Digital Escrow and Arbitration on OpenLaw and Ethereum
Blockchain and Legal Security in a few clicks via OpenLaw, Ethereum and MetaMask Mobile 📲
Let’s say I want to sell something online and avoid obvious risks that might otherwise talk me out of it . . . namely:
- Buyer refusing to pay me for the item; 🙅
- Buyer initiating a dispute over said payment; 👩⚖️
On the other end, let’s say I just want to buy an item without going outside and similarly want to avoid the counter-party threat of:
- Seller refusing to ship item after payment; 📭
- Seller taking an unreasonable long time to ship item, presenting undue opportunity cost; 💤
- Seller initiating a dispute ….; 👩⚖️
This is the table set for a good deal of online transactions …. 🍽️
Before assets could talk to the internet, we would likely need to involve third-party ‘trust services,’ such as an escrow agent and arbitrator to lower risk of our deal, which requires additional negotiation and transaction costs 💰. Now, we have an emerging substrate through public blockchain networks that allows private agreements to be represented and effectively resolved in a format that doesn’t require judges or state mechanisms to settle bargained assets.
WELL, let’s actually see how we might do better here with trust technology, like OpenLaw an Ethereum that can together account for the legal and technical aspects of online transactions (& all via phone using MetaMask 📱✨!):
(I) Pull up Bill of Sale: Program your ‘Sale of Goods’ Escrow: 📜 🔧
A brief questionnaire (i) populates a Bill for the sale of goods (i.e, our contract), which when executed, (ii) programs a mirror escrow smart contract, and also further (iii) embeds a reward for our selected arbitrator in the event that this transaction calls for quick dispute resolution (default set to 5% arbitration fee of contract value…)
(II) Deposit Purchase Price into Digital Escrow with Buyer Confirmation:
We can then grab our new escrow smart contract address like so:
This unique escrow program reflects the essential deal terms and performance flow as agreed in the underlying Bill of Sale …. that is, escrow smart contract will reflect deal ‘parties,’ ‘state’, and only the selected buyer can confirm receipt of the goods and release purchase price to seller; only buyer and seller can initiate a dispute and lock escrow; only arbiter can resolve locked escrow 🔐.
To get things started, our Buyer will then top up this escrow with the bargained-for 10 DAI (◈) in order to induce Seller to send their Sneakers 👟, again, by just using a human-readable form:
(III) Initiate Dispute and lock Digital Escrow with Buyer Confirmation:
Now, for demonstrative purposes, let’s assume our Seller shipped sneakers that had an (arguably) foul stench 👃, leading the erstwhile Buyer to refuse to confirm receipt on the deal ‘confirmation’ form 🤬, thus stranding the purchase price (◈) in digital Escrow purgatory … 🏜️
To move things along and see ‘some’ money sooner, Seller can then use the same buyer confirmation form (that now essentially acts as dApp to manage contract performance) to initiate a dispute and lock the 10 DAI (◈) for the arbiter address selected in Bill of Sale to divvy up …
(IV) Resolve Dispute and release Digital Escrow with Arbiter Resolution:
Our Arbiter, incentivized to claim their 5% cut of this Sneaker deal, can then take the wheels and enter in their split of the 10 DAI (◈) via a simple OpenLaw resolution form (bing, bang, boom 💥):
We can see this resolution split (6.5 / 3 / 0.5 ◈) in real-time on the Ethereum blockchain:
That’s it! 💸 just Magick Internet Money things 🧙:
LINKS: 🎩
- Demo Escrow Smart Contract: https://etherscan.io/address/0xad7bec254720f23615d85933ad5f3f11ac5b958b
- Source Code for Escrow “Factory”: https://etherscan.io/address/0xbfa24c8c54d0ca5229e9c456d48b16b4b752bc3c#code
PS: Though DAI stablecoin (◈) was used in this transaction to account for digital asset volatility, any ERC20 token, including other stablecoins (e.g., USDC) can be readily used in these forms below:
- BILL 📜
- CONFIRMATION ✔️
- RESOLUTION ⚖️
Cheers! If you have any questions related to this demo or smart agreements in general, send a line over to info@openesq.tech 📧 ✌️
