Review Escrow

E-commerce and peer-to-peer marketplaces (e.g., for high-value goods) implement review escrow to mitigate fraud. The buyer's payment is held by the platform. Upon delivery, the buyer has a review period to inspect the item. If the item matches the description, the funds are released to the seller. If a dispute arises, a neutral arbitrator or platform admin reviews evidence from both parties before deciding to release or refund the escrowed amount.

In web3, review escrow secures payments for security audits. A project locks payment for an audit firm. The funds are only released after the project's technical team reviews and accepts the final audit report. Similarly, bug bounty platforms hold reward funds in escrow. When a white-hat hacker submits a valid vulnerability report, the platform's security team reviews the submission. Upon confirmation, the escrowed bounty is automatically paid out to the researcher.

Used in property sales for holding earnest money deposits. The buyer's deposit is placed in an escrow account managed by a title company or attorney. The funds are only released to the seller after the reviewer (often the closing agent) verifies that all contractual contingencies—such as inspections, appraisals, and financing—have been satisfactorily met. This prevents either party from acting in bad faith during the closing process.

Media companies and brands use review escrow when commissioning custom content (e.g., articles, videos, software). Payment is escrowed upon contract signing. The commissioning party acts as the reviewer, inspecting the final deliverable against the agreed scope of work and quality benchmarks. Only upon their formal approval are the locked funds released to the content creator, ensuring contractual compliance before payment.

DAOs use review escrow for grant funding and contributor compensation. A grant proposal is approved, and the treasury funds are locked in a smart contract. A designated committee or multisig group reviews the grantee's deliverables or milestone reports. Upon successful review and a governance vote, the escrow contract executes the fund release. This creates a trust-minimized and transparent workflow for decentralized project funding.

Platforms like Upwork or Fiverr have centralized escrow. In Web3, smart contract-based review escrow automates this. A client locks payment, the freelancer delivers work, and funds are only released upon the client's approval or after a predefined review period. This eliminates platform fees and counterparty risk.

• Key Feature: Automatic release after a time-lock if no dispute is raised.
• Example Use: A developer submits code to a repository; payment is released after the client verifies the commit.

Used for complex NFT sales beyond simple auctions. Enables conditional transactions where the final sale is contingent on the buyer's inspection or a real-world event verification.

• Process: Buyer's payment is held in escrow. The NFT is transferred to a conditional holding contract. Upon the buyer's satisfactory review (e.g., verifying authenticity traits), the funds are released to the seller.
• Benefit: Facilitates high-value, trust-minimized sales of digital art, virtual land, or tokenized assets.

When parties disagree, review escrow contracts integrate with decentralized arbitration or oracle networks. Instead of a central authority, a decentralized panel or a data oracle (like Chainlink) can be tasked with verifying delivery.

• Flow: 1. Dispute is raised. 2. Escrow locks funds. 3. Pre-agreed arbitrators or an oracle fetches proof. 4. The contract executes their ruling.
• Key Protocol: Kleros is a decentralized court system commonly integrated for this purpose.

Enables pay-for-delivery models for open-source development and bug bounties. A project places a bounty in an escrow contract. Developers submit their work (e.g., a pull request, a vulnerability report), and the funds are released only after the project maintainers review and accept the submission.

• Automation: Can be combined with tools like GitHub Actions to trigger payments upon merging a PR.
• Example: Gitcoin Grants and other quadratic funding rounds often use vesting or escrow-like mechanics for milestone-based payouts.

Bridges Web3 with real-world commerce. A buyer pays in stablecoins to an escrow contract. The seller ships the goods. Upon delivery confirmation (via tracking number API or buyer confirmation), the contract releases payment. This is the decentralized equivalent of PayPal Goods & Services.

• Challenge: Requires a trusted data feed (oracle) for delivery confirmation to prevent false claims.
• Use Case: Decentralized e-commerce platforms and community marketplaces.

Manages complex projects with multiple stakeholders and phased deliverables. Funds are locked and released incrementally upon completion and review of predefined milestones.

• Mechanism: A multi-signature wallet or a specialized smart contract holds funds. Each milestone payout requires approval from a quorum of specified reviewers (e.g., client, project manager, investor).
• Application: Large-scale DAO grants, construction projects, and film production funding, where releasing all capital upfront is risky.

A review escrow is a specialized smart contract that acts as a neutral third party. It locks funds or assets (e.g., payment for an audit) and only releases them to the developer or auditor once a predefined condition is met. This condition is typically the submission and acceptance of a formal review report by the project owner or a decentralized oracle. The escrow's logic is transparent and immutable, removing the need for interpersonal trust.

This mechanism directly addresses the principal-agent problem in software audits. It protects both parties:

• Project Owners: Funds are only disbursed upon satisfactory work delivery, preventing payment for incomplete or substandard reviews.
• Auditors/Reviewers: Payment is guaranteed and held securely, eliminating the risk of non-payment after work is completed. Trust is placed in the code of the escrow contract rather than in the counterparty, a fundamental shift enabled by blockchain.

Escrows often incorporate multi-signature controls or decentralized oracle networks to resolve disagreements. If the project owner rejects a review, the contract can enter a dispute state. Pre-agreed arbitrators or a decentralized jury (e.g., using Kleros or UMA) can then be invoked to examine the evidence and rule on fund release. This provides a clear, on-chain path for conflict resolution without resorting to traditional legal systems.

A critical security feature is the timelock or claim period. After the review is submitted, the project owner has a fixed window to accept it and release funds. If they take no action, the contract can be configured to automatically release payment to the auditor after the deadline, preventing funds from being locked indefinitely. This removes stalling as a tactic and ensures predictable outcomes.

Review escrow is a key component of bug bounty platforms (like Immunefi) and developer grant programs. A project can lock funds for a specific security review scope. Auditors compete or are selected to perform the work, knowing the reward is secured. Upon successful vulnerability disclosure and verification, the escrow executes the payout. This creates a powerful, automated marketplace for security expertise.

The security of the entire system depends on the escrow contract's own code. Vulnerabilities here can lead to total loss of funds. Key risks include:

• Logic flaws in release conditions or dispute resolution.
• Oracle manipulation if relying on external data feeds.
• Admin key compromise if the contract has upgradeable or privileged functions. Therefore, the escrow contract itself must undergo rigorous auditing and formal verification before being trusted with significant value.

A self-executing program on a blockchain that holds funds or assets until predefined conditions are met. It is the technical foundation for review escrow, automating the release of payment upon successful delivery and buyer approval.

• Code is Law: Terms are enforced automatically by the contract's logic.
• Immutability: Once deployed, the terms cannot be altered.
• Transparency: All parties can verify the contract state and funds.

The formal process for adjudicating conflicts when a buyer and seller disagree on whether escrow release conditions have been met. In decentralized systems, this often involves a decentralized oracle or a dispute resolution committee.

• Escalation Path: A neutral third party reviews evidence submitted by both sides.
• Binding Ruling: The resolver's decision is executed by the smart contract.
• Staking Mechanisms: Participants may stake tokens to discourage frivolous disputes.

A broader category of financial transactions where the transfer of value depends on a verifiable outcome. Review escrow is a specific implementation where the condition is buyer confirmation.

• Other Examples: Payments released upon proof of delivery, milestone completion, or specific oracle-reported data (e.g., flight arrival).
• Flexible Logic: Conditions can be simple (time-based) or complex (multi-sig).

A peer-to-peer exchange of cryptocurrencies across different blockchains that either completes entirely or fails entirely, with no intermediary custody. It contrasts with escrow by eliminating the trusted third party role entirely.

• Hash Time-Locked Contracts (HTLCs): The cryptographic primitive enabling atomic swaps.
• Simultaneous Exchange: Assets are swapped directly between parties in a single transaction.
• No Custody Risk: Funds are never held by a third party, even temporarily.

A digital wallet that requires authorization from multiple private keys to execute a transaction. It is a simpler, more flexible precursor to escrow smart contracts, often used for shared custody.

• M-of-N Signatures: A transaction requires signatures from a predefined subset of key holders (e.g., 2-of-3).
• Human-Mediated: Release depends on manual signatures, not automated conditions.
• Common Use Case: Team treasuries, DAO vaults, and basic 2-party escrow setups.

A service that connects blockchains to external data sources. In advanced escrow systems, oracles can automate condition verification, moving beyond manual buyer review.

• Automated Triggers: Release funds upon verifiable real-world events (e.g., shipment tracking confirms delivery).
• Data Feeds: Provide objective information like price feeds, weather data, or sports scores.
• Trust Minimization: Uses cryptographic proofs and decentralized networks to ensure data integrity.