Asgaya Remittances: Inefficient by Design
The Constraint: Seller risk vs custody/compliance
Traditional escrow held client fiat → triggered custody regulation (MiCA/PSD2). Asgaya’s payment-first model avoids this: the seller locks their own BCH only after receiving the sender’s fiat. No entity ever holds client funds.
The Decision: Payment-First + Two-Step Settlement
- Sender pays seller via Bizum → seller receives fiat BEFORE funding covenant
- Seller locks BCH into covenant (€100 face value + €7 buffer from their inventory)
- Covenant requires TWO signatures to claim: recipient + merchant (in-person verification)
- If unclaimed after 8 hours → BCH goes to the sender wallet
Note on 8-hour window: Phase 0 hypothesis based on RS062 data (99.45% success at 4-hour windows) + stability layer protecting senders on abort. Allows gathering complete claim-timing data without excessive covenant failures.
The Trade-off
What We Gain
✅ No custody (seller never locks BCH before receiving fiat)
✅ No intermediation (no entity holds funds between parties)
✅ Legal recourse (bank transfer traceable, court precedent)
- This is how ecommerce works: you pay first and then the merchant delivers the product
✅ Seller always BCH-neutral or profitable (received fiat first)
What We Lose
❌ Recipient friction (must go to merchant in person within 8 hours)
❌ Inefficient UX (extra step vs direct wallet delivery)
❌ Merchant dependency (system fails if no merchants available)
Money Velocity: Payment-First Pays Off Beyond Compliance
Payment-first is not only what avoids custody — it is the capital-velocity enabler. Because the seller is paid before funding, the fiat is already in hand when the covenant is created, so the capital to fund the next covenant is available right away. A small BCH inventory can therefore serve many remittances in a single day — the property that makes the model viable at scale (the full capacity math lives with the 7% buffer).
The two-step settlement (recipient + merchant co-sign) does two jobs at once:
- it lets the recipient and the merchant transact safely (in-person verification), and
- it settles the sender ↔ BCH-seller transaction — the seller has been paid and the covenant is funded; only the BCH price is left, and that is fixed later by the recipient (see the 7% buffer).
Why This Choice
This inefficiency is intentional. We’re betting recipients accept the friction because:
- They’re buying groceries anyway (picking up money = shopping trip)
- Merchant provides cash or holds BCH (recipient’s choice)
- Right kind of merchants (neighborhood shops, high foot traffic)
- They might onboard merchants themselves (recipient agency)
But this is an assumption. Phase 0 validates whether recipients actually tolerate this UX.
Economic Argument: Seller Protection
Even if BCH price crashes past the 7% buffer:
- Seller received €100.50 fiat via Bizum (€100 + 0.5% seller fee)
- Seller locked €107 BCH into covenant (€100 face + €7 buffer)
- BCH drops 10% → covenant aborts, returns BCH to sender
- Seller keeps €100.50 fiat (already received, BCH-neutral)
- Seller can buy back BCH at current (lower) market rate → sold BCH above market, profitable trade
Payment-first + abort mechanism ensures sellers are always BCH-neutral or in profit.
Payment Timeout: 10 Minutes (Phase 0 Hypothesis)
After sender creates covenant and receives payment details:
- Sender leaves Asgaya app
- Sender pays via Bizum/bank transfer, in person at a merchant
- 10 minutes is plenty (most transfers complete in 1-2 minutes)
- Sender can cancel if delayed
Note: This timeout is a Phase 0 starting assumption, validated by sender behavior data. May be adjusted based on real-world usage patterns.
Phase 0 Validation
Open Questions:
- Do recipients actually go to merchants within 8 hours?
- What % of covenants abort due to unclaimed expiry?
- Do “right kind of merchants” (groceries, convenience stores) drive adoption?
- Does in-person verification feel like friction or safety?
- Do recipients onboard their own merchants (neighborhood shops)?
Success criteria:
- <20% covenant abort rate due to unclaimed expiry
- Recipients report in-person verification as “safe” not “annoying”
- Merchant density improves over time (recipients onboard neighbors)
Why We Can’t Use Traditional Escrow
Traditional escrow flow:
Sender → Escrow (locks BCH) → Wait for payment confirmation → Release to recipient
Problems:
- ❌ Custody: Escrow operator holds client funds (even temporarily) = custodian
- ❌ Licensing: Custody triggers MiCA CASP (EU), PSD2 Payment Institution (EU)
- ❌ Defeats Asgaya’s value proposition: Compliance WITHOUT licensing
Payment-first flow:
Sender → Pays Bizum → Seller receives fiat → Seller locks BCH → Covenant → Recipient claims (merchant co-sign)
Advantages:
- ✅ No custody at any point: Seller controls their BCH until covenant funded
- ✅ No intermediation: No entity routes payments between sender and recipient
- ✅ Seller protected: Already has fiat, can’t lose money
- ✅ Legal recourse: Bank transfer traceable (just like ecommerce purchases)
The Bet We’re Making
Hypothesis: Recipients tolerate inefficiency because the alternative (expensive legacy remittances) is worse.
Western Union:
- Costs 6-8% in fees + hidden spreads
- Takes 1-2 days to arrive
- Requires going to physical location anyway (pickup)
Asgaya:
- Costs <1% (transparent seller fee)
- Takes 10 minutes to 8 hours (recipient’s choice)
- Requires going to physical location (merchant)
The trade: Recipients already go somewhere to pick up money. If that “somewhere” is a neighborhood merchant where they shop anyway, the friction becomes negligible.
If we’re wrong: Phase 0 abort rate will be >50%, recipients will complain, adoption fails. We adjust or pivot.
If we’re right: Recipients prefer cheaper + inconvenient over expensive + convenient. Merchant network becomes moat.
Status: Phase 0 Validation
Last Updated: 2026-06-21
Confidence: Medium (strong rationale, unproven in practice)
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