From 252dc99fa8859d820e6217eeb0ace79681ea335f Mon Sep 17 00:00:00 2001
From: Frank Mueller <mue@tideland.biz>
Date: Fri, 13 Apr 2018 13:03:39 +0200
Subject: [PATCH] Initial micropayment doc (#169)
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* Start with micropayment

* More µRaiden details

* More SWAP details

* More SWAP details and start of Orchid

* Add information about Raiden

* Initial ideas about pluggable API
---
 ideas/095-les-service-model/README.md       |   1 +
 ideas/095-les-service-model/micropayment.md | 112 ++++++++++++++++++++
 2 files changed, 113 insertions(+)
 create mode 100644 ideas/095-les-service-model/micropayment.md

diff --git a/ideas/095-les-service-model/README.md b/ideas/095-les-service-model/README.md
index 6d0e03d..de46e85 100644
--- a/ideas/095-les-service-model/README.md
+++ b/ideas/095-les-service-model/README.md
@@ -68,6 +68,7 @@ Description:
 
 ## Artifacts
 
+- [Information about Micropayment](micropayment.md)
 - [Logfile](log.md)
 - [Links](links.md)
 
diff --git a/ideas/095-les-service-model/micropayment.md b/ideas/095-les-service-model/micropayment.md
new file mode 100644
index 0000000..50f671e
--- /dev/null
+++ b/ideas/095-les-service-model/micropayment.md
@@ -0,0 +1,112 @@
+## Micropayment
+
+### Existing Solutions
+
+#### Raiden
+
+##### Concept
+
+- Off-chain solution for ERC20-compliant token transfers on Ethereum
+- Designed for many-to-many solutions
+- Transfer of tokens without global consensus
+- Previously setup on-chain deposits and *balance proofs*
+- Payment channels for bidirectional transfers between two participants as long as deposit isn't exceeded
+- Transfers require no fees
+- Funds can be added to existing channels
+- Blockchain isn't involved during transfers, only for channel creation and potential closing
+- As binding as on-chain due to smart contract containing tokens only accessable to both participants
+- Closing leads to payments to both participants based on balance
+- *Network* of channels with routing allow transfers between all peers, secured by *hash-locks*
+- Scaling with the number of peers
+- RESTful API
+
+##### Links
+
+- https://raiden.network/
+- http://raiden-network.readthedocs.io/en/stable/
+- https://medium.com/@raiden_network/
+
+#### µRaiden
+
+##### Concept
+
+- Like Raiden but only between two parties: *sender* (client) and *receiver* (service provider)
+- Designed for many-to-one solutions
+- Creation of channel and settling leads to µRaiden Smart Contract and a *deposit*
+- Smart Contract enforces payment of deposit
+- Signing payments with balance-proofs between sender and receiver allows off-chain transactions
+- Once channel gets closed deposit is payed to receiver based on *balance proofs* and rest to sender
+- Typically only two on-chain transactions for opening and closing
+- If deposit of sender gets low it can increase it with an on-chain transaction
+- Own ERC20 and ERC223 compliant token
+- RESTful API
+
+##### Links
+
+- https://raiden.network/micro.html
+- https://github.com/raiden-network/microraiden
+- https://microraiden.readthedocs.io/en/docs-develop/
+
+#### SWAP
+
+##### Concept
+
+- Swarm Accounting Protocol
+- Generic *peerwise* accounting
+- Long-term exchange of data chunks balanced by data chunks preferred
+- Relies on reputation system
+- Open for payment systems with issue and receive function
+- Issue results in a 3rd party proveable promise of payment
+- Issued *cheques* will be accumulated in *cheque book*
+- Only last one will be cashed in
+- Peer decides how often to cash in
+- Transactions costs motivate to minimize their number
+- Trust to peers grows with good behavior
+- SWAP^2 provides API to set triggers for automatic payments
+- SWAP^3 reduces transaction cost by debt swap
+
+##### Links
+
+- https://github.com/ethersphere/swarm/wiki/Swap
+- https://github.com/ethersphere/swarm/wiki/Swap-demo-instructions
+
+### API
+
+#### Client
+
+##### Query Conditions
+
+Ask service provider about pricing and model (bandwidth, CPU, etc.).
+
+##### Establish Business Contract
+
+Establish a payed connection with an initial deposit.
+
+##### Check Balance
+
+Check balance of the deposit to increase fund early enough before
+connection potentially is dropped.
+
+##### Increase Fund
+
+Increase fund to keep connection with higher quality level. If
+fund is spent connection may not be dropped but changed into
+free connection. That may be dropped later.
+
+##### Close Contract
+
+Close contract so that used deposit is spent service provide and
+rest is refunded.
+
+#### Service Provider
+
+##### Book Token
+
+Book a token based on provided service. If all tokens of deposit
+are used with a booking then close contract.
+
+##### Close Contract
+
+Close contract to retrieve used deposit and transform connection
+into a free connection.
+