All You Need to Know About Superfluid

Introduction

Traditional payroll processes involve banks as intermediaries. Companies sign agreements with banks and every month, companies upload salary details. The salaries are deducted from the company accounts and distributed to employee accounts. The main issues with this method of salary distribution are that the salaries are not timely concerning the time employees work, many companies have wage arrears, and if a company suddenly goes bankrupt, employees cannot receive their deserved labor remuneration. Companies possess both human and monetary resources during the traditional salary distribution process. Non-real-time transactions mean that employees’ benefits are occupied for a period. Most transactions related to time in real life have this problem, such as going to the cinema to watch a movie, paying rent, etc.

The emergence of streaming payment solves the untimely exchange of funds and goods during transactions. In 2019, the Sablier protocol was the first to implement streaming payment technology through Ethereum smart contracts, and then the Zebec Protocol, Utopia, and other protocols were launched in succession. To date, streaming payment software is not simply completing the transfer of digital currency counting by the second but proactively creating many application scenarios for this technology. For example, investors can send funds to project parties through streaming payments without worrying about the project parties running away with the money. Also, when the project party distributes tokens, it can do so through an instant distribution method, only needing to pay the Gas fee once to complete multiple distributions to multiple addresses, simplifying the token distribution process. In addition, streaming payments can significantly relieve the financial pressure of the payer on streaming media subscriptions or NFT installment payments. Superfluid, established in 2020, was the first streaming payment protocol to be combined with other products. This article will explain in detail its product technology.

What is Superfluid?

Streaming payment’s primary application scenarios provide payroll or real-time investment services to other projects. Superfluid leverages the composability of streaming payments, offering simple and easy-to-use products. It is currently deployed on ten chains, including Polygon, Arbitrum, Optimism, Avalanche, and Ethereum. The project has not yet issued a token.

The Superfluid team is based in Estonia, the birthplace of Skype. Some team members previously worked at Skype. The team raised $9 million in a seed round led by Multicion in 2021, with participation from several high-profile investors. In February 2024, they secured $5.1 million in strategic funding led by Fabric Ventures.

The protocol’s smart contracts have been audited twice. Nevertheless, in February 2022, it was hacked. According to SlowMist, the attacker exploited the smart contracts and stole over $13 million in various tokens.

Superfluid’s Mechanism

Superfluid products are deployed across multiple chains, and the entire workflow involves wrapping, sending, and receiving.

Wrap

The token wrapping process is quite simple. Users need to select the type and quantity of the token, click the “Wrap” button, and get approval from the wallet.

Source: Superfluid app

Send

Once the tokens are wrapped, they can be sent to any address as a continuous stream of digital currency cash flow. The sending cycle can be one-time, daily, weekly, monthly, or yearly, and the protocol will automatically calculate the number of tokens that need to be sent per second under this cycle.

Source: Superfluid app

Receive

Click “Receive” to obtain the receiving address and the QR code for the receiving wallet.

Product Features

Super Tokens

The protocol introduces the Super Tokens product, an extension of the ERC-20 token standard. Using a wrapper to convert ERC-20 into Super Tokens, it can obtain the functions of Super Agreements, allowing tokens to be transferred in a stream or instantly distributed.

Source: Superfluid docs

First, users must deposit ERC-20 tokens into the Wrapper Super Token contract and then mint an equivalent amount of Super Tokens. If unwrapping is initiated, a comparable amount of Super Tokens will be destroyed, and the ERC-20 tokens will be retrieved.

Pure Super Tokens do not require underlying tokens, and there’s no need for wrapping or unwrapping. They possess all Superfluid-related features right out of the box. These tokens have all the features of regular ERC-20 tokens and Super Agreements.

Distributions

Distributions is an additional value transfer function that Super Tokens possess. When an account signs a distribution agreement with another account, the two parties can modify the balance of Super Tokens according to the agreement rules and the selected parameters. There are currently two distribution methods available: streaming distribution and instant distribution.

Streaming Distribution indicates that tokens can move continuously from the sender’s account to the receiver’s account every second. The sender can create, update, and delete at any time. In Streaming Distributions, the sender agrees to decrease their account balance at a specific rate per second while the receiver’s account balance increases in a stream. The stream is continuous and will continue until the sender cancels the stream or the sender’s Super Token balance reaches zero. All the inflows and outflows can then calculate the net balance of the account.

Source: Superfluid docs

Instant Distribution is another method for distributing funds. The repetition of a one-to-many distribution model can increase Gas costs, but the Instant Distribution protocol makes one-to-many distribution scalable. The entire process involves three steps: First, the sender publishes an Instant Distribution index, which is responsible for organizing the distribution of Super Tokens to the receiver proportionally. Then, by issuing units through the Instant Distribution index, the sender can set proportions for each receiver account under the Instant Distribution index. These units are similar to stock distribution; the more units an account has relative to other receivers, the more tokens it can receive from each distribution. When Super Tokens are distributed through the Instant Distribution protocol, each receiver will immediately receive tokens proportional to their units relative to the total number of units. This is completed in one go at a fixed Gas cost.

Source: Superfluid docs

Composability

Superfluid is a highly composable streaming payment protocol. Its ecosystem is continuously expanding, with over 40 applications built on Superfluid, including payment platforms, content-sharing platforms, NFTs, DeFi, and more. For instance, in subscription services, as subscriptions take place continuously, payments also proceed continuously. Similarly, in NFT auctions, streaming payments for immediate distribution makes settlement and fund transfer more real-time and simpler, avoiding repetitive labor distribution.

Source: Superfluid ecosystem

Superfluid’s streaming payment protocol’s innovations come from two features. Firstly, unlike traditional one-time payments that occur at a specific point in time, streamed payments are spread out over a period. Secondly, once the distribution ratio is set, instant distribution can ensure continuous proportional payments to an account at zero gas cost.

Current Developments

To date, Superfluid has amassed a total of 270,000 users, with total transactions exceeding USD 260 million. Over the past month, the platform has seen over 50,000 users and transactions over USD 50 million.

Source: Dune

Looking at its transaction types, one-way streaming transactions account for the highest proportion, reaching 86.6%, with streaming payment distribution and instant distribution methods being less common. Currently, the number of users is relatively stable, maintaining around 50,000, with the most activity on the Optimism chain, accounting for nearly half of the transaction volume.

Source: Dune

Conclusion

Superfluid is a streaming payment protocol that can be combined with other protocols. It reduces the risk and cost of asset transfers through streaming payments per second and instant distribution at a fixed ratio. Although the project was established early, it was significantly impacted by a major hacking incident. Currently, its business data is performing well. The future development of the streaming payment track still has much uncertainty. Superfluid has not yet issued tokens, but it already has a specific user base within the industry. In the future, it is expected to become a leader in the streaming payment track.