Stablecoins for Goods and Services
Element Zero provides a new way of payment that is a leap ahead of the Amazon, PayPal and Visa payment processes. Stablecoins are ideal for buying goods and services and users have the added benefit of the escrow and arbitration features to provide trust between buyer and seller.
Any person or organization can use Element Zero stablecoins to safely buy goods and services from unknown users or decentralized marketplaces using the escrow and arbitration features to establish trust that was previously unavailable.
For example, a buyer can use Element Zero stablecoins to purchase a TV from a private seller. However, the seller will not ship the TV until funds are deposited in a smart contract, which will release the funds to the seller once the third-party shipper (FedEx, for example) confirms delivery of the TV. But what if the TV that arrives is not the promised brand/model? And worse, what if the seller refuses to refund your payment? This is a dispute that can be solved with the escrow and arbitration smart contract feature.
How it Works
Every time a stablecoin is transferred from one wallet to another, the transfer automatically goes through a smart contract, which acts as an escrow of sorts. In a transaction where the receiving wallet accepts crypto as a return, then the transfer will be categorized as a sales transaction. The smart contract will process the transfer without delay—subject to a transaction fee. In a transaction between two wallets where no crypto is returned, it is considered a transaction of goods, services, or contribution. If prior to the transfer, the stablecoins are held in escrow by the smart contract, then it will be held for a predetermined time. If no predetermined time is set, then it will be processed without delay.
If there is an issue with the transaction, as long as the funds are in escrow, the sender and receiver can cancel the transaction or place a dispute on the arbitration smart contract. Once this happens, the arbitration process can begin.
A very nominal escrow fee of 0.0005 will be charged on a daily basis for all transactions utilizing the escrow (escrow fee multiplied by the number of days). By doing this, the user has the option to pay zero escrow fees and the funds will be released to the receiver immediately. Alternatively, a user can pay an escrow fee to hold the funds for a longer term. In this case, 100% of the fees will go back to the Liquidity Reserve to support the stablecoin’s liquidity.
If arbitration takes place, the smart contract will allow a limited number of users to participate as a jury to decide—by voting—which side (the buyer or the seller) has a stronger claim. The decision made by the jury will determine if the funds will be processed or returned to the sender.
At the point a request for arbitration is made, both parties are given the chance to explain their claim on the blockchain. Each party will send an arbitration fee to the smart contract to create an incentive for users to participate as jury members. The party receiving the most support in arbitration will receive their funds and their arbitration fee back (transaction fees will also be returned, since the transaction was not completed.)
To increase the chances of jury members choosing based on a consensus of the facts presented, only jury members that voted for the prevailing side will get paid. Over time, jury members will establish a history of their jury decisions, making acceptance in future juries something granted first to those users with a strong record of accepted fairness.
Using the Element Zero Smart Contract System, any Element Zero stablecoin holder can create a private smart contract, with the added trust of the arbitration and escrow protocols in just minutes. No complex expertise, systems or knowledge is necessary, meaning that sellers who were previously unable to compete in the e-commerce marketplace to now accept digital payments for their goods and services with ease.
