# Peanut Protocol: The Future Venmo

*Are we in the final stage of crypto payment abstraction?*

By [bougainville](https://paragraph.com/@bougainville) · 2024-12-27

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In this post, we will dive into Peanut Protocol's unique value proposition and why I think it could have a tangible impact on payments as a protocol for _generational trust._

### **Addressing the UX gaps in payments: what problem are they tackling?**

You don't stumble often on a company with such a straightforward yet revolutionary vision. Peanut Protocol primary mission is alleviating all the hassles and risks surrounding crypto transfers to become the evolution of a [Stripe](https://stripe.com/) or [Cash.app](http://Cash.app). I see it as the equivalent of a Venmo for the Web3 world.

The most pressing issues Peanut is solving are:

*   Complex wallet address management and associated security risks
    
*   Necessity for test transactions before significant transfers
    
*   Chain-specific considerations that confuse users
    
*   Lack of intuitive, consumer-friendly interfaces
    

Many actors have pushed for account abstraction, which is now mainstream thanks to Privy, Rhinestone (see my article [**here**](https://paragraph.xyz/editor/7650QWNm6a3fSZlYRZPu)), or Abstract. However, the space lacks a user-friendly and intuitive way to send funds without worrying about and performing test transactions. Character-sensitive transfers are things of the past. It is time to revamp them with familiar yet powerful tools that move from Account Abstraction to Address Abstraction.

### **Why Peanut's approach is revolutionary: _Generational Trust_**

What's more familiar in Web2 than a URL? It is accepted as the ID for any website you want to visit, or you want your friend to visit by sharing it. You know some URLs are sketchy, and you have learned to (most of the time) detect those.  
So few things are more familiar than a link in our Web2 world; hence, piggybacking on this architecture seemed the most straightforward yet elegant way to create a cross-border payment system for Konrad and Hugo. People talk about generational wealth, but I'd like to think of a better, more enthralling goal: _generational trust_. _Generational trust_ will specifically make sense in a multi-AI agent world where trust will matter more than anything else, and the number of transactions will undeniably explode.

Their innovation lies in three key areas:

1.  **Trustless Architecture:** The protocol operates on a fully trustless, non-custodial model. Funds are secured in smart contracts and can only be accessed with a secret embedded in the Peanut link. This maintains the core ethos of cryptocurrency, self-custody, while dramatically simplifying the user experience.
    
2.  **Link-Based Transfer System:** Instead of dealing with wallet addresses, users share a simple link. This link contains all the necessary information for fund retrieval, eliminating the need for complex wallet interactions.
    
3.  **Security-First Design:** The protocol implements a sophisticated security model where:
    

*   All link information remains local to the browser session
    
*   The frontend app is completely open-source
    
*   Smart contracts are permissionless and independently auditable
    
*   A 24-hour safety window allows link creators to withdraw funds if needed
    

### **In practice, how does it work?**

> _The basic primitive of Peanut Protocol is a cryptographically secure smart contract that relies on an offchain message, usually shared in a link or QR code. The protocol holds the deposited token from the sender and can only be unlocked by a secret. This has a simple workflow. First, the sender deposits tokens to the vault smart contract, then Peanut send the URL to their recipient, and finally the recipient withdraws the funds with the secret within the URL._

There are several options for creating a link:

*   Peanut App
    

*   SDK
    

*   An integration (e.g. wallet or app)
    

*   Smart contract
    

To do so, go to the [**Peanut Send Page**](https://peanut.to/send) and start imputing the amount you want to send.

![](https://paragraph.xyz/_next/image?url=https%3A%2F%2Fstorage.googleapis.com%2Fpapyrus_images%2Fa34ebb7a41d9cd04945b32b265166dd8.png&w=3840&q=75)

Once you connect your wallet and sign the transaction, the asset and the public key will be stored in the Peanut smart contract. Then, a unique link will be created along with a deposit on the Peanut Vault.

![](https://paragraph.xyz/_next/image?url=https%3A%2F%2Fstorage.googleapis.com%2Fpapyrus_images%2Ff27fe6e03172369ca4d007679c97a2b9.png&w=3840&q=75)

The sender part is done. Note that all the links are in the same format:

    /https://peanut.to/claim?c=CHAIN&i=INDEX&v=VERSION&p=KEY

There is nothing to do on the receiver end but hit the claim button. Note that it is gasless for the receiver. Just one click, and you're good.

![](https://paragraph.xyz/_next/image?url=https%3A%2F%2Fstorage.googleapis.com%2Fpapyrus_images%2F0e40421e0f573fe3ea36d49be172ad43.png&w=3840&q=75)

### **  
Some use cases**

Here are the core features they are focusing on at the moment and a few use cases:

*   **Address Abstraction**: No need to use wallet addresses or ENS names. They let you send and request funds via links/QRs which and it can be shared via email, WhatsApp, Telegram, in IRL.
    
    ![](https://paragraph.xyz/editor/callout/tip-icon.png)
    
    You are in charge of a **group payment.**  
      
    In a group chat on Telegram discussing a gift for a colleague, one person offers to organize the funds. Instead of requesting crypto wallet addresses or sending an awkward ENS name, they generate a Peanut link.  
    The link is shared in the group chat, and everyone can contribute directly in a few clicks.
    
*   **Chain-Abstracted Payments**: Payments work across different blockchains. For example, you can send $1,000 on Optimism, and the recipient can receive it on Arbitrum.
    

*   **Stablecoin-Abstracted Payments**: They allow for flexible stablecoin conversions. You can send 1,000 USDT, and the recipient can receive 1,000 USDC.
    
*   **Fiat/Crypto Abstracted Payments**: Peanut introduces Ethereum’s first self-custodial offramp. You can send USDC, and the recipient can claim it as USD directly from their bank account without ever needing to touch the crypto or create a wallet.
    

![](https://paragraph.xyz/editor/callout/tip-icon.png)

You **hire a freelancer** from another country to work on a project.  
  
Instead of using platforms that charge high fees for currency conversion and payouts, you pay the freelancer in USDC via Peanut.  
The freelancer receives a payment link and claims the funds in their local bank account, bypassing the need to interact with cryptocurrencies directly.

There is one space in which I am incredibly excited to see the Peanut team in action: **e-commerce**.  
  
One can imagine a world where merchants can generate payment links on the fly, enabling crypto payments without wallet integration or address management complexity. Every time a purchase is made online, the merchant can give some cash back through a link as a crypto or fiat payment. On the other hand, satisfied customers can send some payment as a tip to a merchant. As counterintuitive as it sounds, if you think deeply about the future of e-commerce, we could see the emergence of microtransactions, such as tipping a merchant online for the quality of its goods, or even crypto crowdfunding, such as the one that already occurs on [**Crowdmuse**](https://www.crowdmuse.xyz/) (our next article).

![](https://paragraph.xyz/_next/image?url=https%3A%2F%2Fstorage.googleapis.com%2Fpapyrus_images%2F009ae899929000556170c333effd2b0b.png&w=3840&q=75)

That's a lot of Peanuts already sent

### **Potential concerns and considerations**

While innovative, the protocol could raise some concerns:

1.  **Link Security:** The self-contained nature of Peanut Links means they must be treated with the same security as private keys. Anyone with access to the link can claim the funds.
    
2.  **Withdrawal Window**: While the 24-hour withdrawal window provides safety, it could also create uncertainty for recipients. Users must understand that link receipt doesn't guarantee fund availability until the window expires.
    

The first aspect is probably the most crucial to address (the team could easily circumvent the second). How can we deter security breaches **to ensure users aren't afraid of sharing links** since they contain the private key?  
  
My suggestion would be to implement **on-chain verification mechanisms**. Here’s how it could work:

When a user receives funds, and before claiming them, a smart contract could retrieve the recipient's X, WhatsApp, or Telegram account and verify if it matches the account specified by the sender. Conditional triggers, managed either by a smart contract or an AI agent governing the contract, could streamline the process and enhance the security of these smart links through proof of ownership or digital identity verification.

### **Conclusion**

Peanut Protocol abstracts away the intimidating complexity of Web3 payments, using familiar elements like URLs and QR codes.

This evolution could dismantle ossified monopolies in the global payment sector, opening the door for individuals and small businesses to thrive without exorbitant fees or barriers, a world where Remitly or Western Union are obsolete and where context-aware microtransactions are trivial.  
  
Peanut isn’t just solving today’s payment challenges; it’s building the infrastructure for a frictionless, interconnected economy, and I am excited to see the team empowering the fundamental layer of payment and trustless collaboration at a scale we’ve yet to imagine

For more details about Peanut Protocol, visit their official site [**Peanut.to**](http://Peanut.to) or the Peanut Notion [**here**](https://docs.peanut.to/).

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*Originally published on [bougainville](https://paragraph.com/@bougainville/peanut-protocol)*