DeDeal

We have developed a decentralized escrow protocol that enables trustless off-chain deals for buying and selling real goods, crowdsourcing and p2p crypto fiat trades.

We have a game theory background.

<Problem>

We know that the ability to exchange on-chain values such as NFTs and crypto trustlessly through mechanisms such as DEX and NFT marketplace is a revolution. However, in off-chain deals, there is a problem called the trade dilemma: send the goods first or pay first. Censorship and high fees by platformers such as visa and ebay are also problems. A decentralized escrow protocol based on game theory solve this problems.

<Rule of DeDeal>

Basic Deal Flow: 1.The seller sends 1 ETH to the protocol as a deposit, and the protocol adds 1 ETH to the seller deposit. 2.The buyer sends 1 ETH to the protocol as payment for the goods, and the protocol adds 1 ETH to the seller deposit. 3.The seller ships the goods to the buyer. 4.If the buyer does not sanction (i.e. press the sanction button) by the deadline, the deal is closed and the protocol sends 2 ETH in the seller deposit to the seller.

If the Seller Commits Fraud: If in step 3 above, the seller does not send the goods to the buyer, the buyer has the following two options: [Option 1-1] Suck It Up Just suck it up. If the sanction button is not pressed before the deadline, the protocol will send 2 ETH in the seller deposit to the seller. As a result, the seller gets 1 ETH and the buyer loses 1 ETH. [Option 1-2] Sanction the Seller By pressing the sanction button, the 2 ETH in the seller deposit is burned. However, in order for the buyer to press the sanction button, the buyer must first send 2 more ETH to the protocol as a buyer deposit. Each time the sanction button is pressed, the deadline will be extended by the deadline interval set before the deal was initiated.

If the buyer chooses <Option 1-2>, the seller now has the following two options: [Option 2-1] Accept the Sanction If the sanction button is not pressed back by the seller before the deadline, the protocol will send 2 ETH in the buyer deposit back to the buyer. As a result, the seller and the buyer will have lost 1 ETH each. [Option 2-2] Sanction the Buyer Back By pressing the sanction button, the 2 ETH in the buyer deposit is burned. However, in order for the seller to press the sanction button, the seller must first send 2 more ETH to the protocol as a seller deposit. This option is chosen as a sanction against a sanction when the seller feels that the sanction by the buyer was unjustified. If the seller chooses [Option 2-2], the buyer is once again given the option to choose [Option 1-1] or [Option 1-2]. In this way, the sanctions continue indefinitely until the seller chooses [Option 1-1] or the buyer chooses [Option 2-1], resulting in both players losing an amount of ETH corresponding to the number of sanctions.

<Why DeDeal Works>

It is important to note that there is no short-term financial benefit to sanctioning. This is called costly altruistic punishment in economic terms. It is only a risk to impose sanctions when no fraud has been committed, because sanctions can be imposed against sanctions. One-way fraud is a lose-win, but the fear of a lose-lose situation due to sanctions makes people choose win-win deals.

In the real world, catching the criminals does not directly benefit the victim, but the fear of the punishment reduces crimes. The ultimatum game in economic experiments, the Code of Hammurabi, and the hostage exchange of warring feudal lords are examples of win-win relationships established through costly punishment. In situations where one can punch the other, one respects the other. We introduce punching into anonymous societies without police and form order. In the real world, centralized power such as the police force sanction on behalf of the victim. Thomas Hobbes called them Leviathan. But there is no Leviathan in the crypto world. That is why we need self-sovereign sanctions, as in the Middle Ages.

<UseCase>

DeDeal is for cross-border transactions where there is no common and reliable C2C service, or in countries where there is no reliable central authority.

<FAQ>

Q1. Can the buyer threaten to burn the deposit and extort money? Just say ”You burn, I burn.” Do not give in to threats and send money, as there is no assurance that they will release the deposit. If they think you are a chicken who can't choose low-lose, you would be a loser in lose-win.

Q2. Sanctioned badly by the rich? Sanctions are never more than you can tolerate, because sanctions end when one of you accepts them. It is also difficult, even in the real world of law, to stop a madman from harming others without fear of punishment.

Q3. Does DeDeal Really Work? It depends on the nature of the agents: since DeDeal is a meta-game, if the players always punish fraud, fraud is less likely to occur; if many people don't sanction to fraud, fraud is more likely to occur. However, experiments such as the Prisoner's Dilemma have shown the advantage of the tit for tat strategy, and when some players begin to adopt the tit for tat strategy, the environment as a whole tends to do so as well. In other words, user education, UX, and deposit ratio adjustments can lead to a fraud-free environment.

Our project, DeDeals, is a decentralized escrow service built on Ethereum that handles secure transactions between buyers and sellers. It uses Solidity for smart contract creation and is deployed using zkEVM.

By using zkEVM, our project benefits from enhanced privacy and reduced gas costs. The increased privacy afforded by zkEVM is especially important because DeDeal is a protocol for conducting transactions without the need for a third party.