Smart-Contract Collateral Token Rewards for Secure Cryptocurrency Payments

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Solution Overview

Problem

Current payment systems using cryptocurrencies are vulnerable to security breaches, fraud, and identity theft, and are inconvenient, time-consuming, and expensive due to reliance on existing payment networks and volatile cryptocurrency values.

Innovation Solution

A secure and trusted cryptocurrency acceptance system that uses a network computing device to manage collateral tokens, ensuring transactions are backed by collateral cryptocurrency, and employs a stake pool system to incentivize security through rewards, while keeping transaction details private and using decentralized consensus algorithms to validate transactions.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Reliability

If traditional payment networks are used for cryptocurrency transactions, then transaction processing can be performed, but security vulnerabilities, fraud risks, and high costs increase

Engineering Contradiction:

Improvetransaction securityVSAvoidfraud and security breaches

Core Design Contradiction:

ReliabilityVSObject-affected harmful factors

Solution Approach 1:

The patent introduces a decentralized network of nodes as intermediaries to validate and secure cryptocurrency transactions. These nodes form a distributed ledger that replaces traditional payment network intermediaries, eliminating security vulnerabilities associated with centralized processing while maintaining transaction integrity through consensus mechanisms

Inventive Principle:

Principle #24Intermediary (Mediator)

Solution Approach 2:

The system enables transactions to secure themselves through cryptographic proof and decentralized validation. Each transaction includes digital signatures and proof-of-work or proof-of-stake mechanisms that allow the transaction to verify its own authenticity without relying on external payment networks, reducing fraud risks inherently

Inventive Principle:

Principle #25Self-service

2Productivity

If existing payment networks are used for cryptocurrency transactions, then transaction processing is enabled, but transaction time increases

Engineering Contradiction:

Improvetransaction processing speedVSAvoidtransaction completion time

Core Design Contradiction:

ProductivityVSLoss of time

Solution Approach 1:

The patent extracts the transaction validation function from traditional payment networks and implements it directly within the cryptocurrency system through decentralized nodes. This eliminates the multi-step authorization, clearing, and settlement process, allowing transactions to be confirmed in a single block validation cycle, significantly reducing completion time

Inventive Principle:

Principle #2Taking out (Extraction)

Solution Approach 2:

The system performs preliminary validation through cryptographic signature verification and consensus mechanisms before transactions are finalized. Nodes validate transaction authenticity and secure the ledger in advance, eliminating the need for subsequent clearing and settlement steps that delay traditional payment processing

Inventive Principle:

Principle #10Preliminary action

3Productivity

If existing payment networks are used for cryptocurrency transactions, then transaction processing is possible, but costs increase

Engineering Contradiction:

Improvetransaction efficiencyVSAvoidtransaction processing costs

Core Design Contradiction:

ProductivityVSLoss of energy

Solution Approach 1:

The decentralized network performs transaction validation and security functions autonomously through consensus mechanisms, eliminating the need to pay fees to intermediaries. Users only pay minimal network fees for transaction inclusion, rather than substantial processing fees charged by payment networks, significantly reducing transaction costs

Inventive Principle:

Principle #25Self-service

Solution Approach 2:

The patent replaces costly payment network intermediaries with decentralized nodes that validate transactions through cryptographic proof. This eliminates interchange fees, assessment fees, and other charges associated with traditional payment processing, allowing transactions to occur at near-zero cost while maintaining security and efficiency

Inventive Principle:

Principle #24Intermediary (Mediator)

Data Source

PatentUS12393932B2Distribution of collateral token rewards

Publication Date: 2025.08.19 FLEXA INC

AI summary

A method includes initiating, by a user computing device, a payment with a merchant computing device. The method further includes determining, by a network computing device, an amount of collateral tokens required to back the payment. The method further includes depositing, by the user computing device, the amount of the collateral tokens in a smart contract. The amount of collateral tokens is locked in the smart contract to back the payment. The method further includes sending, by the network computing device, an amount of a desired currency to the merchant computing device to complete the payment. The method further includes sending, by the merchant computing device, a fee to the network computing device for facilitating the payment. The method further includes converting, by the network computing device, the fee to collateral tokens, and depositing the collateral tokens in one or more smart contracts as rewards.