14.28. DD 028: Proof of escrow in the exchange

Note

This design document is currently a draft, it does not reflect any implementation decisions yet.

14.28.1. Summary

We propose here an extension to the exchange: An escrow service that can be used by other, separate trading services f.e. for online auctions.

14.28.2. Motivation

Certain types of trade, such as auctions or trades with long phases of negotiation, require a proof of escrow of money as a guarantee in order to participate or perform the trade.

We want to extend GNU Taler to support trades such as anonymous sealed-bid auctions. While the auction service will be a separate (from the exchange) entity, behaving in parts like a normal merchant in the GNU Taler sense, the exchange itself can provide an escrow services.

14.28.3. Background and Requirements

An escrow service is a intermediary between two parties and must trusted by both. In the GNU Taler payment system, this role is per definition played by the exchange for buyers and sellers during purchases. The auditor controls the exchange and is also a mediator between buyers and selles.

The role of the exchange can be therefore extended to the specific needs of escrow. In contrast to purchase/deposit, for escrow, particular coins are locked, but not spent. This prohibits their spending for a specific timespan and until a valid order of release is provided.

However, in the context of auctions, we want the parties to be able to verify the fairness of the participants. For example, a seller of goods during an auction shall only be able to release the money for the winning bidder and not for the others. On the other hand, both, sellers and bidders should be able provide evidence to the exchange and auditor if the other party wasn’t honest, f.e. if the winning bidder hasn’t released the money.

14.28.4. Proposed Solution

We propose a the following endpoints

• POST /escrows/$ESCROW_ID/register: Register an escrow account under the provided EdDSA public key $ESCROW_ID. The required parameters are:

  • a starttime
  • an endttime
  • an interval [m, M] of minimum and maximum amounts, where M can also be ∞.

• GET /escrows/$ESCROW_ID: Return the terms of the escrow and the current list of depositor IDs.

• POST /escrows/$ESCROW_ID/deposit/$DEPOSIT_ID: Deposit a specific amount with a particular list of coins. The required parameters are:

  • the amount a to be deposited (must lie in [m, M])
  • the list of coins to be used for the deposit (the sum of the values must be at least a)
  • signatures from each coin over the SHA512 hash of the amount a, the $DEPOSIT_ID and the $ESCROW_ID.

  The $DEPOSIT_ID is the SHA512 hash over all the coins.

• POST /escrows/$ESCROW_ID/claim/$DEPOSIT_ID: The owner of the private key for $ESCROW_ID can claim the deposited coins. It has to provide

  • the particular amount a' to be claimed
  • the list of coins to be claimed from the deposit
  • signatures over the SHA512 hash of the amount a', $ESCROW_ID and the $DEPOSIT_ID, signed by each coin

The following diagram gives an overview of the flow:

When the endtime of an escrow has arrived on the exchange, an amount a of a deposit of amount b ≥ a can be claimed by the originator of the escrow account. Only one successful claim can be made for a particular escrow account. After a claim has been made, the remaining coins in the remaining deposits are released by the exchange. If no claim is made within a specific time interval after endtime, all coins of all deposits are released.

The GET /escrows/$ESCROWS_ID allows to depositors and auditors to confirm their deposit. It also allows depositors to compare the list with their mentioning at other services, such as the list of bidders in an online auction.

TODOs: Specify

• data structures
• signatures
• return values
• errors
• terms of contracts
• default time intervals

14.28.5. Alternatives

TODO

14.28.6. Drawbacks

TODO

14.28.7. Discussion / Q&A

TODO

(This should be filled in with results from discussions on mailing lists / personal communication.)