Escrow: The Financial Service that Creates Trust

The escrow service was created to enable customers to trade OTC (over the counter) without risk. A standard P2P transfer could go wrong if party A sends his share of the agreed deal to party B but party B backs out and takes the funds from party A. This is where a service such as escrow can shine. It can offer both parties a secure and safe method of exchange.

Market environment

The crypto-space is saturated with investors, re-sellers and wealthy individuals. Their portfolios are extremely diverse. These assets come from a variety of sources such as seed investment, venture capitalism, partnerships and direct investment for instance. Sometimes these large players want to buy or sell assets via an OTC market. This assists in preventing market fluctuations because of large amounts being traded in the open market. They may have other reasons to avoid using a public exchange but this is the most obvious reason. The popular OTC markets are pure P2P markets, where two parties can agree on a mutually beneficial deal and perform the trade. The down side of this market is the lack of trust. The dealmaker essentially must trust his counterparty. The dealmaker, party A, will send their funds first. All the responsibility falls on party B to uphold the deal's integrity.

Why we need escrow

The escrow service is engineered to bring trust to a completely trustless setting. The Black Ocean escrow service is built from the ground up using Ethereum smart contracts which assist in preventing any kind of bad deal.

How it works

Party A has agreed a great deal with party B. They don't know who they are, but they would really like to benefit from the deal. The best way to make sure they both get treated fairly and nobody loses out from a bad deal, is to use escrow. Party A can head over to Black Oceans Escrow site. There, they can spin up the contract with the required parameters according to the agreed deal. Once it has been initiated, the funds in question will be locked into the contract. At this time, they will not be accessible via the Web3 wallet. Once the deal has been initiated the escrow service will offer party A the unique link to participate. This would then be sent to party B to finalise. Once the deal has been finalised, the smart contract for the deal will execute and the transfer will take place. Both parties A & B receive their agreed purchases and sales simultaneously. If there is any problem, the contract will expire and the tokens held in escrow will be released to their original owners.

Is this economical with such high network fees?

This is a valid point to consider for any escrow service provider. The good news is, Black Ocean covers 100% of the fees using the FLy token. In essence it makes using the escrow service free to the end user (apart from the small fee charged to party A for setting up the contract).

How can this service be offered for free?

The VRM and Black Ocean team care about long term goals. Offering to cover the fees is an incentive designed to attract a large customer base to the ecosystem and many services on offer. Of course, Black Ocean makes some money from the minimal fee charged to the initiator, party A. The fees are fairly simple. For a transaction you will pay 0.5% of the value of the deal. Customers that hold more than 10K FLy can enjoy a further 50% discount on that, reducing the escrow fee to a measly 0.25%. For frequent users, this is going to be a game-changer.

Summary

VRM and Black Ocean continue to innovate and build. Adding the escrow service to their comprehensive list of services is just another step in the right direction to becoming the world's best financial services token. If you haven't visited Black Ocean yet, take a look here to see all their services.