Say goodbye to traditional contracts & enjoy full transactional security with Decentralized Escrows
Chainge has recently launched a new revolutionary module that empowers users world-wide to seamlessly transact with each other without having to worry about safety or contract conditions being fulfilled.
Long story short, the decentralized escrow module is available to anyone who wants to buy or sell something (assets/ commercial goods/ services) while having the security that the other party will hold up their end of the deal.
The whole process in the Chainge app is automatic and decentralized, which means there’s no need for a third party’s involvement or traditional escrow services that charge ridiculous fees. If you want to find out more about the Decentralized Escrow module, check out a more in-depth article here.
Now, let’s get to the practical part of escrow contracts with a couple of walkthroughs
Initiate an escrow smart contract
1. Go to Banking
2. Select Escrow.
3. From the Escrow listing screen, tap on the “+” icon on the header.
4. On the Escrow Intro screen, tap on the “Let’s start” button.
Escrow initiation steps:
Step 1 (Describe the escrow):
- Provide a name for your escrow smart contract (mandatory).
- Provide a description (optional).
Step 2 (Add the collateral, as the escrow initiator):
- The collateral can be selected from any supported spot asset in Chainge and represents the amount the initiator will have to pay his counter party.
Step 3 (Define a performance bond):
- The performance bond works like a guarantee to mitigate the risks.
- The initiator can define if the performance bond is required by one of the two parties, by both, or by none.
- In the video example, both parties are required to add a performance bond, hence the initiator will have to input the asset name and amount for each one.
Step 4 (Select the counterparty):
- On the final step, the initiator can select the counter party the escrow is initiated with.
- The counter party needs to be a Chainge user.
Step 5 (Preview and initiate):
- Preview the escrow details, edit if necessary or Continue to create it by signing the transaction.
Now the escrow smart contract order is initiated and the selected counter-party will receive an invite notification.
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To visualise the newly created Escrow smart contract, as the initiator, you have to go to Banking -> Escrow -> and select “Initiated by me” tab. The newly created Escrow smart contract will have the “Initiated” status until the counter party accepts the invitation.
Accept an escrow smart contract
When receiving an invitation to an escrow smart contract from a counter party, in order to accept it, you, as the receiver have to follow these steps:
1. Go to Notifications on your main wealth screen by clicking the top right bell icon.
2. Tap on the escrow invitation card.
3. Read the Escrow smart contract terms.
4. Tap on the “Accept the escrow invitation” button.
5. Sign the transaction.
If there is any performance bond required from you, it will be automatically be added in the escrow. After the Escrow smart contract invitation is accepted, the Escrow contract changes the status from “Initiated” to “In Progress”.
Release the funds from an Escrow smart contract:
If you’re the initiator of the Escrow smart contract and decide to release the funds to your counter party, the following steps are required:
- Go to Banking.
- Tap on the Escrow card.
3. Make sure the “Initiated by me” is selected in the dropdown.
4. Select the “In progress” tab.
5. Select the desired escrow contract.
6. Tap on “Release the funds” button.
7. Preview the funds release screen before performing the action.
8. Click on “Release the funds” button.
9. Sign the transaction.
10. Once the order is completed, the funds will be sent to the counter party and the performance bond(s) will return to whomever added them.
The released funds are the collateral which you, as the initiator added to the Escrow smart contract when the escrow was created.
And this was a step by step tutorial on how to successfully complete an escrow smart contract deal. The whole process is very intuitive and takes just a few minutes to complete. However, we did notice our users had some questions regarding the performance bond.
The performance bond basically acts as additional insurance for one or both parties involved in the escrow contract. When a performance bond is placed by party A, then party B cannot cancel the escrow without party A’s consent and vice-versa. In this case it’s in both parties’ best interest to come to an agreement or the assets (collateral + performance bonds) will stay put in the smart contract until they figure things out.
And just a couple more things for the road:
⚠️ The collateral and performance bond(s) can only be spot assets
⚠️ If BOTH parties use CHNG as a performance bond, then you will benefit from a 40% discount applied on the 0.5% service fee, thus reducing the service fee to 0.3%
⚠️ In this first version of the Escrow module, Chainge n’or any other third party don’t have the power to mediate or release the funds if the parties don’t come to an agreement on their own.
Aaaaand done. You’re now officially ready to start using the Decentralized Escrow module. And stay tuned cause we’ll be back with a FAQ article to make sure that no question remains unanswered aaaand a great Escrow campaign for Chaingers starting Dec 24th, so get ready to put that escrow module to work.
Let the transacting begin!