Default Escrow Contract
Default Escrow Contract is the first Zenland contract designed for general purchases.
By nature, it is a programmable contract that works similarly to escrow. The only difference is how the payment is stored and who manages it.
In traditional escrow, the escrow agent, an independent third party, holds the funds and negotiated assets until the contract conditions are met by both parties. This gives the escrow agent the right to decide if the parties delivered on the agreed terms and whether or not the deal must be closed. The obvious downside of the traditional escrow is in its central authority (an escrow agent), time and costs.
In contrast, a Zenland escrow smart contract has no central authority and is a simpler and safer alternative to paper-based contracts. A smart contract is a programmable agreement between the parties that keeps funds in the blockchain until the payment conditions are met. Once those conditions are met, the contract follows the specified instructions and releases the funds. Because of the blockchain, these escrow contracts are party-neutral and can be checked at any time.
For more information refer to What is Explorer.
The default escrow contract form is a simple agreement filled out by one party and approved by the other. Based on the code logic, the contract follows the commands given by its participants known as the contract actions.
Some of the cases where the default escrow contract is used include both physical and digital products:
domain names,
game skins,
gift cards,
headphones, etc.
Let's see why buying or selling a domain name or headphones would make more sense with the escrow contract.
Domain names
It's no surprise that changing the ownership of the domain is a risky deal. You either have to know the person you are dealing with, use the registrar's broker services, or an escrow. Then, there are hefty escrow and transaction fees, and the ownership process may take anywhere from a few weeks to a month.
With the smart contract agreement, you are guaranteed to speed up the process at a fraction of the cost.
Pricing and fees
The negotiated price for the domain + a broker fee ($60 - $100). Sometimes the broker fee is paid as a percentage of the deal. The broker negotiates the deal for you and supervises the whole process until the domain has been transferred to your account.
Depending on the escrow service, the fees may vary from 1.5% to 6% of the deal. Usually, it does not include deal negotiation with the domain owner. The escrow agent keeps the payment while the owner transfers the domain to your account and then, releases them
A Zenland fee (a service fee for the platform) of 1.75% - 0.5% of the deal. You and the current owner of the domain name negotiate the contract terms. Once the contract is signed, you transfer the money into the contract and the owner transfers the domain to your registrar's account.
Key benefit
Less hustle on your part; the broker does the major work.
The escrow agent guarantees
Blockchain protection against scammers
Major drawback
The service fee may add up to 20% to the domain cost.
Hefty escrow and payment processing fees.
Contract creation may seem complicated for new users.
Headphones
Headphones and headsets are among the most frequently purchased physical products peer-to-peer. P2P commerce can be faster and easier for both parties. The parties negotiate the payment directly, and therefore, have no escrow commissions.
On the flip side, so-called "stranger deals" are risky with no guarantees for either party. The default escrow contract may give the guarantee of a fair deal without the escrow agent's charges.
Pricing and fees
Most peer-to-peer marketplaces like Facebook Marketplace or Craigslist do not charge for listing a product/service.
Customers will communicate directly with each other until the deal is closed.
A typical escrow service is not well adapted to smaller deals like the headphones.
The standard escrow fee may go as high as half or even the full price of the headphone deal.
Zenland escrow contract only charges the platform fee of between 1.75% and 0.5%.
The contract safeguards the payment until the headphones are received.
Key benefit
No charges for using the platform to leave or find ads.
The escrow agent guarantee
Blockchain protection against scammers
Major drawback
High risk of fake profiles and payment issues.
High and inflexible escrow fees for smaller deals.
Contract creation may seem complicated for new users.
Regardless of the product/service agreed upon, every contract follows through the phases known as the contract states. These states guide the contract through the process allowing its successful completion. Each state is enacted, controlled, and changed only after specific action(s) are taken by its participants. All changes done to the contract are reflected in the Contract Chat.
As mentioned above, once approved by both parties the contract is published to the blockchain. Just like with any database, it remains there long after completion and cannot be accidentally deleted or edited for personal gain.
More information on how to create a smart contract, including the default escrow contract, is here.
Last updated