Cross-Blockchain Escrow Arbitration via Smart Contracts
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Solution Overview
Problem
Conventional third-party escrow systems face reliability issues due to the lack of an effective arbitration mechanism when dealing with transactions across multiple independent blockchain networks, which use different protocols and have difficulty communicating records between each other.
Innovation Solution
An escrowing system and method for cross-blockchain third-party settlement that utilizes smart contracts on multiple blockchains, where an arbitration host determines the success of a delivery outside the blockchain and transfers digital assets without the need for managing trading entities, allowing for improved reliability by enabling secure transfer or return of assets based on successful delivery verification.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If blockchain-based solution is used for third-party escrow transactions, then trustless transaction protection is achieved, but reliability of escrow deteriorates due to lack of effective arbitration mechanism across independent blockchain networks
Solution Approach 1:
The patent introduces an arbitration smart contract as an intermediary component between independent blockchain networks. This arbitration contract receives delivery verification information from external sources and automatically executes asset transfers based on verified delivery conditions, serving as a mediator that enables reliable cross-chain escrow without requiring direct trust between trading parties across different blockchains.
Solution Approach 2:
The patent segments the escrow system into separate components deployed on different blockchain networks: a first smart contract on the initiating end's blockchain, an arbitration smart contract on the accepting end's blockchain, and corresponding wallet addresses. This segmentation allows each blockchain to operate independently while still achieving coordinated escrow functionality through the arbitration mechanism.
2Adaptability or versatility
If multiple independent blockchain networks are used for transactions, then transaction versatility is improved, but communication between blockchains deteriorates due to different protocols
Solution Approach 1:
The arbitration smart contract serves as an intermediary that receives delivery verification information from external sources and translates it into blockchain-compatible format for automatic execution. This intermediary layer enables communication between independent blockchain networks without requiring them to share the same protocol, as each blockchain only needs to interact with its local smart contract.
Solution Approach 2:
The patent moves the arbitration logic from the application layer to the smart contract layer, creating a new dimension of interaction. Instead of trying to communicate directly between blockchain networks at the protocol level, the system uses smart contracts to handle cross-chain coordination, effectively adding a functional dimension that bypasses protocol incompatibilities.
3Reliability
If arbitration host manages trading entities to verify delivery, then delivery verification reliability is improved, but system complexity deteriorates due to direct management of trading entities
Solution Approach 1:
The arbitration smart contract automatically executes asset transfers based on delivery verification information it receives, without requiring the arbitration host to manually manage trading entities. The system enables self-service arbitration where the smart contract itself performs the verification and execution, reducing the complexity of human-managed arbitration while maintaining reliability.
Solution Approach 2:
The patent extracts the arbitration logic from the arbitration host and embeds it in the arbitration smart contract. This separation allows the arbitration host to simply provide verification information while the smart contract handles the complex logic of determining whether delivery conditions are met and executing the appropriate asset transfers, reducing overall system management complexity.
Data Source
AI summary
An escrowing system for cross-blockchain third-party settlement and a method thereof are disclosed. In the escrowing system, an initiating-end host and an accepting-end host escrow digital assets in smart contracts in different blockchains, respectively, and based on a result of delivery of trading entities outside the blockchain, the digital assets escrowed by the smart contracts are transferred or returned, and the arbitration host is permitted to perform trading arbitration, without managing the trading entities, to determine whether the delivery outside the blockchain succeeds. When the arbitration host determines that the delivery outside the blockchain succeeds, the arbitration host can transfer the digital assets escrowed by the initiating-end host and the accepting-end host without consent of the initiating-end host, so as to achieve a technical effect of improving reliability of escrow.