🎲Game theory based settlement

You can't use automated settlement with your payment system? Don't worry - we have a solution

In a nutshell

While auto-settlement allows users to achieve the best experience, it may not work everywhere since it requires to have official API for a payment system, that is accessible from a user side because we need the API to scan for payments

Moreover, not all the market makers may want to disclose their read-only API keys, or just don't have/want to deal with payment systems supported by default automated payment settlement system.

At ARX, we are aimed to cover as many payment ways as possible, so we have built an universal system for those payment systems that do not support open and accessible user API, which is based on game theory.

It is designed to ensure safety of both sides of each deal. As we don't want to trust a third-party (like a moderator or an arbitrator), we decided to design the collateral system as the core mechanism for dispute prevention in collateral based approach.

How does it work?

Both sides of the deal have to provide 25% collateral of the deal volume. If the parties won't reach a consensus about the deal (i.e. the fiat side has marked payment as sent and the crypto side has confirmed that fiat funds have been received) before the deal expiration time, both parties will have their collateral slashed. We will still meet the required 25% collateral requirement which ensures both sides stay true and honest.

But why both? In case of a dispute there will be a victim, why should the victim also get slashed?

Because the smart contract technically does not know whether the fiat funds were sent or not, the code does not know which party is speaking the truth and who is wrong or right. The only thing is can do is to slash both sides of the deal.

What is the benefit of such an approach?

This should eliminate the idea of scamming other users, as scamming is always unprofitable for the scammers themselves. There is no way for a scammer to make a profit, but instead they will lose their collateral. In this way greed saves honest users from scammers with no need to have arbitrators.

With ARX collateral system design, scamming will always be unprofitable for both sides of a deal.

Okay, it seems that such an incident where we would have to open disputes won't happen frequently due to the system design. But what if it happened anyway?

We have built multi-layer safety system that will handle such cases in case of such issues, but we are assuming it will very rarely happen. This system does not require a third party human to get involved to resolve a failed deal.