seed-finance

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About

Seed Finance - Instant supplier financing powered by stablecoins Seed Finance is a decentralized reverse factoring protocol built on ARC, Circle's blockchain designed for stablecoin finance. It solves a simple but costly problem: suppliers deliver goods today but wait 30–60 days to get paid. The Solution - Seed Finance connects three participants on-chain: - Suppliers create invoices and receive early payment in USDC — no more waiting 60 days. - Buyers approve invoices on-chain, confirming their payment obligation, and repay on the original due date. Their payment terms don't change. - Liquidity Providers deposit USDC into a shared vault and earn yield generated from financing fees — real yield backed by real trade finance activity. An Operator (the protocol's backend) orchestrates the funding and repayment flows between all parties. How It Works: Supplier creates invoice ↓ Buyer approves invoice (on-chain commitment) ↓ Operator approves funding from the liquidity pool ↓ Supplier triggers funding after aproval and receives USDC instantly ↓ Buyer repays at maturity → flows back to LPs as yield Here’s a clean, readable, **well-structured version** you can drop straight into a doc, Notion, or a pitch deck 👇 --- # Real-World Example: How Seed Finance Works ## The Scenario * **Supplier:** Packaging company delivering boxes * **Buyer:** Retail chain with **Net 60** payment terms * **Invoice Amount:** **50,000 USDC** * **Payment Term:** **60 days** --- ## Without Seed Finance The supplier waits **60 days** to receive **50,000 USDC**. During that time: * Cash is locked * Supplier can’t pay their own vendors * New orders may be rejected due to liquidity constraints **Result:** Growth is stalled because working capital is frozen. --- ## With Seed Finance ### Step-by-Step Flow | Step | What Happens | Amount | | ---: | ----------------------------------------------------------- | --------------- | | 1 | Supplier submits a **50,000 USDC invoice** (due in 60 days) | — | | 2 | Buyer approves on-chain: *“I owe 50,000 USDC in 60 days”* | — | | 3 | Operator triggers early payment from the liquidity pool | — | | 4 | Supplier receives funds immediately (minus fee) | **49,500 USDC** | | 5 | Buyer repays full invoice at maturity (day 60) | **50,000 USDC** | --- ## The Numbers Breakdown * **Financing Fee:** **1%** of invoice * **Fee Amount:** **500 USDC** This **500 USDC** powers the entire protocol. ### Who Pays and Who Earns | Participant | Receives | Pays | Net Result | | ------------------ | --------------------- | -------------------- | --------------------------- | | **Supplier** | 49,500 USDC (day 0) | 500 USDC fee | Gets cash **60 days early** | | **Buyer** | No change | 50,000 USDC (day 60) | Same terms, same cost | | **Liquidity Pool** | 50,000 USDC repayment | 49,500 USDC funded | **+500 USDC profit** | --- ## What This Means for Each Role ### Supplier Perspective * Pays **1%** to unlock capital **60 days early** * ~**6% APR annualized** * Cheaper than: * Bank credit lines * Traditional factoring (**2–5% per invoice**) * Predictable, instant cash flow --- ### Buyer Perspective * **Zero cost** * **Zero workflow change** * Pays exactly **50,000 USDC on day 60** * Stronger, healthier suppliers --- ### LP (Liquidity Provider) Perspective * Deposits USDC → receives **SEED share tokens** * Example: * LP deposits **100,000 USDC** * Pool finances **10 invoices of 50,000 USDC** * Capital rotates every 60 days * Each invoice earns **500 USDC** * **5,000 USDC earned in 60 days** * ≈ **5% in 60 days → ~30% APY** **Key point:** Yield is backed by **real commercial invoices**, not token emissions. --- ## At Scale | Metric | Value | | ----------------------------- | ------------------ | | Pool Size | 500,000 USDC | | Invoices Financed / Month | 50 × 50,000 USDC | | Monthly Fee Revenue | 25,000 USDC | | LP Annual Yield | ~60% APY | | Supplier Savings vs Factoring | **50–70% cheaper** | --- ## Final Takeaway Seed Finance unlocks working capital without banks, paperwork, or delays. * Suppliers get liquidity * Buyers keep their terms * LPs earn real yield * Everything settles **on-chain in USDC on Arc** Everyone wins.

How it's made

Architecture Overview Seed Finance is built across three layers: smart contracts, a TypeScript backend, and a Next.js frontend — all connected through Arc, Circle's L1 blockchain purpose-built for stablecoin finance. Smart Contracts (Solidity 0.8.26 + Foundry) The invoice system uses the Diamond Pattern (EIP-2535), splitting logic into modular facets — InvoiceFacet, FundingFacet, RepaymentFacet, and ViewFacet — all behind a single proxy address. This lets us upgrade individual pieces without redeploying the whole system. The liquidity pool is an ERC-4626 tokenized vault where LPs deposit USDC and receive SEED share tokens. Yield distribution is automatic — as repayments flow in with fees, the share price increases, so LPs don't need to claim anything. We also built a TreasuryManager with a USYC strategy that routes idle capital into Hashnote's tokenized T-Bills, so even capital sitting in the pool earns yield while waiting to finance invoices. Backend (TypeScript + ethers.js + Circle SDK) The operator backend orchestrates the full invoice lifecycle: indexing on-chain events, triggering funding when invoices are approved, and processing repayments at maturity. We integrated Circle's Developer-Controlled Wallets for secure key management and Circle Gateway for USDC on/off-ramping, so businesses can move between fiat and on-chain seamlessly without touching crypto directly. Frontend (Next.js 14 + Wagmi + Viem + RainbowKit) The frontend provides role-based dashboards — suppliers create and track invoices, buyers review and approve them, LPs manage deposits and monitor yield, and operators oversee funding operations. We used Wagmi hooks for all contract reads/writes. Why Arc? Building on Arc was a deliberate choice. USDC is the native gas token, so every transaction — creating invoices, approving them, funding suppliers — is paid in the same currency the protocol operates in. No ETH bridging, no token swaps, no gas abstraction hacks. For a trade finance protocol where everything is denominated in USDC, this removes an entire layer of friction. Arc's built-in compliance features also align with the regulated nature of supply chain finance. Notable Hack USDC on Arc has a dual nature — 18 decimals as the native gas token but 6 decimals through the ERC-20 interface at address 0x360...000. We had to handle both representations carefully throughout the stack to avoid decimal mismatches between gas estimation and token transfers.