The GUILDS project is developed by Uncommon Digital (the company behind Uniscrow) and funded by the 2 Open Call of TruBlo european project (grant agreement No. 957228). GUILDS goal is to build a decentralized trust and reputation system for online business and freelancing.

GUILDS will be a protocol and a suite of tools for transparent, immutable and auditable reputation and dispute resolution systems.

The system is blockchain-based and makes use of 2 other key concepts from the crypto space: DAOs and TCRs.

Before entering in the project details it is necessary to understand what DAOs and TCRs are.

Note: Throughout the text we use the all-capital word GUILDS to refer either to this project or to the protocol itself. We use the form with first uppercase letter “Guild” to refer to a single instance created and managed by GUILDS protocol, and the form “guild” for the meaning of the word according to English dictionary

What is a DAO

DAO is an acronym for decentralized autonomous organization. A DAO is essentially software running over a decentralized network that incorporates governance and decision-making rules and therefore it is a form of organization that is managed through rules programmed in smart contracts. 

The purpose behind a DAO is to design an organizational structure that could work independently of a traditional hierarchical management. 

More details about DAOs can be found in a previous article.

What is a Token Curated Registry (TCR) and a Guild

“Token-curated registries are decentralized curated lists with intrinsic economic incentives for token holders to curate the list’s contents judiciously” (Goldin, 2017). The lists in the TCR system may be made up of everything: professionals, universities, restaurants, websites, videos, etc.

The fact that it is a curated registry makes the content of the list reliable.

A Guild is a curated list where the items listed are the same members curating the list. Participants care about the overall reputation of the list because it affects their personal reputation directly.

The GUILdS Project

The GUILD project business idea is based on the fact that remote and freelance work is booming and it is estimated that by 2030 80% of the workforce will operate in such condition. In 2019, the revenue of the US 57 millions freelancers has reached 1 trillion USD.

A large amount of transaction is taking place through centralized job boards.

Centralized job boards

Centralized job boards manage the reputation of the users and are a key factor to find new jobs. However, at any moment the user account can be closed or the reputation score can be reset by a centralized action, e.g. if the user does not pay the monthly membership fee.

The core issue is that the reputation information is not owned by the user and therefore cannot be transfered to another system, should he decide to move to a different platform. 

It cannot even be exported.

Years of valuable client reviews on the user’s work would be lost causing him a significant damage.

Additionally, centralized platforms charge high commissions, in the worst case, as much as 30%. There is also a long history of vulnerabilities in centralized online reputation management systems that makes difficult to consider their reviews trustable.

Hence, there is the need of decentralised technologies to support such kind of systems.

How GUILD works

The GUILDS project makes use of a DAO for the governance of the reputation registry in a decentralized fashion. The system is implemented as a blockchain-based registry (a TCR) of workers profiles.

GUILDS is decentralized, autonomous and based on a tokenomics model. So, no central authority is in charge of management tasks. Only the members of a Guild have the right to peer review the applications of new members and establish a vetted environment.

A Guild is started by founders which endorse it with their own reputation and brand. Users will benefit from being members of the platform, but they must meet some integrity, conduct and reputation requirements. 

Financial incentive and game theory

The game theory behind the system will converge to a fair and motivated set of members that will manage the registry.

An applicant applies for the Guild membership against an amount of native token of the Guild put at stake.

The members are then asked to vote for the inclusion of a new applicant. Votes are backed by financial stakes and the game theory behind will converge to a steady condition where only fair and motivated applicants are accepted.

The platform tokenomics allows the members to be rewarded for the work they do.

Dispute resolution

The GUILDS protocol prevents misconduct and acts as a decentralized resolution center in case of disputes between a customer and one of its members. Dispute management adds a great value that makes reputation a concrete value and trust easier to build. The platform handles also disputes among members.

Conclusions

The GUILDS project will allow to implement decentralised platforms aimed at managing any kind of registry through a DAO backed by a game theory and a tokenomics that will make the system converge to a stable and sustainable environment that is able to ensure the quality of the registry content.

In the specific case of a freelance registry, the platform will allow the portability of reputation data, dispute resolution and protection against vulnerabilites thanks to the decentralized architecture.

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DAO is an acronym for decentralized autonomous organization. The term originated in the Ethereum community in 2015. A DAO is essentially software running over a decentralized network. It incorporates governance and decision-making rules and therefore it is a form of organization that is managed through rules programmed in smart contracts. 

The purpose behind a DAO is to design an organizational structure that could work independently of a traditional hierarchical management. It can implement, through smart contracts, contractual obligations as well as business logic rules.

A DAO is therefore an organized system of people gathered under a single purpose/project, and thanks to the use of the blockchain and tokens, allow their participants to vote on issues. So as if they were shareholders of a company but in this case the decisions lead to approve or not a certain solution or idea. 

With a DAO, most management and administrative functions and internal processes could be automated, and “value” in a given context would be distributed among virtual stakeholders via smart contracts.

A DAO is a type of application made possible by the blockchain technology.

Short history: TheDAO and the DAO hack

The first popular implementation of DAO was named TheDAO, and was launched in April 2016 on the Ethereum blockchain. TheDAO was a kind of hedge fund, where contributors could directly vote on proposed projects. It became the most successful investment crowdfunding in history at the time, raising $150 million, and concentrating 14% of all ETHER tokens issued at the time.

However, even before the token sale had concluded, several specialists expressed concerns about vulnerabilities in TheDAO’s code. More specifically, computer scientists were concerned that a bug in The DAO’s smart contract would allow money to be stolen. While programmers attempted to fix the bug, an attacker exploited the vulnerability and began stealing funds from The DAO.

MakerDAO: protocol and community governance

MakerDAO is a project that combines a DAO along with the DAI stablecoin creating a complete DeFi ecosystem that can secure loans, savings, and more on Ethereum’s blockchain smart contracts. MakerDAO is one of the largest DeFi projects in the world, and in addition to being a leader in cryptocurrencies and the DeFi movement, it was also one of the first to be launched.

The birth of MakerDAO can be attributed to Rune Christensen, currently CEO of the Maker Foundation, who decided to kick off the ambitious project in March 2015.

In 2017, DAI, the first stablecoin governed by a DAO in the entire crypto world was born and the doors were opened to a new range of financial opportunities on blockchain technology.

MakerDAO allows the user to obtain Collateralized Debt Position (CDP) loans by generating stablecoin DAIs, against a deposit of Ethereum (ETH) or other supported assets. The value that needs to be deposited must be at least 50% higher than the value of the DAIs being withdrawn. 

The MakerDAO protocol and the system are governed by the community through the DAO.

DAO and NFT

DAOs have become central to the crypto space. From DeFi protocols like Uniswap (UNI) and Maker (MKR) to NFT platforms like YellowHeart and JennyDAO, and crypto gaming guilds, decentralised autonomous organisations are popping up almost everywhere.

There is also a growing number of DAOs being set up to buy NFTs. For example, JennyDAO was launched in early 2021 and attracted $7 million in funding by May 2021, all with the aim of buying NFTs and splitting their ownership.

Although each DAO operates slightly differently from the others, they generally operate through governance. Token holders vote on action proposals. So, in the case of JennyDAO, for example, stakeholders would vote on which NFTs to buy.

PLATFORMS

Those who want to create their own DAO can rely on existing platforms that through a graphical interface allow to configure the DAO according to their needs. The main platforms that provide DAO deployment as-a-service on Ethereum allow users to create their own DAO are Aragon, DAOstack, DAOhaus and Colony. All are free/open-source projects in development, in various stages of maturity.

Out of these platforms, the largest in terms of usage is Aragon.

Conclusions

So is DAO yet another buzzword or is it a valuable technology to follow? Likely the majority of today’s DAOs will be defunct in the next 2 or 3 years, nevertheless they are pioneering and testing new forms of aggregation and governance around common interests. We will learn a lot from DAOs and some of the DAOs will likely build successful businesses and communities.

The GuildS project

The Guilds project led by Uncommon Digital (the developer of Uniscrow) envisions the use of DAOs for the implementation of a blockchain-based reputation system. With the rise of blockchains, decentralized Self-Sovereign Identities and smart contracts we envision that no central authority should be in the position to control the reputation of its users. On the other end, users should be empowered with the tools to make reputation and trustworthiness an attribute portable and verifiable across different platforms. Check for more information here https://www.trublo.eu/guilds/

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With globalization and the spread of the Internet, more and more companies have engaged in business deals involving often unfamiliar foreign partners.

More recently, the pandemic has accelerated the process of moving to the use of online work and commerce in many professional sectors pushing professionals and businesses to equip themselves with online tools and services to ensure negotiation, payment and delivery, as well as dispute resolution. 

The whole deal can be completed without a meeting, but by managing the entire process online.

The main categories that have the need to expand their businesses outside their usual perimeter through contracts with remote partners are professional services and SME.

Professional services

Professionals operating in the professional services market, of all types, from software development to the creation of digital works, including all forms of consulting and production of digital artifacts today can offer their services globally.

The professional services segment includes B2B transactions for services provided by freelancers in all professional fields: graphics and design, digital marketing, writing and translation, music and audio, software development, business and consulting, design, legal services, lifestyle, etc.

In that segment, statistics show that U.S. freelancers earned nearly $1 trillion in 2019, with 57 million Americans freelancing in that year. About one-third of the European workforce began working from home in 2020. 

Some estimates suggest that remote workers could account for 80% of the global workforce by 2030. 

Beyond freelancers, the professional services market in the U.S. alone totaled about $2T for 2018

E-lance platforms provide work for 73% of freelancers; these online marketplaces are therefore the primary source of work for freelancers. Nearly three-quarters of the global freelance community use online platforms to find clients.

SME

Also SME are more and more facing the need to carry out business deals with remote unknown organizations due to their commercial expansion. They typically need to transfer physical or digital goods and they look for mechanisms to secure such commercial transactions.

Types of market

In general, it is a B2B market for all those transactions that are provided by a freelancer to a micro-business or between SMEs, or a C2C transaction between private individuals for the purchase and sale of physical or digital goods that can be carried out at a distance.

Marketplaces

Platforms that offer marketplaces where supply and demand of professional services meet, where operators advertise their activities and clients can select, negotiate and purchase them, always using the platform itself, are an indispensable intermediary. 

Some well-known platforms are Upwork, Fiverr, Freelancer, Guru, People per Hour, Toptal, etc.

These platforms apply a transaction fee and have a considerable discretionary power and the total management of payments.

Dispute resolution

One of the most significant benefits of using a marketplace platform is presumably the idea that disputes can be resolved quickly. However, this is not exactly what happens and there is a strong asymmetry between customers and suppliers.

Platforms are designed to primarily protect the customer because customers are the source of the financial flows and the platforms themselves live on this income.

According to report by the Federation of Small Businesses (FSB), commercial disputes cost small businesses in England and Wales 11.6 billion pounds per year. In a survey of its members, the FSB found that 70 percent had faced at least one dispute between 2010 and 2015. Nearly three-quarters of these were the result of late or non-payment, the report states.

There is a strong need of being supported by a dispute resolution system that allows to solve the situations where customers, for any reason, reject or do not pay for the service or product, or cases where the supplier fails to comply with the request.

Conclusions

The increasing diffusion of business carried out between unknown and often remote people or organizations has led to the birth and success of platforms that act as marketplaces for the sale of products and services.

These platforms must also provide access to payment and dispute resolution services.

In this context, the Uniscrow service fits perfectly as it a neutral service that can be used at lower fees than traditional services and can be integrated in existing marketplaces and platforms.

Our mission at Uniscrow is creating solutions for people and companies that want to make business remotely and securely. This is why we are building a blockchain-based escrow software that will provide a new level of transparency, security and control for users without the need to have a bank or an escrow agent as intermediaries.

Contact Us

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ADRs have their historical origin in US practice, with subsequent introduction in Europe with an EU specific legislation.

The parties have the opportunity to resolve national or cross-border disputes concerning sales or service contracts by filing a complaint (an ADR procedure) with an ADR body supervised by a competent authority.

One of the disputing parties asks the neutral third party to intervene and act as an intermediary. The body may suggest a solution, impose a solution on both parties or simply bring the parties together to find a solution.

The disputing parties can be 2 businesses in a business to business transaction, or a business and a consumer.

Among the various types of ADR, the following stand out for their prevalence: mediation, conciliation, arbitration. 

Mediation

Mediation is an informal alternative to litigation. Mediators are individuals trained in negotiations, who bring opposing parties together and attempt to work out a settlement or agreement that both parties accept or reject. Mediation is not binding.

Conciliation

Like mediation, conciliation is a voluntary, flexible, confidential, and interest-based process. 

Like in mediation proceedings, the ultimate decision to agree on the settlement remains with the parties. The main difference between conciliation and mediation proceedings is that, at some point during the conciliation, the conciliator will be asked by the parties to provide them with a non-binding settlement proposal.

Arbitration

Arbitration is more formal than mediation and conciliation and has a lot of similarities with traditional court proceedings. Unlike mediation or conciliation, an arbitration is binding on the parties.  The arbitrator’s ruling resolves the dispute, even if one or both parties do not agree with it. 

What is an ADR body?

It is a public or private body set up on a permanent basis which offers the resolution of a dispute through an ADR procedure. It is registered on a special list kept by the competent authority. ADR bodies thus constitute the central point of the proper functioning of the instrument.

EU legislation requires that dispute resolution bodies are assessed by Member States and must meet a number of quality requirements to ensure that they operate effectively, fairly, impartially, independently and transparently. 

Advantages of ADR

The advantages of ADR are that it provides a quick and effective solution to disputes and reduces the judicial burden by taking ‘alternative’ action without going to court. It also avoids that consumers or small companies, discouraged by the cost and duration of court proceedings, give up protecting their rights.

Alternative dispute resolution can also help the sale of goods and services at national level or abroad, online or offline. It can also help maintain a company’s reputation and good customer relations.

How it works

The parties involved in the dispute must agree on the alternative dispute resolution body that will deal with the case. Each dispute resolution body has its own rules and procedures and charges different fees.

While the dispute is being dealt with, the dispute resolution body may contact the party concerned to ask for more information or documents or invite him to a meeting.

It is possible to appoint a representative for assistance. In other words, a business or a customer can ask someone else to present the complaint or follow the case on his behalf.

A solution can usually be reached within 90 days.

EU Online Dispute Resolution platform

EU makes available an Online Dispute Resolution (ODR) platform.

In case of a dispute with a consumer about an online purchase, the ODR platform could be the right tool to find a quick and cheap solution and avoid going to court. The trader can use the platform to file a complaint against a customer (e.g. in case of non-payment) or the consumer can use it to file a complaint against a trader.

The ODR platform is available in all EU languages and is free of charge. One of the competent dispute resolution bodies registered on the platform will receive and deal with the dispute. All procedures take place online.

Conclusions

The goal of ADR is to provide a forum for the parties to work toward a voluntary, consensual agreement, as opposed to having a judge or other authority decide the case.This way of dealing with disputes is beneficial both for the involved parties and for reducing court congestion and to prevent unnecessary costs and delays. For these reasons the ADR instrument is of growing importance and interest in the business and consumer community.

UNISCROW

Uniscrow is developing an innovative, blockchain-based way to make escrow digital and disintermediate using arbitrators.

Our mission at Uniscrow is creating solutions for people and companies that want to make business remotely and securely. This is why we are building a blockchain-based escrow software that will provide a new level of transparency, security and control for users without the need to have a bank or an escrow agent as intermediaries.

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An Escrow results from a written, binding agreement between two parties. An agreement whereby in a business arrangement certain sums of money or asset are deposited with a third party as collateral. The sums are released upon the occurrence of a termination condition expressly defined by the parties. 

Purpose of the Escrow

In complex business negotiations the parties may wish to protect themselves in an enhanced manner. For this reason it is common practice to include Escrow Agreements in contracts. These are guarantee agreements which may consider the establishment of an account to guarantee the transaction. This is known as an Escrow Account.

The purpose of an Escrow is to bring an independent third party into the business transaction.

The Escrow Agreement

The agreement that will be signed to establish an escrow account is a legally binding contract that sets forth the terms of the business transaction for which the money is being paid. The agreement will define the terms of the transaction and any conditions that require to be met. It will need to specify how each party will notify the person in charge of the account so that the money can be released. This means that the parties to the agreement may be in different countries and may rely on an independent third party.

A very important aspect concerns the consequences in the event of default by one of the parties.

As with any contract, it is crucial to regulate every aspect, including those relating to breach of contract. For example when the buyer refuses to accept the goods.

The Escrow Agent

Very often, a financial institution or a lawyer will act as guarantor. An escrow account is opened in a bank, and it will act as a guarantee for the deposit of a sum of money. This is a sum of money that must pass between two parties in return for a commercial transaction. Once the transaction has taken place the bond on the guarantee is released and the money is transferred from one party to the other.

The relationship between escrow agent, depositor and beneficiary is a trust relationship.

The third party status and independence of the escrow agent with respect to the parties to the main relationship means that the escrow agent cannot claim any rights with respect to the asset (goods) being escrowed.

The escrow agent is considered to be the agent of both parties who can only revoke the mandate jointly.

Advantages

The advantage of the escrow thus assures the contracting parties that an asset is held by an independent third party. The third party holds the goods in accordance with the parties’ instructions and will deliver them to the entitled party only and exclusively when the pre-established condition is met.

The third party is responsible for the custody of the asset, which remains in its management until the conclusion of the commercial transaction.

Costs 

It is necessary to take into account the costs involved in making such an arrangement. Banking institutions, in fact, for the deposit and custody of these sums of money (or assets), require a fee that must be considered.

For this reason, before starting an agreement like this and opening an Escrow Account at a banking institution, it is essential to evaluate the costs associated with the operation. It is true that this is not a small guarantee, but it is also true that the costs associated with this type of agreement are often significant for small companies.

Practical examples

Business transaction

A company is buying a large quantity of goods from a remote company for the first time. The parties do not yet know each other well enough and both want to protect their business transaction. The buyer sees the risk of the seller’s lack of reliability. Similarly, the seller does not know the financial strength of the client company. In this case, the deposit of sums of money in a bank to be released at the moment of the arrival of the goods is a security clause widely used in the commercial field.

Purchase and sale of artwork

In the case of sale and purchase of artworks, it is very frequent that a third party is involved. It holds the artwork under custody and guarantee. Once the commercial transaction between the buyer and the seller has taken place, the escrow agent gives the buyer access to the artwork being held.

Conclusions

Escrow are a very useful tool to enhance the reliability of business transaction between parties who do not know or do not trust each other. It is also used for transactions between parties based in different countries.

The Escrow Agent will play a neutral role keeping the money or the assets as long as the condition defined in the Escrow Agreement are met.

Of course, the service or the Escrow agent has a cost that must be considered before entering such an arrangement.

Uniscrow is developing an innovative, blockchain-based way to make escrow digital and disintermediate.

Our mission at Uniscrow is creating solutions for people and companies that want to make business remotely and securely. This is why we are building a blockchain-based escrow software that will provide a new level of transparency, security and control for users without the need to have a bank or an escrow agent as intermediaries.

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