Decentralized Escrow Provider (DEP) - Idea and guideline discussion

[AnCapitol]

Dear DASH Community,

after reading various comments over at dashcentral, it seems like there is a need for a separate escrow service besides contacting core.

This thread is meant to discuss my idea how to set up a escrow service in a decentralized (one might say cypherpunkian) way (Further referred to as DEP). If this should conclude in overwhelmingly positive responses I will set this up.

Let's go:

TRUST
The first issue we have to solve is trust. If we have just one entity, we have a single point of failure. Hence we shall have two escrowees with a multisig wallet which holds the funds.
One would be the main escrower (MEW) who reviews the progress of the passed proposals. The other one is a backup against malicious behavior (further referred to as SEW).
In this example I would be the main escrower and another MNO would be the second.
To further the decentralization, every 5 escrowed proposals the SEW would have to change.
Up for discussion would be the rotation cycle and when a SEW can return.

To further apprehend the trust issue, the MEW and SEW would have to reveal his/her real identity to one of the core members (Ryan, Bradley, Fernando e.g.), in case there would be the need to press legal action (e.g. bailing out with 500 DASH).

PRICING
You don't work for free, neither the MEW nor the SEW should. The fee shall be 1 DASH per payout cycle per escrowed proposal per escrowee. To illustrate this, let's take the following two examples:

• Proposal for 250 DASH payout in 4 Months (62.5 DASH per month).
  • MEW Fee 4 DASH
  • SEW Fee 4 DASH
• Proposal for 80 DASH payout in 1 Month.
  • MEW Fee 1 DASH
  • SEW Fee 1 DASH

"Why only 1 DASH? Why not XYZ Euros/Dollars?"
To work as an escrow should only be done by people who really believe in DASH and want to further the network by all means necessary. The first step to achieve this is to think and calculate in DASH. Also this is not rocket science, this is holding funds, reviewing progress and paying proposal owners out in a timely matter.

PRICE STABILITY
If a proposal needs to retain a certain euro/dollar value, the DEP needs to be able to hold funds in a FIAT currency. Thankfully, the BitShares network provides Multisig wallets and BitEUR/BitUS which have been proven to be reliable for the last 3 years. The payout to proposal owners would still remain in DASH, but the price fluctuation risk would be negligible. Also the fees on the Bitshares Network are low.
At the time of writing, around 73k BitUSD are available as ASKS in the order book. This might seem to be low, but the daily volume of BitUSD is shown at around 2.7 Million BitUSD.

PROGRESS REVIEW
If a proposal owner fails to:

• deliver updates every 2 weeks by posting on
  • the Forum
  • DASH Nation Discord
• perform according to agreed upon milestones/deliverables
• be reachable for more than 2 consecutive days by the DEW or another reviewing party (e.g. DASHWatch)

the MEWs job is to inform the MNOs and withhold funding until the situation has been resolved.
Should the MEW fail to progress with the proposal owner within 5 days, the remaining funds shall be (please debate):

1. used to provide proposal fees for small proposals (<15 DASH)
   
2. send to core for development
3. send to @mastermined for the DashForce Meetup program
4. other

The MEW and SEW also stop to receive Fees for this proposal. (E.g. The proposal has 2 payout cycles, the owner fails to deliver after the first one, funding is stopped, the DEP only gets 2 DASH as a fee).

The process to choose which small proposal to support needs to be discussed separately.

CONCLUSION
As I have put forth, a decentralized escrow is a viable option without spending huge amounts of DASH on lawyers and (antiquated) legal structures.

I'm looking forward to your comments and review of my idea.

Best Regards from Berlin,

AnCapitol

Edit: Changed DEW to DEP

 

[Unstoppable]

Dash is forging new territory with it's Masternode structure, DAO and treasury system. It's only fitting the Dash community forges new territory in escrow. Thank you for putting your thoughts forward on this. The devil is in the details, of course, but I like the broad strokes painted here.

Are Decentralized Escrow Providers (DEPs) limited to verified MNOs? Will there only ever be the two?

I think a more rigorous protocol is required for selecting the DEPs to discourage and expose malicious DEPs, while balancing the need for a degree of personal privacy protection, should they themselves become targets, as they are keyholders. We should also be able to measure their effectiveness.

Escrow providers, decentralized or not, should have a fair bit of experience as project managers to help the Proposal Owners define clear, meaningful milestones that provide solid accountability.

Milestone tracking should be as transparent as possible, perhaps a website which tracks the attributes of each proposal:
The MEW and SEW assigned with this proposal
Each agreed-upon milestone listed out with the associated payout amount
The transaction IDs of each payout as each milestone is met
With this much transparency we can see the effectiveness of the system, the DEPs, the proposal owners, and we can also detect any collusion/corruption.

Once a proposal is funded, I don't think it's too much to ask of the POs to paste the milestones onto the proposal/escrow tracker. The DEP will tick off milestones as they are verified complete, and paste the txid.

Perhaps Descrow.dash.org, so that it's owned by the network? The Dash ecosystem has an ever-growing garden of websites that I think could be cleanly attached to dash.org. Or perhaps it's better if it's independent.

It's true Escrow providers must be properly incentivized, as are the other major parts of the Dash network (miners, MNOs/DAO). Ideally it would be self-sustaining, as you described. Perhaps more granular, perhaps ~1-5% of each proposal. Perhaps it's fixed, perhaps flexible. I think we have options here.

 

[akhavr]

Treasury right now cannot create payout to a multisig address. Until then, decentralized escrow is not feasible.

 

[AnCapitol]

@Unstoppable First of all, thank you for your thoughtful comment and taking the time to review my idea. Let's get to your questions:

I really like the term DEP so I will refer to this idea further on as DEP

Are Decentralized Escrow Providers (DEPs) limited to verified MNOs? Will there only ever be the two?

For the SEW I would say yes, the MEW wouldn't necessarily need to be a MNO. Maybe we could use something like the witness voting of steemit/bitshares.
The MEW puts up a proposal and asks if the MNO's would support him/her as a DEP, If he/she get's enough yes votes, he retains the proposal fee and is certified by the MNOs on the Blockchain.

"There can only be two, a master and an apprentice...."
Actually it's just two to keep the workload a minimum. The SEW is just a security layer. It would be quite the hassle to do any transaction if you needed to get like 5 signatures just to send 20 DASH from the escrow.

Escrow providers, decentralized or not, should have a fair bit of experience as project managers to help the Proposal Owners define clear, meaningful milestones that provide solid accountability.

Yes that would be preferable. I have 4 years experience as a project manager. But if we would use the voting mechanism for the DEPs, then the DEPs would be automatically people who are known in the DASH Community and get stuff done.

Milestone tracking should be as transparent as possible, perhaps a website which tracks the attributes of each proposal:
The MEW and SEW assigned with this proposal
Each agreed-upon milestone listed out with the associated payout amount
The transaction IDs of each payout as each milestone is met
With this much transparency we can see the effectiveness of the system, the DEPs, the proposal owners, and we can also detect any collusion/corruption.

This is a very good idea! +1

It's true Escrow providers must be properly incentivized, as are the other major parts of the Dash network (miners, MNOs/DAO). Ideally it would be self-sustaining, as you described. Perhaps more granular, perhaps ~1-5% of each proposal. Perhaps it's fixed, perhaps flexible. I think we have options here.

I would settle for my 1 DASH fee, because I want to be incentivized to treat each escrowed proposal equally. Other DEPs can charge the rates as they please.



@akhavr Do you have a timeline on when this will be implemented? I assume it will be after the Evo release?

That's a bummer, but only a minor one. We could at least reduce the workload for Core, if the address for the treasury is held by core and (manually) transfers the amount to the provided multisig address of the DEPs. If I understand the Docs correctly, usually it's a 2 out of 3 setup for multisig. So 1 for the MEW 1 for the SEW and 1 for Core.

 

[Unstoppable]

Agreed, the lack of direct funding to multisignature is a minor, likely temporary obstacle, using Core as an intermediate. The project could be funded to a Core wallet, then handed off to the DEP multisig wallet. Using them as a third sig is a great idea.

Using the treasury system to elect DEPs is an excellent idea. A potential DEP submits a proposal to the network, asking to be recognized as an 'official' Dash DEP. All they need to ask for is 5 dash to recover the proposal fee, fair enough. Once passed, they have been blessed by the network to act in that capacity.

Malicious actors will not be quick to put up 5 dash lest they lose it. If a DEP turns out to be ineffective, unresponsive, or malicious, the transparent milestone tracker will make that quickly obvious and they won't be used in future proposals.

Any Project Manager out there who is bored, stressed, or underemployed, with a love for cryptocurrency may find this to be a very fulfilling role. If they go with your 1 dash per project per month, one could live off of this comfortably. We all know there is no shortage of projects in the pipeline. I can imagine there being a dozen or so DEPs in the next year, all living quite happily keeping our Proposal Owners honest, and putting the MNOs' minds at ease.


Eliminating the risk of DEP impersonation

As the second-layer gatekeepers of treasury funds (after the MNOs), making sure you are the same person across dashcentral and dash.org is extremely important, in order to prevent someone from impersonating you. You will be approaching pre-proposal owners and they will be approaching you, entrusted with managing funds released by the MNOs.

On dashcentral, one can verify their MNO status by signing a message from their wallet and enter the signature on dashcentral. Afterward, when they post, it shows 'MNO'. It's rock solid. No humans are involved. They've proven cryptographically they're the owner of that masternode.

Such a thing would be good for elected DEPs to show as 'DEP' on dash.org and the tracking site. This would be for your safety as a DEP, in that nobody can impersonate you, and proposal owners can be sure they are speaking with the real you.

Do such mechanisms exist for dash.org/forum? How does one get the profile tags such as Core Developer, Foundation Member, MNO? Are those verified, proveable things? If so, it would be great if there was one for 'DEP'. This would link your accounts on the sites, cryptographically.


Many DEPs to choose from

So let's imagine you have been voted YES by the MNOs as an official Dash DEP, you have your 5 dash back in your pocket, and you're open for business. Likely you would keep an eye on pre-proposals on dash.org/forum, offering your services. A year later, so have 15 other people.

Perhaps a rating/feedback system is in order. I'm beginning to imagine something along the lines of localbitcoins. On the post-proposal project/milestone management/tracking site (what shall this be called?), each DEP has their profile up. Their profile has been linked cryptographically to their wallet from their DashCentral election.

They have their profile information, their escrow rates, and all can see their escrowed projects, current and historical.

Pre-proposal owners, seeking escrow, go to the site and shop for their MEW and SEW...

 

[AnCapitol]

As the second-layer gatekeepers of treasury funds (after the MNOs), making sure you are the same person across dashcentral and dash.org is extremely important, in order to prevent someone from impersonating you. You will be approaching pre-proposal owners and they will be approaching you, entrusted with managing funds released by the MNOs.

On dashcentral, one can verify their MNO status by signing a message from their wallet and enter the signature on dashcentral. Afterward, when they post, it shows 'MNO'. It's rock solid. No humans are involved. They've proven cryptographically they're the owner of that masternode.

Yes, while I find using a keybase.io pgp key sufficient (like I do check here), some might want to couple that with a DASH address. It might be an idea to use the multisig address for signing?

Such a thing would be good for elected DEPs to show as 'DEP' on dash.org and the tracking site. This would be for your safety as a DEP, in that nobody can impersonate you, and proposal owners can be sure they are speaking with the real you.

Do such mechanisms exist for dash.org/forum? How does one get the profile tags such as Core Developer, Foundation Member, MNO? Are those verified, proveable things? If so, it would be great if there was one for 'DEP'. This would link your accounts on the sites, cryptographically.

As far as I know @tungfa or one of the other mods can assign profile tags. I don't see why it shouldn't be possible to have a DEP Tag.

Many DEPs to choose from

So let's imagine you have been voted YES by the MNOs as an official Dash DEP, you have your 5 dash back in your pocket, and you're open for business. Likely you would keep an eye on pre-proposals on dash.org/forum, offering your services. A year later, so have 15 other people.

Perhaps a rating/feedback system is in order. I'm beginning to imagine something along the lines of localbitcoins. On the post-proposal project/milestone management/tracking site (what shall this be called?), each DEP has their profile up. Their profile has been linked cryptographically to their wallet from their DashCentral election.

They have their profile information, their escrow rates, and all can see their escrowed projects, current and historical.

Pre-proposal owners, seeking escrow, go to the site and shop for their MEW and SEW...

Again, these are awesome ideas. Unfortunately I'm not really the programmer, so it might be interesting to get a webdesigner on here who is up for the task.
Also I think the site should be outside of Cores reach, just to keep it decentralized.

Question for @Ryan Taylor and @fernando or anyone with a law background:
Another point that's been floating in my head concerning real name verification with core:
Let's assume core gets a warrant and they want information on the DEPs. How safe are they then? And is core obliged to follow this inquiry?
We have already emphasized that the DEPs will be targets for criminals and other enemies of decentralized currency (ergo governments). Does anyone have an idea how to minimize this risk?
Maybe 2 different MNOs have to vouch for the MEW and have his/her real name? (In addition to the proposal voting process)

 

[Unstoppable]

I've never used pgp so I don't have an informed opinion. I just know I'll be verifying my MN on DashCentral when it becomes a requirement, and I like the simplicity. I see some people have added their dash address to their dash.org profile. I supposed it would be sufficient that they use the same address when posting their proposal to recover their 5 dash. That could be enough to tie together the profiles between dash.org and dashcentral. As for the DEP site, I think some sort of cryptographic proof is required. Maybe pgp, maybe dashcentral-style, but something solid. This is only to tie together the profiles of a DEP as one person.

As far as the multisig wallets and proposals, I imagine, in the future, when a healthy, competitive ecosystem of DEPs exist, a PO could choose their MEW and SEW independently. The MEW would be submitting the proposal using a multisig as you say, but allowing flexibility in choosing SEWs, I think a separate wallet per proposal is called for. Perhaps this really complicates things for the DEPs but I believe it to be an eventuality in this scenario.

It would be great if this could be incorporated into DashCentral, and Rango has built a very nice, highly technical website, as far as I can tell, but I'm not sure that he would be able to implement this in a timely manner. This addition would be quite a project. I agree it should be outside of Core's control, but under the ownership of the network, if possible, as well as open source, allowing an easy fork should the webmaster become unresponsive.

The DEP site will surely be difficult to build and maintain. I have no background in this, either. Perhaps it's not too much to ask that it be subscription-based, in that DEPs pay a monthly fee to be listed on it. This would allow the webmaster to be properly compensated and provide full-time support.

I'm looking forward to responses from core on your questions. I hope they can also clarify how exactly one obtains the Core/Foundation/MNO tags.

This is all very interesting.

 

[AnCapitol]

I've never used pgp so I don't have an informed opinion. I just know I'll be verifying my MN on DashCentral when it becomes a requirement, and I like the simplicity. I see some people have added their dash address to their dash.org profile. I supposed it would be sufficient that they use the same address when posting their proposal to recover their 5 dash. That could be enough to tie together the profiles between dash.org and dashcentral. As for the DEP site, I think some sort of cryptographic proof is required. Maybe pgp, maybe dashcentral-style, but something solid. This is only to tie together the profiles of a DEP as one person.

If you want to try out PGP go to keybase.io. The core team and others are using it since it makes the whole PGP learning curve relatively easy.
Although signing and encrypting message with the dash wallet is also straightforward. I guess the end decision which key to use would depend on the DEP site.

It would be great if this could be incorporated into DashCentral, and Rango has built a very nice, highly technical website, as far as I can tell, but I'm not sure that he would be able to implement this in a timely manner. This addition would be quite a project. I agree it should be outside of Core's control, but under the ownership of the network, if possible, as well as open source, allowing an easy fork should the webmaster become unresponsive.

The DEP site will surely be difficult to build and maintain. I have no background in this, either. Perhaps it's not too much to ask that it be subscription-based, in that DEPs pay a monthly fee to be listed on it. This would allow the webmaster to be properly compensated and provide full-time support.

Maybe @rango could give a rough guess about time needed to implement this kind of a system. The fee for the DEP listing is also a very good idea. I'll update the whole DEP System outline in a more graphical manner this week, so we could start making progress in implementing it in the very near future.

 

[Ryan Taylor]

Yes, while I find using a keybase.io pgp key sufficient (like I do check here), some might want to couple that with a DASH address. It might be an idea to use the multisig address for signing?



As far as I know @tungfa or one of the other mods can assign profile tags. I don't see why it shouldn't be possible to have a DEP Tag.



Again, these are awesome ideas. Unfortunately I'm not really the programmer, so it might be interesting to get a webdesigner on here who is up for the task.
Also I think the site should be outside of Cores reach, just to keep it decentralized.

Question for @Ryan Taylor and @fernando or anyone with a law background:
Another point that's been floating in my head concerning real name verification with core:
Let's assume core gets a warrant and they want information on the DEPs. How safe are they then? And is core obliged to follow this inquiry?
We have already emphasized that the DEPs will be targets for criminals and other enemies of decentralized currency (ergo governments). Does anyone have an idea how to minimize this risk?
Maybe 2 different MNOs have to vouch for the MEW and have his/her real name? (In addition to the proposal voting process)

If it is a decentralized escrow that we did not operate, Dash Core Group would have no information that is not already publicly available. There would simply be no information for us to turn over to the authorities. We already don't know who our MNs are today, though a determined government could subpoena a hosting service to find out the identity of a MN owner. In multiple jurisdictions it would be infinitely harder to do that.

 

[AnCapitol]

Hi @Ryan Taylor ,

thanks for your answer, but I seemed to have been unclear.
My Question is:
I give you or fernando my real name for being a DEP. Core get's a warrant to hand it out. Do you have to do it? You do not operate the escrow but you know who it is.

 

[Ryan Taylor]

Hi @Ryan Taylor ,

thanks for your answer, but I seemed to have been unclear.
My Question is:
I give you or fernando my real name for being a DEP. Core get's a warrant to hand it out. Do you have to do it? You do not operate the escrow but you know who it is.

Again, I'm not a lawyer and am not qualified to provide legal advice. My understanding is that if we were subpoenaed we could be required to provide the information or would face imprisonment. While we could challenge the court order, the decision of the court would stand. If the operator of the escrow wanted to remain anonymous, there would be better approaches, for sure. I would encourage you to consult a lawyer for a better answer and a possible solution.

 

[Unstoppable]

Maybe Dashwatch could be of use for the DEPs.