The Catallax Trust has been designed to support a number of different scenarios. I’m outlining each one of these in a different post over the next few weeks as we move toward the release.
Today we are going to talk about how to use a Catallax Trust for an employment contract.
The Catallax Trust allows for a contractor and employer to agree to a fiat based payment of crypto over a number of months.
For example, John is hiring Beth to build a new smart contact based facebook. He agrees to pay her $25,000 USD per month for 6 months. John doesn’t actually have that much cash but he holds a large amount of ETH. He can put $150,000 worth of ETH into a Catallax Trust and it will pay out to Beth on a monthly schedule. If the price of ETH fluctuates wildly one of two things will happen:
If the price of ETH goes up he the trust will pay out less ETH and at the end of the contract, John will get his remaining ETH back.
If the price of ETH goes down Beth can let him know that the trust is no longer fully funded and that he needs to send more ETH into the trust if he wants her to continue with the contract.
Using a trust for an employment contract, especially in the crypto space where many contracts pay out in crypto, has a number of advantages:
Contractors know that the account that will be paying them is fully funded and that funds can’t be moved right before payday.
The contract requires a 36 day waiting period if you are going to change the beneficiary of a trust. This Guarantees at least one month of lead time for contractors to know that their contract has been terminated and that they will need to find new employment.
Employers won’t have to worry about monitoring exchange rates on payday.
Contractors can monitor the account as the value of the denominated crypto fluctuates to make sure that the employer has adequately funded the account.
Creating the Trust and Assigning it to a Contractor requires the following steps:
Employer calls the Custodian.CreateTrust function to create a new Catallax Trust contract. This function takes a token(ETH or ERC20), a curreny(USD, EUR, ect), term(number of months), and fiat payout(amount of currency per term to pay out).
Employer calls the Trust.ChangeBeneficiaryOwner function to set the beneficiary of the trust to the contractor’s address.
Employer funds the Trust by sending ETH and or ERC20. Fees are paid in ETH, ERC20 can be required if the trust pays out ERC20.
Employer starts the trust on the first day of the contract by calling the Trust.StarTrust function.
During the month the Custodian will be publishing the exchange rates between the token and the currency to the blockchain.
After one month the Contractor can call the Trust.Withdraw function to get the exchange rate adjusted the amount of crypto sent to their beneficiary address.
If you are interested in using a Catallax Trust to manage your employment contracts please reach out to us so that we can make sure that we support the Token / Currency combinations that you would like to use.
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