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How it works

A seller posts a USDC bond, is paid instantly while under capacity, and refunds for lost disputes come out of the bond.

The flow in one picture

Buyerpays 180.00UndoPayfee 0.90Sellerpaid instantlyBond1,000 USDCExample amounts in USDC
The money moves, the guarantee stays.

The buyer pays through UndoPay. The seller receives the money at once. The seller's bond stays in BondVault and stands behind the payment until the refund window ends.

Step by step

  1. The seller posts a bond. The bond is in USDC and is held by the BondVault contract. The seller also chooses a refund window of 7, 14 or 30 days.
  2. The bond sets a capacity. Capacity equals bond x leverage. Leverage is 1x for a seller's first 14 days, 2x until day 30 and 5x after.
  3. The buyer pays through UndoPay. UndoPay takes the 0.5% fee from the seller's side and checks the seller's free capacity.
  4. Under capacity, the seller is paid instantly. The amount is added to the seller's open exposure until the payment's window ends.
  5. Over capacity, the payment goes to escrow. It is held until its window ends, then released to the seller. Nothing is rejected.
  6. The window ends. Exposure drops by the payment amount and the capacity is free again.

Instant payout or escrow fallback

UndoPay will decide the route for each payment with one check.

text
capacity       = bond x leverage
open exposure  = sum of instantly-paid payments still inside their refund window
free capacity  = capacity − open exposure

if amount <= free capacity  → instant payout
otherwise                   → escrow until the window ends

An escrowed payment is fully backed by its own funds. It does not count toward open exposure and it does not use any capacity.

The buyer's protection is the same on both routes. Only the timing of the seller's payout changes.

A worked example

Lea sells ceramics. She is past day 30, so her leverage is 5x.

ItemValue
Bond1,000 USDC
Leverage5x
Capacity5,000 USDC
New sale180 USDC
Fee at 0.5%0.90 USDC
Routeinstant payout

The 180 USDC sale is paid instantly. Lea pays a 0.90 USDC fee. Her open exposure rises by 180 USDC for the length of her window, then falls back.

When something goes wrong

The buyer can open a dispute while the refund window is open.

  • The buyer deposits 2% of the amount, with a minimum of 1 USDC. The deposit is returned if the buyer wins.
  • The seller has 48h to refund or contest. No answer means the buyer wins.
  • If the seller contests, 3 arbitrators drawn at random among $UNDO stakers vote within 72h.
  • In the Agent lane, a missing or late signed receipt means an automatic refund with no arbitration.

If the buyer wins, the refund follows the refund waterfall: first the seller's escrowed balance, then the seller's bond, then, in phase 2, the Guarantee Pool.

What the bond does while it waits

Idle bonds are designed to earn USDC yield on Arc lending markets. The seller keeps 90% of that yield. Yield is variable and can be zero, and lending markets carry their own risk. See Risks.

A bond cannot be withdrawn while exposure is open against it.

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