> For the complete documentation index, see [llms.txt](https://docs.noxcat.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.noxcat.io/noxcat-defi/escrow-protocol/user-guide.md). # User Guide The **NOXCAT Escrow Protocol** enables two parties to securely exchange assets without relying on a centralized intermediary. Instead of trusting another person, both parties rely on a smart contract to hold the seller's assets until the transaction is completed. The protocol supports a wide range of peer-to-peer transactions, including: * Cryptocurrency ↔ Fiat * Cryptocurrency ↔ Real-World Assets (RWA) * Cryptocurrency ↔ Goods & Services * Any transaction where one side provides on-chain assets *** ## How It Works The escrow process consists of four stages: 1. Create an Escrow Order 2. Complete the Transaction 3. Release or Refund Assets 4. Arbitration (if required) ### Step 1 — Seller Creates an Escrow Order The seller initiates the transaction by creating an escrow order. During creation, the seller specifies: * Asset being sold * Amount * Accepted payment method * Trading terms * Expiration time The seller then deposits the agreed assets into the escrow smart contract. Once deposited: * Assets are locked on-chain. * Neither party can withdraw them directly. * The smart contract becomes the temporary escrow holder. At this point, the order becomes available for the buyer. ### Step 2 — Buyer Accepts and Completes Payment After reviewing the order, the buyer accepts the trade. The buyer completes the agreed payment outside the blockchain according to the seller's payment instructions. Examples include: * Bank transfer * Mobile payment * Cash settlement * Other agreed payment methods Once payment has been completed, the buyer selects **"Payment Sent"** within the wallet. This notifies the seller that payment has been made. > **Important** > > Buyers should only confirm payment after the payment has actually been completed. ### Step 3 — Seller Confirms Receipt Once the seller receives payment, the seller confirms receipt within the wallet. The escrow smart contract automatically releases the locked assets to the buyer. A protocol service fee is deducted from the escrowed assets before settlement. Current fee schedule: * **Standard Fee:** 0.50% * **Promotional Rate:** 0.25% After settlement: * Buyer receives the purchased assets. * Seller receives the off-chain payment. * The trade is completed. *** ## Automatic Refund If the buyer does not complete payment within **24 hours**, the escrow order automatically expires. The seller may reclaim the locked assets directly from the smart contract. No arbitration is required. This prevents assets from remaining locked indefinitely due to inactive buyers. *** ## When a Dispute Occurs Sometimes a buyer may claim payment has been completed while the seller reports that payment has not been received. When this happens, either party may initiate the **Arbitration Process**. During arbitration, the escrowed assets remain securely locked inside the smart contract until a final decision is reached. ### Arbitration Process The arbitration system is designed to provide decentralized dispute resolution without relying on a centralized operator. #### Step 1 — Seller Initiates Arbitration If payment cannot be verified, the seller may initiate an arbitration request. To discourage malicious disputes, the seller must first deposit an arbitration bond equal to: **1% of the transaction value (denominated in $NOX).** Once submitted, the buyer receives an arbitration notification. #### Step 2 — Buyer Accepts the Challenge The buyer has **24 hours** to respond. To proceed with arbitration, the buyer must also deposit an equivalent arbitration bond equal to: **1% of the transaction value (denominated in $NOX).** If the buyer fails to respond or does not provide the required bond within the 24-hour response window: * The arbitration request automatically closes. * The seller may reclaim: * The original escrowed assets. * The seller's arbitration bond. * The buyer's forfeited arbitration bond (if applicable under protocol rules). This mechanism discourages frivolous disputes and inactive participants. ### Decentralized Arbitration Once both parties have submitted their arbitration bonds, the dispute enters decentralized arbitration. The protocol randomly selects a panel of qualified arbitration nodes from the NOXCAT Validation Network. Each arbitrator independently reviews the evidence submitted by both parties. Examples of supporting evidence may include: * Bank transfer receipts * Transaction screenshots * Payment confirmations * Communication history * Other relevant documentation ### Voting Process Each arbitrator casts a confidential vote. Voting remains open for **12 hours**. Once voting concludes, the protocol determines the final outcome according to the predefined consensus rules. The decision is final. Depending on the result: * The buyer receives the escrowed assets, **or** * The seller reclaims the escrowed assets. ### Arbitration Network Arbitrators are not selected manually. They are chosen randomly from a pool of eligible validators. To become an arbitrator, participants must satisfy protocol requirements, including: * Staking the required amount of $NOX. * Meeting minimum participation standards. * Maintaining acceptable performance within the network. Randomized selection helps ensure fairness while reducing opportunities for manipulation. ### Arbitrator Reputation System The NOXCAT Validation Network uses a **banking-grade reputation model** to evaluate arbitrator performance over time. Rather than treating every arbitrator equally, the protocol continuously evaluates trustworthiness using both protocol participation and public blockchain activity. Factors may include: * Historical voting accuracy * Participation rate * Consensus alignment * On-chain activity * Reputation within the NOXCAT ecosystem Higher reputation improves an arbitrator's eligibility for future dispute selection, helping maintain a reliable and trustworthy arbitration network. ### Arbitration Fee Distribution After arbitration concludes, the arbitration bonds are processed according to the protocol's economic model. The collected arbitration fees are distributed as follows: * **50%** → NOXCAT Foundation (Protocol Treasury) * **50%** → Participating Arbitrators This incentive structure rewards honest participation while supporting the long-term sustainability of the arbitration network. *** ## Why Use the Escrow Protocol? The NOXCAT Escrow Protocol replaces traditional trusted intermediaries with transparent, programmable infrastructure. By combining: * Smart contract escrow * Automated settlement * Decentralized arbitration * Economic incentives * Reputation-based validator selection the protocol enables secure peer-to-peer transactions across both on-chain and off-chain environments. Whether trading cryptocurrencies, real-world assets, or everyday goods and services, users can transact with confidence, knowing that settlement is enforced by protocol rather than by trust alone.