Rails & Settlement

Payment rails are the core mechanism for streaming payments between parties in the Synapse ecosystem. They enable continuous, per-epoch payments for services like storage and are created automatically when you upload your first file to a storage provider.

Understanding Payment Rails

Automatic Rail Creation

Payment rails are created automatically when you upload your first file to a storage provider. You don’t need to manually create or manage rails - the SDK handles this for you. However, understanding how they work helps you monitor costs and maintain account health.

How Rails Work

Rails ensure reliable payments through a simple lockup mechanism:

1. The Lockup Requirement

When you create a data set (storage), the system calculates how much balance you need to maintain:

• Formula: lockup = paymentRate × lockupPeriod (e.g., 30 days worth of payments)
• Example: Storing 1 GiB costs ~0.0000565 USDFC/epoch, requiring ~1.63 USDFC minimum balance
• Purpose: This protects the service provider by ensuring you always have enough for the next payment period

2. How Your Balance Works

• You deposit funds into the payments contract (e.g., 100 USDFC)
• The lockup requirement reserves part of this balance (e.g., 1.63 USDFC for 1 GiB storage)
• You can withdraw anything above the lockup requirement
• When you settle, your total balance decreases by the payment amount (lockup requirement stays the same)

3. Normal vs Abnormal Operations

• Normal Operation: You keep settling regularly, lockup stays reserved but unused
• If you stop settling: Service continues but unpaid amounts accumulate
• If balance gets too low: Rail terminates when you can’t cover future payments
• After termination: The lockup now becomes available to pay the service provider for the period already provided

Understanding Your Balance

Think of your account as having these components:

• Total Funds: All tokens you’ve deposited into the payments contract
• Lockup Requirement: The minimum balance reserved to guarantee future payments
• Available Balance: totalFunds - lockupRequirement (this is what you can withdraw)

When Lockup Gets Used (The Safety Net)

The lockup finally gets “used” when things go wrong:

• Rail terminates (due to insufficient funds or manual termination)
• After termination, the service provider can settle and claim payment from the lockup
• This ensures the provider gets paid for services already delivered, even if the client disappears
• Example: If you had 10 days of lockup and the rail terminates, the provider can claim up to 10 days of service payments from that locked amount

For more details on the payment mechanics, see the Filecoin Pay documentation

Rail Components

Each rail consists of:

• Payer: The account paying for services
• Payee: The recipient of payments (service provider)
• Operator: The contract managing the rail (e.g., WarmStorage contract)
• Payment Rate: Amount paid per epoch
• Lockup Period: How many epochs of payments to lock up in advance
• Commission: Percentage taken by the operator (in basis points)

Working with Rails

Check active payment rails to monitor ongoing commitments and verify proper service authorization.

Viewing Your Rails

Check rails where you’re the payer:

const payerRails = await synapse.payments.getRailsAsPayer();
console.log(`You have ${payerRails.length} outgoing payment rails`);

for (const rail of payerRails) {
  console.log(`Rail ${rail.railId}:`);
  console.log(`Active: ${!rail.isTerminated}`);
  if (rail.isTerminated) {
    console.log(`Terminated at epoch: ${rail.endEpoch}`);
  }
}

Check rails where you’re receiving payments:

const payeeRails = await synapse.payments.getRailsAsPayee();
console.log(`You have ${payeeRails.length} incoming payment rails`);

Getting Rail Details

For detailed information about a specific rail:

const railInfo = await synapse.payments.getRail(railId);
console.log("Rail details:", {
  from: railInfo.from,
  to: railInfo.to,
  rate: railInfo.paymentRate,
  settledUpTo: railInfo.settledUpTo,
  isTerminated: railInfo.endEpoch > 0,
});

Settlement Operations

Settlement is the process of executing the accumulated payments in a rail. Until settled, payments accumulate but aren’t transferred.

Why Settlement is Needed

• Gas Efficiency: Batches many epochs of payments into one transaction
• Flexibility: Allows validators to adjust payments if needed
• Finality: Makes funds available for withdrawal

Performing Settlement

Automatic Settlement (Recommended)

The simplest way to settle a rail is using settleAuto(), which automatically detects whether the rail is active or terminated and calls the appropriate method:

// Automatically handles both active and terminated rails
const hash1 = await synapse.payments.settleAuto(railId);
await synapse.client.waitForTransactionReceipt({ hash: hash1 });
console.log("Rail settled successfully");

// For active rails, you can specify the epoch to settle up to
const hash2 = await synapse.payments.settleAuto(railId, 1000n);
await synapse.client.waitForTransactionReceipt({ hash: hash2 });
console.log("Rail settled successfully up to epoch 1000");

Manual Settlement Methods

For more control, you can use the specific settlement methods:

Active Rails

Settle up to the current epoch:

// Settle a specific rail (requires settlement fee)
const hash = await synapse.payments.settle(railId);
await synapse.client.waitForTransactionReceipt({ hash });
console.log("Rail settled successfully");

Settle up to a specific past epoch (partial settlement):

Useful for:

• Partial settlements to manage cash flow
• Testing settlement calculations
• Settling up to a specific accounting period

const targetEpoch = 1000n; // Ensure it's not in the future
const hash = await synapse.payments.settle(railId, targetEpoch);
await synapse.client.waitForTransactionReceipt({ hash });

Important: The untilEpoch parameter:

• Must be less than or equal to current epoch - Cannot settle future epochs that haven’t occurred yet
• Can be in the past - Allows partial settlement up to a historical epoch
• Defaults to current epoch - If omitted, settles all accumulated payments up to now
• The contract will revert with CannotSettleFutureEpochs error if you try to settle beyond the current epoch

Terminated Rails

When a rail is terminated, use the specific method for terminated rails:

// Check if rail is terminated
const railInfo = await synapse.payments.getRail(railId);
if (railInfo.endEpoch > 0) {
  console.log(`Rail terminated at epoch ${railInfo.endEpoch}`);
  // Settle the terminated rail
  const hash = await synapse.payments.settleTerminatedRail(railId);
  await synapse.client.waitForTransactionReceipt({ hash });
  console.log("Terminated rail settled and closed");
}

Preview Settlement Amounts

Always Preview Before Settlement

Best Practice: Always call getSettlementAmounts() before executing settlement to verify the amounts are as expected. This prevents unexpected payments and helps you confirm the settlement will process correctly.

// Preview settlement to current epoch
const amounts = await synapse.payments.getSettlementAmounts(railId);
const totalSettledAmount = formatUnits(amounts.totalSettledAmount);
const totalNetPayeeAmount = formatUnits(amounts.totalNetPayeeAmount);
const totalOperatorCommission = formatUnits(amounts.totalOperatorCommission);

const finalSettledEpoch = amounts.finalSettledEpoch;
const note = amounts.note;
console.log("Settlement preview:");
console.log(`  Total amount: ${totalSettledAmount} USDFC`);
console.log(`  Payee receives: ${totalNetPayeeAmount} USDFC`);
console.log(`  Operator commission: ${totalOperatorCommission} USDFC`);
console.log(`  Settled up to epoch: ${finalSettledEpoch}`);
console.log(`  Note: ${note}`);

// Preview partial settlement to a specific past epoch
const targetEpoch = 1000n; // Must be less than or equal to current epoch
const partialAmounts = await synapse.payments.getSettlementAmounts(
  railId,
  targetEpoch
);
const partialTotalSettledAmount = formatUnits(partialAmounts.totalSettledAmount);
console.log(
  `Partial settlement to epoch ${targetEpoch} -`,
  `would settle: ${partialTotalSettledAmount} USDFC`
);

Settlement Strategies

For Service Providers

Service providers (payees) should settle regularly to receive accumulated earnings.

// Example: Settle all incoming rails using settleAuto
async function settleAllIncomingRails() {
  const rails = await synapse.payments.getRailsAsPayee();

  for (const rail of rails) {
    try {
      // Check if settlement is worthwhile
      const amounts = await synapse.payments.getSettlementAmounts(rail.railId);

      // Only settle if amount exceeds threshold (e.g., $10)
      const threshold = parseUnits("10"); // 10 USDFC
      if (amounts.totalNetPayeeAmount > threshold) {
        // settleAuto handles both active and terminated rails
        const hash = await synapse.payments.settleAuto(rail.railId);
        await synapse.client.waitForTransactionReceipt({ hash });
        console.log(
          `Settled rail ${rail.railId} for ${formatUnits(amounts.totalNetPayeeAmount)} USDFC`
        );
      }
    } catch (error) {
      console.error(`Failed to settle rail ${rail.railId}:`, error);
    }
  }
}

For Clients

Clients (payers) typically don’t need to settle unless:

• They want to update their available balance before withdrawal
• A rail is terminated and needs finalization

// Example: Settle before withdrawal
async function prepareForWithdrawal() {
  const rails = await synapse.payments.getRailsAsPayer();

  // Settle all rails to update balance (settleAuto handles both active and terminated)
  for (const rail of rails) {
    const hash = await synapse.payments.settleAuto(rail.railId);
    await synapse.client.waitForTransactionReceipt({ hash });
  }

  // Now withdrawal will reflect accurate balance
  const availableBalance = (await synapse.payments.accountInfo())
    .availableFunds;
  console.log(
    `Available for withdrawal: ${formatUnits(availableBalance)} USDFC`
  );
}

Error Handling

Common settlement errors and solutions:

try {
  await synapse.payments.settle(railId);
} catch (error) {
  if (error.message.includes("InsufficientNativeTokenForBurn")) {
    console.error("Insufficient FIL for settlement fee (0.0013 FIL required)");
  } else if (error.message.includes("NoProgressInSettlement")) {
    console.error("Rail already settled to current epoch");
  } else if (error.message.includes("RailNotActive")) {
    console.error("Rail is not active or already terminated");
  } else {
    console.error("Settlement failed:", error);
  }
}

Next Steps

• Learn about Service Approvals for managing operator permissions
• Explore Storage Management which creates payment rails automatically
• See Payment Operations for comprehensive payment management guide