. When it comes to challenges in accepting payments, the interoperability issue crops up time and again. We’re working on an interoperable layer on dapps which will make users be sitting in one ecosystem but interacting with the other all happening in the backend of things. For vendor payments and payrolls, it does become a bit of a challenge and manual work. It leaves room for a lot of error.
Tarusha Mittal, dapps.co
I am hundred percent on the same page here. Interoperability is something that is very important. As a crypto industry, we need to build with each other to grow faster. It is the way to go forward
Ashish Sood, Polytrade
Q. How secure are blockchain-based solutions?
There’s nothing more secure than putting transactions on-chain because it’s immutable, and transparent for everybody to see. When it comes to some good hygiene practices for platforms that are building in this space, I always recommend that you get your contract and your platform audited regularly, hold hackathons, and do bug bounties. Ultimately, when you’re dealing with client funds or partner funds you need to make sure there are no logical, code-related errors on your platform or your smart contract which might result in the funds getting locked up. Having said that, regular audits become very important. Have some people in-house for testing as well. Getting audits done can be very expensive and capital-consuming. The onus becomes even more if you’re a centralized platform, if you’re taking custody of funds then you need to do some basic hygiene. Having multi-sig wallets, ensuring that the funds are safe, keeping your community in the ambit.
Tarusha Mittal, dapps.co
One practice that people have started which is nascent to web3 is that they will send a rupee first or a dollar first to see if they’ve received it and then continue the second transaction that’s because they’re scared, they’re still confirming if the transaction is happening. Keeping your private key secured is important, ensuring that the contracts are audited. Having Gnosis wallets, and multi-sigs are very important while you are doing payments in web3 vs web2. It is your key, your money, you lose it, and you cry.
Ashish Sood, Polytrade