The protocol comprises two main parts: the exchange mechanism and the dispute mechanism. The exchange mechanism governs the state transactions through the protocol where Buyer and Seller exchange the payment for the off-chain asset. If the Buyer wishes to dispute that the Seller has performed their part of the agreement, the dispute resolution mechanism is called from the exchange mechanism to let them reach a mutual agreement or escalate the dispute.
Phases
The exchange mechanism comprises three phases: the Offer Creation phase, the Commit phase and the Redemption phase, in addition to an exceptional Dispute Resolution phase.
Offer Creation Phase
At the Offer Creation phase, the Seller inputs details of an item which they intend to sell, by creating an Offer. The Offer is created in an immutable manner within the protocol and is set up so that the Seller can interact with their newly created Offer. The Offer sets the terms of the offer for sale made by the Seller, including including a link to some metadata containing the contractual agreement between the Buyer and Seller, and a description of the terms of the Offer including: the Buyer Payment Amount which also includes a Buyer Deposit element, the Seller Deposit, and the details of the Dispute resolver.
Commit Phase
If a Buyer agrees to the terms of the Offer, they may proceed via the Commit function which locks up the Buyer’s Payment amount into the protocol, together with the Seller Deposit. At this stage the Buyer receives an NFT which is redeemable for the off-chain asset, from here on referred to as a Redeemable NFT (rNFT) . The Buyer may then choose either to transfer or trade the rNFT, before ultimately moving to the Redemption Phase.
Redemption Phase
The Redemption Phase is the phase in which the holder of the rNFT may choose to redeem the Offer as defined in Offer Phase. The holder of the rNFT can choose to Redeem by interacting with the Redeem function in the protocol. It should be noted that Sellers will be asked to set a Redemption period when creating an Offer, which will determine the period in which Redemption can happen.
If a Buyer Cancels their commitment before Redeem, they will incur a cancellation penalty equal to the Buyer Deposit (aka Buyer Cancelation Penalty). Similarly, during this period, the Seller may Revoke the Offer, thus forfeiting the Seller deposit. In this way, the Buyer and Seller deposits set the reversibility of the respective parties’ commitments to transact. As such, a committed Offer can be viewed as a type of forward contract. That is, an agreement for the two parties to execute a commercial exchange at an agreed price at or before a specified date.
Fulfillment Phase
After Redeem is called, the protocol progresses to the Fulfillment Phase. This is the phase where the Seller needs to fulfill the promises made out in the Offer. Then the Redemption Period is over, the protocol optimistically assumes that the Seller has fulfilled their obligations under the contractual agreement, and enables the Seller to withdraw the Payment and Seller’s deposit. Alternatively, in the event that the Buyer calls the Dispute function before the end of the Redemption Period, the exchange moves into the Dispute Resolution Phase.
Dispute resolution phase
The Dispute Resolution Phase comprises two sub-phases, the Mutual Resolution phase and the Escalated Dispute resolution phase. If a Buyer raises a dispute, the protocol provides a path for the parties to resolve the conflict via a mutual resolution game, whereby Buyer and Seller negotiate off-chain and ultimately send an on-chain compromise proposal for the division of the escrowed funds.
If mutual resolution succeeds, the protocol automatically divides the escrow as per the mutual agreement. (The mutual resolution game is designed to handle the main payload of disputes in much the same way that chatbots handle first line call center queries).
If mutual resolution fails, the protocol escalates to an external Dispute Resolver (DR). The DR reviews the agreement, claims, evidence requirements and evidence provided. The DR then decides on how to split the funds held in the protocol for the given exchange, based on payout guidelines specified within the Offer contractual agreement.
Finalization Phase
The Finalization Phase encompases the set of states that signal that a given exchange has come to an end. There are a number of different finalization states. Each one of the end states has its own label and comes with its own set of rules governing the payout of the funds committed to the protocol.
Read on: download our v2 whitepaper
Boson enables the decentralized exchange of physical assets- tokenized as redeemable NFTs.
The launch is planned later this year, and over the coming weeks, we will be releasing additional information about what Boson is, how it works, and how you can build on the protocol, and participate as either buyer, seller or integrator.
To read more in our white paper, you can download it here
