PANews reported on April 18 that according to Cryptoslate, Circle announced the launch of Refund Protocol, introducing a non-custodial smart contract system that enables stablecoin transactions to resolve disputes without relying on centralized intermediaries. The initiative aims to address a key flaw in stablecoin usage, namely the lack of built-in refund or chargeback mechanisms. The Refund Protocol grants specific permissions to payment arbitrators while limiting their ability to control funds. Arbitrators can lock funds for a period of time, authorize refunds to pre-set addresses for payees, and allow early withdrawals after negotiating fees. However, arbitrators are prohibited from arbitrarily transferring funds, thereby maintaining the non-custodial nature of the system. The company acknowledges that currently, custodial assets do not generate returns, but suggests that future upgrades could integrate lending protocols like Aave, tokenizing locked funds and potentially sharing returns between recipients and arbitrators.
