The worlds of DeFi and TradFi have long been considered to be at odds. This narrow-minded approach, however, is slowly being overturned. The synergy between DeFi and TradFi is finally being acknowledged by the wider global community as crypto sheds its status as a fringe currency. With over 420 million people across the world now invested in crypto, it has begun to position itself as a widely accepted currency and a unifying form of global remuneration. 

With borderless contracting a post-COVID19 norm, borderless compensation is catching up to speed. Wire transfers are slow and costly whereas blockchain-based systems for compensation are fast, secure, and global. Blending the speed and efficiency of on-chain transactions with the tax ease of off-chain fiat compensation, hybrid crypto and fiat payroll is here to reshape international compensation. 

Demystifying On-Chain and Off-Chain Transactions

Before diving into the specifics, it's important to understand the distinctions between on-chain and off-chain transactions. 

An on-chain transaction refers to a transaction that occurs directly on a blockchain. In the context of crypto, on-chain transactions involve the transfer of digital assets between two parties, with the details of the transaction recorded and verified on the blockchain network on which they occurred. 

In the context of traditional finance, or TradFi, off-chain transactions refer to financial transactions occurring via traditional financial networks. These can include wire transfers, direct deposits, and sending money between bank accounts. 

With the current state of hiring trending towards highly collaborative international teams, more companies are breaking away from the status quo of slow, expensive, and antiquated traditional payroll systems. While hybrid fiat and crypto solutions are beginning to surface, for a long time there were few options available that bridged the web2 to web3 gap. 

Options for on-chain and off-chain compensation, that combine fiat, crypto, and stablecoin payments, are paving the way for a more globally-connected future. Off-chain payroll solutions have a limited reach. While many people may want to receive at least a partial paycheck in their local fiat currency, the process of issuing compensation is where the challenge lies. Off-chain payments are not inherently global, and when trying to compensate an international workforce, between expensive money transfers and tricky questions of compliance, scaling becomes an obstacle. 

Hybrid crypto and fiat payroll thus represents the sweet spot between TradFi and DeFi. Leveraging all of the benefits of blockchain technology while enabling the sending and receipt of fiat, crypto and stablecoin currencies, hybrid payroll unlocks new levels of flexibility. 

Rise: A Pioneer in Hybrid Payroll Solutions 

Rise in an all-in-one payroll and compliance solution. Designed to address the unique needs of web3 companies, Rise leverages blockchain technology while simultaneously enabling off-chain transactions. What this looks like is a fiat and crypto-enabled payroll solution with automatic routing and guaranteed compliance. 

A company can fund payroll from either a digital wallet or a traditional bank account. Rise automatically routes USDC into USD, ensuring that for employer and employee alike, taxes are simplified and all transactions are fully compliant with local tax and labor laws. Once received, workers have the freedom to withdraw their wages in the currency of their choice, across 90 fiat currencies and 100 cryptos, to either a digital wallet or a traditional bank account. 

In addition to payroll, Rise streamlines the hiring process through KYC checks, one-click professional service agreements, and automated pay schedules. Achieving a perfect balance between TradFi and DeFi, Rise allows for new levels of flexibility and scalability. 

How Rise Integrates On-Chain and Off-Chain Transactions 

Rise is providing solutions to many of the previously unsolvable challenges facing global payments in the web3 sector. 

One of the primary roadblocks to scalable payroll that Rise solves is the ability to fund payroll directly from a digital wallet while sending payments in fiat. Rise’s on-chain compatibility means that web3-native institutions such as DAOs and other web3 start ups can fund payroll directly from their digital wallets. Rather than going through a third-party conversion service to route the currency of their treasury into fiat, payroll can be funded in USDC and will be automatically routed by Rise into USD. 

Another challenge that has plagued many web3-native companies is the desire to compensate workers in the currency of their choice, without needing to open a traditional bank account to allow for fiat payments. With Rise, once a worker receives their wages, they can choose to withdraw them in fiat, crypto, or stablecoins, and in their preferred ratios whether that is 50/50 crypto to fiat, 80/20, or beyond. 

Workers experience heightened freedom while companies are not responsible for any additional legwork. Rise’s unique feature of flexible ratios allows for a worker to withdraw the fiat they need to cover their monthly expenses while having a direct bridge to their favorite DeFi protocols to reinvest wages in crypto, gaming, NFTs, and more. 

A standout feature of Rise’s web3 infrastructure is the RiseID, an on-chain professional DID. The RiseID is minted once a worker or company’s KYC check is completed and allows employers to start pay schedules, approve time sheets, and initiate payments and lets workers withdraw their funds. 

The RiseID is connected to the user’s wallet of choice and companies can add on delegate wallets, granting additional persons the authority to approve transactions, sign smart contracts, and initiate tasks. This element is of particular importance to DAOs who may have multiple people managing one account. 

Advantages of Hybrid Payroll Systems

The principal benefits provided by a hybrid payroll solution are enhanced levels of security, efficiency, and flexibility. 

Cryptography, the fundamental technology that underlies the security features of blockchain technology, ensures the integrity and authenticity of transactions. Due to digital signatures, hash functions, and consensus mechanisms, falsifying data is extremely difficult on blockchain networks; once a transaction has been executed, it cannot be tampered with and is visible to anyone on the public ledger. 

Efficiency is a standout feature of blockchain-based payroll systems. Rather than waiting days to weeks for a payment to arrive, with on-chain payroll, payouts are sent and received in seconds. Payments sent over the Arbitrum blockchain, the primary layer-2 network used by Rise, arrive in their recipients digital wallet in an average of 26 seconds and cost as little as $0.42. Arbitrum processes an average of more than 39,000 daily transactions, making it the most popular Layer 2 solution and an ideal network for ensuring time and cost efficient payroll. 

Above all other benefits, hybrid payroll is inherently more flexible than off-chain payroll. While traditional finance typically offers one payment option- fiat currency- hybrid payroll offers three- fiat, crypto, and stablecoins. 

Furthermore, flexibility is experienced by both the employer and the employee. For employers, the ability to fund payroll in digital assets or fiat currency ensures that regardless of the financial system that a company relies on, they can remunerate their teams without needing a conversion service. In the case of employees, the ability to receive a paycheck in fiat and cash it out in their preferred currency represents a company’s commitment to their needs. 

The User Experience: Rise in Action

Rise Pay is designed to optimize for a seamless user experience from onboarding to payout. Whether users are web3-native or new to on-chain payments, Rise makes setting up an account, submitting invoices, and withdrawing wages close-to instant and simple to use. 

For companies and contractors alike, the Rise experience begins with a KYC check. Once completed, each user mints their professional on-chain DID, the RiseID. With this, employers can initiate pay schedules and begin assigning tasks and payees can submit invoices and start getting paid. 

The Future of Payroll: Hybrid Systems Leading the Way 

Hybrid payroll solutions are clearing the path for a more international, interconnected, and diverse workforce. 

The ease that blockchain technology brings to international payments unlocks access to global hiring that has not previously been possible. On-chain payroll solutions bypass the complications that arise with cross-border payments and the difficulty of transferring money between international bank accounts. They enable a level of collaboration that is common amongst DAOs but not the norm for traditional institutions. 

By weaving blockchain solutions into all layers of business, both blockchain-native and traditional companies open the door to working with collaborative teams of top talent dispersed across the globe. 

Getting Started with Hybrid Payroll

Rise envisions a future of work where the constraints of geographical location no longer reign supreme and hiring can be based on best-fit talent. An iteration of the modern workforce where international teams have the tools to closely collaborate and share their distinct, unique skill sets, bringing diverse knowledge and perspective to a project. 

Starting with the hiring process, Rise’s payroll platform ensures that all international hiring is compliant with local and global labor and tax laws. Rise’s compliance experts handle all tax forms, guaranteeing that international payments do not violate any regulations. Connecting on-chain services such as professional DIDs and USDC payments to off-chain institutions, such as transfers of fiat currency to international bank accounts, Rise is reimagining the future of hiring, payroll, and global workforce management. 

Schedule a demo today to learn how the fusion of on-chain and off-chain interactions can prepare your company to embrace the future of work.