Escrow System for Trade Finance

Background

Escrow payment is very demanded feature especially for cross-boarder trading payment, because quite often buyer and sender have difficulties to build enough mutual trust prior to trading. Also, once some issue happened, it is practically hard to solve it due to different jurisdiction. Hence traders are aware of necessarily to use secure payment method.

Problem

LC (Letter of credit), offered by bank, is often used for cross-boarder trading payment to solve trustless trading issue. However, this is expensive and takes quite some time to process so that it is not ideal solution for buyers and sellers’ point of view.

Solution

Our system will provide simple, easy, yet reliable and transparent escrow service for those traders. We will use smart contract capability as programmable payment and immutable ledger infrastructure to offer this service covering all the potential escrow business scenarios.

We have analyzed and listed up all possible scenarios which may be happened in escrow transaction flow, then clarify what each actor(beneficiary, payer, mediator) should be able to do.

Based on this analysis, we implement Escrow Contract which define the role or power of each actor. This will cover the all scenarios in escrow business while preventing any user moving the fund in malicious way. Meaning that system can work under trustless situation.

In advanced scenario, we will represents BL as NFT token. Our escrow smart contract can swap fund and BL token simultaneously between payer and beneficiary. This could not have been done easily in traditional finance system as BL and fund settlement is managed by two different entities. (Shipping Carrier and Bank).

In technical perspective, metadata of BL token is stored in IPFS, because this information is very important as proof of ownership, which should not be forged. We deploy our smart contract in polygon network which makes it possible for users to use relatively cheaper gas fee.