Automatic Dispute Management (ADM)

Escrowing is particularly important for off-chain components like e-commerce payments.

1. A payer account approves a token transfer to the Merchant via a trusted Merchant Protocol Gateway (smart contract).
2. The Merchant Protocol Gateway routes the transaction to a smart contract based on the delivery time of the e-commerce order (another smart contract) that transfers those tokens to itself, holding them in escrow. The escrow time and reputation factors will vary on the final delivery time.
3. The merchant account cannot withdraw escrowed tokens without a high reputation level (calculation based on successful “non-disputed” escrows over variable time, total processed amount on address) or after the escrow time has passed without any dispute-signals from the payer account. The tokens are transferred to the merchant (minus a transaction fee that goes to the fee pool) after a settlement signal on the blockchain from the merchant or automatically after the escrow time has passed in the blockchain if there are no dispute claims.
   Should the merchant have a high reputation level, the tokens will be transferred by the Merchant Protocol Gateway without ever landing in any escrow contract.
4. Should there be a dispute signal from the payer and the merchant has a bad reputation level, the escrow contract will initiate a “chargeback” event resulting in the funds being routed back to the sender.