Development of a Blockchain Solution for the Paynet payment System

In Uzbekistan, cryptocurrency operations have been legalized, which is one of the reasons blockchain-based transactions are becoming increasingly popular among users.

All operations are available only through licensed platforms approved by the "National Agency of Perspective Projects". Each such project must meet several criteria, one of which is a mandatory KYC procedure.

To ensure our product is fully compliant with state legislation, we worked closely with a specialist — a member of the working group on cryptocurrency legalization.

To implement KYC on the platform, we integrated with MyID, the national facial recognition system.

Thanks to the integration with the government database:

• Each account belongs to a specific citizen of the Republic of Uzbekistan, and a single person cannot have multiple accounts.
• If a user is involved in criminal activity or is underage, they cannot create an account on the service.

Users undergo facial recognition during registration and then log in using a username/password combination and an SMS code.

There are two possible registration flows:

• Through the Paynet Crypto web version: The user enters their passport details and then completes facial recognition directly in the browser interface.
• Through the MyID mobile application: A QR code appears in the Paynet Crypto web version. The user scans it and completes facial recognition in the MyID app.

We implemented 4 popular networks and 8 assets:

• Tron network: USDT, TRX
• Polygon network: USDT, POL
• TON network: TON, NOT, USDT
• Bitcoin network for BTC transactions

We carried out a separate development for the Tron network to reduce transaction costs, optimizing gas usage in terms of Energy and Bandwidth.

Within the service, users can perform the following transactions:

• Send and receive cryptocurrency to/from other platform users
• Transfer funds to any crypto exchange or wallet
• Exchange one cryptocurrency for another
• Convert fiat to cryptocurrency
• Convert cryptocurrency to fiat

We integrated Paynet acquiring, allowing users to link any fiat card issued by banks in Uzbekistan. These cards become available within the service, enabling users to exchange fiat for crypto and vice versa.

How it works: Users select the cryptocurrency they want to receive and the amount. Then they choose which fiat card to exchange from and complete the transaction. The same process applies when exchanging one cryptocurrency for another: the user specifies the asset they want to receive and the amount, then indicates which currency they are selling.

We integrated with a currency rates verification API to ensure that each transaction is executed at the prevailing exchange rate.

Funds can be sent not only to wallet addresses but also via phone number, similar to traditional banking services. Additionally, each user can also set a custom nickname to which transfers can be made.

We enabled users to top up their cryptocurrency wallet through an ATM. The user simply inserts their card, deposits fiat currency, and receives the equivalent amount of cryptocurrency at the prevailing exchange rate.

The main version of the platform is a web service, accessible from both desktop and mobile devices. To provide additional access options on mobile, we developed a Telegram Mini App, where users can perform all the same transactions as in the web version.

Additionally, within the Mini App, users can connect their Telegram Wallet and carry out transactions with it.

We developed an admin panel with customizable administrator permissions. Access levels vary across eight different criteria, including interactions with fees, the platform, and users.

Only a super-admin or another administrator with profit withdrawal rights can withdraw platform earnings. The withdrawal will not occur until all administrators at this level approve it.

To detect suspicious transactions, we implemented an AML bot. If a user attempts to send assets to a wallet flagged for criminal activity, the transaction will be blocked. In such cases, the user’s account may also be suspended.

Platform administrators can see which users are blocked and the reason for the block. If a user passes the unblocking procedure, an administrator can restore access to their account.

Each transaction has a unique ID and can be tracked in case of disputes or account block investigations.

The payment system earns commissions on transactions performed by users on the platform. The admin panel allows setting a commission rate for each type of transaction.

Transactions within the platform do not go through the blockchain; funds remain in the Paynet Crypto master wallets, and the backend records the volume of assets belonging to users. Therefore, administrators currently do not charge a commission for such transactions.

We plan to connect the service to a liquidity aggregator, allowing the client to manage assets more freely. For example, it will enable user transactions even if the service’s master wallets do not have sufficient funds.