# Payment Methods
For flexibility, there are 3 payment options to pay for blockchain data. They are:
- Pay-As-You-Go (PAYG)
- Closed Service Agreement
- Open Service Agreement
# Pay-As-You-Go (PAYG)
This is the baseline payment method and a fallback for others. Each Indexer will advertise their PAYG prices when registering their ability to serve requests for specific SubQuery projects.
Consumers making requests will have to lock the tokens necessary to make that request in a state channel, and at the end of an Era, these tokens will be distributed to the Indexers based on the Cobb-Douglas production function.
# Closed Plans and Agreements
Closed Agreements represent an agreement between only one Indexer and one Consumer. It’s a direct relationship where all payment flows between the two parties for the work that is done.
Closed Agreements are designed to give Indexers confidence that there is a market and ROI for data from a particular SubQuery Project, and essentially signal to them which Projects should be indexed.
Closed Plans can also be placed on existing SubQuery Projects to attract additional Indexers to that SubQuery Project. This may be useful in situations where the existing monopolistic Indexer may be charging an unreasonable amount for the data or there is a lack of competition to drive prices to equilibrium.
# Open Service Agreement
Open Market Service Agreements are similar to Closed Market Service Agreements, but allow multiple Indexers to join and compete to provide data to the Consumer. An Open Market Service Agreement may start as a contract between 1 Consumer and 1 Indexer, but more parties may join the contract resulting in n consumer and n indexers.
Each Open Market Service Agreement results in a new reward pool being created for that contract, and SQT is distributed amongst participating indexers by the Cobb-Douglas production function.
Open Agreements provide favourable terms for both Indexers and Consumers, but enable better performance and reliability for Consumers by attracting more Indexers to compete and serve the same data. If Consumers are running large scale applications with users around the world, then Open Agreements are ideal.
# SubQuery’s Innovation in Payment Methods
Today, we generally pay with subscription-based payments for the music we listen to, the TV shows we watch, and the applications that we use. In pioneering web3 service applications, we’ve instead adopted a pay-as-you-go model, where each atomic transaction has an exact cost in the network.
We think subscription based or recurring payment methods are here to stay. Service providers like them because they represent predictable revenue, similarly on the other side consumers like them because they are a known and easily quantified cost. There’s also a psychological factor where once you subscribe, most consumers will feel obligated to consume as much if not all of it, increasing the demand for the service and allowing economies of scale to kick in.
The combination of the above three payment options for indexers provide several advanced subscription based options for Consumers and Indexers. Some parties may benefit from the certainty of rewards provided by Closed Agreements and the predictability of recurring costs. Equally, others may instead prefer to hunt out the most affordable data by going for high volume recurring agreements or low spot prices on the Pay-As-You-Go market.