Safety deposit
The safety deposit is a fundamental component of Elektroscrow's transaction protocol, designed to enhance the security and integrity of each escrow transaction. When a new escrow contract is initiated, both parties – the buyer and the seller – are required to deposit a predetermined amount, termed the safety deposit, in addition to the actual transaction value. This deposit acts as a form of collateral, ensuring that both parties are equally invested and committed to the successful completion of the transaction. The amount of the safety deposit is equivalent to the value of the escrow transaction, meaning the seller effectively deposits double the transaction amount, while the buyer deposits the transaction value. decentralized.
This structure incentivizes both parties to adhere to the agreed-upon terms, as any deviation or failure to comply result in not being able to recieve the safety deposits back until a reconciliation between parties. Upon the successful conclusion of the transaction, by mutual decisions for the outcome of the escrow, the safety deposits are refunded with a minor protocol fee deduction. This concept is the key for enforcing safety rules to participants without having a mediator to govern the process thus being fully
Example: Lets say the escrow amount is x amount of tokens and fee is the protocol fee:
Required amounts to deposit:
Transfered amounts after successfull escrow:
Refunded amounts after mutual refund decision:
Buyer: 2x
(Safety deposit + escrow amount)
Seller:
x(Safety deposit)
Seller: (2x - fee/2)
Seller: (x - fee/2)
*Safety deposit is always = escrow amount