Core Concepts

Understanding the Paygrid architecture and clearing network

Three-Layer Architecture

Accord Layer
Off-Chain

Bilateral payment negotiation between institutions. Handles Payment submission and Acknowledgement to form Settlement Intents.

Key Feature:EIP-712 signed messages
Vector Layer
Off-Chain

Multilateral netting engine that batches settlement intents into 30-minute epochs and computes net positions through cycle detection algorithms.

Key Feature:70-90% volume reduction
Finality Layer
On-Chain

Atomic settlement of net positions on blockchain. Provides cryptographic finality and eliminates settlement risk through Payment-vs-Payment (PvP) settlement.

Key Feature:Atomic execution

Payment Lifecycle

1

Discovery

Look up the receiving institution's capabilities, supported assets, and connection endpoints.

2

Payment Submission

Create an EIP-712 signed payment and submit it via the Accord API. The receiving institution is notified immediately.

3

Acknowledgement

The receiving institution reviews and acknowledges the payment, forming a Settlement Intent.

4

Epoch Batching

Settlement intents are batched into 30-minute epochs for multilateral netting.

5

Multilateral Netting

Graph-based algorithms detect cycles and reduce gross payment volume to minimal net positions.

6

Atomic Settlement

Net positions are settled on-chain with atomic execution. All transfers succeed or all fail.

Multilateral Netting Example

Before & After Netting
See how gross volumes are reduced to minimal net positions

Gross Payments (Before Netting)

PSP-A → PSP-B:$100,000
PSP-B → PSP-C:$150,000
PSP-C → PSP-A:$120,000
Total Gross Volume:$370,000
↓ Multilateral Netting ↓

Net Positions (After Netting)

PSP-A:-$20,000 (owes)
PSP-B:$0 (balanced)
PSP-C:+$30,000 (receives)
Total Net Volume:$50,000
Capital Saved:86.5% reduction

Security Model

EIP-712 Signatures
All payments and acknowledgements are cryptographically signed using Ethereum's EIP-712 standard. This ensures message authenticity and prevents tampering.
Replay Protection
Nonces and expiry timestamps prevent replay attacks. Each payment can only be submitted once and must be acknowledged before expiry.
Atomic Settlement
On-chain settlement uses atomic execution. Either all net transfers execute successfully, or none do. No partial failures possible.
Merkle Proofs
Every epoch produces a Merkle tree of all included intents. You can verify your payment's inclusion independently.

Key Terms

Payment
A signed payment instruction from a payer institution to a payee institution. Contains amount, asset, expiry, nonce, and cryptographic signature.
Acknowledgement (Ack)
The payee's signed confirmation of a payment. When combined with the original payment, it forms a Settlement Intent.
Settlement Intent
The combination of a Payment and Acknowledgement. This bilateral obligation is eligible for multilateral clearing.
Epoch
A 30-minute batching window where settlement intents are collected, netted, and settled. Epochs run continuously every 30 minutes.
JIT Funding
Just-In-Time funding where institutions only post the minimal required capital for their net debit position at settlement time.
Merkle Root
Cryptographic commitment to all settlement intents in an epoch. Enables independent verification of payment inclusion.

Capital Efficiency

Why Multilateral Netting Matters

Traditional (Bilateral)

  • • Every payment settles individually
  • • Capital locked for every transaction
  • • High prefunding requirements
  • • Settlement risk on each payment

Paygrid (Multilateral)

  • • Payments batched and netted
  • • Minimal capital for net position only
  • • 70-90% reduction in funding needs
  • • Atomic PvP settlement eliminates risk

Real-World Impact:

A remittance company processing $10M daily can reduce locked working capital from $2-3M to just $200-300K through multilateral netting – directly improving cash flow and runway.