Economics

Every deal moves exactly four sums of money: the price, two optional bonds, and the protocol fee. All math is integer basis-points (BPS = 10 000), every terminal path conserves the total to the wei, and every payout is a pull-based credit.

The actors' stakes

Party	Deposits	When
Buyer	price + buyerBond	at fund
Seller	sellerBond	at markDelivered
Treasury	—	receives fee on settled price
Arbiter	—	receives arbFee only on a resolved dispute

Bonds are anti-grief skin-in-the-game: they always return to their owner on the happy path, and the losing side of a dispute forfeits part of its bond to pay the arbiter.

Happy path (confirm or claimTimeout)

fee          = price × feeBps / 10000        (feeBps snapshotted at fund, ≤ 10%)
seller gets  = (price − fee) + sellerBond
buyer gets   = buyerBond
treasury     = fee

The fee is taken on the price only — never on bonds. Silence is acceptance: if the buyer neither confirms nor disputes within confirmWindow, anyone can claimTimeout and the seller is paid the same amounts (optimistic release).

Dispute (resolve(sellerBps))

The arbiter picks sellerBps ∈ [0, 10000] — the seller's share of the price:

sellerPrice = price × sellerBps / 10000
buyerPrice  = price − sellerPrice          (subtraction ⇒ rounding dust goes to the buyer)
fee         = sellerPrice × feeBps / 10000 (fee only on the part the seller actually earns)

Then the bonds, keyed on who was wrong:

Verdict	Arbitration fee	Seller receives	Buyer receives
sellerBps > 5000 (buyer wrong)	arbFee = buyerBond × arbFeeBps / 10000	(sellerPrice − fee) + sellerBond + (buyerBond − arbFee)	buyerPrice
sellerBps < 5000 (seller wrong)	arbFee = sellerBond × arbFeeBps / 10000	sellerPrice − fee	buyerPrice + buyerBond + (sellerBond − arbFee)
sellerBps = 5000 (tie / no fault)	none	(sellerPrice − fee) + sellerBond	buyerPrice + buyerBond

The arbiter is paid from the losing side's bond (capped at MAX_ARB_FEE_BPS = 50%; runbook default 20%) — never from the price, never from the winner. The rest of the losing bond goes to the winner, compensating the grief.

Worked example (defaults: fee 1%, arb fee 20%)

Deal: price 1.00, buyerBond 0.10, sellerBond 0.50 — arbiter rules 60/40 for the seller (sellerBps = 6000): sellerPrice = 0.60, fee = 0.006, arbFee = 0.10 × 20% = 0.02. Seller: 0.594 + 0.50 + 0.08 = 1.174 · Buyer: 0.40 · Arbiter: 0.02 · Treasury: 0.006. Total out = 1.60 = total in. ✔

Timeout exits

• refundExpired (seller never delivered): buyer gets back price + buyerBond, in full. No fee, no arbFee — the protocol earns nothing on a failed deal.
• resolveExpired (arbiter went silent for resolveTimeout): neutral undo — buyer gets price + buyerBond, seller gets sellerBond back. No fee, no arbFee. An absent arbiter can delay a resolution, but never decide one by default.

Conservation

On every terminal branch:

credits(seller) + credits(buyer) + credits(arbiter) + credits(treasury)
  == price + buyerBond + sellerBond      (exactly, dust-free)

This is asserted in the contract's test suite on every settlement path (fuzzed over fee grids) and enforced fail-closed in the Hub's simulated ledger. Rounding is deliberate and bounded: price dust → buyer, fee dust → seller, arbFee dust → the winning side.

Incentive notes

• Why bonds? A bond-less escrow invites free disputes (buyer) and fake deliveries (seller). Bonds make the losing side of a dispute pay the arbitration, so honest parties trade at zero extra cost.
• The arbiter's incentive is to be chosen again: it earns only on disputes, from the loser, at a capped rate. It can never profit from diverting funds (impossible) nor from stalling (resolveExpired zeroes its fee).
• The operator's incentive is volume: a capped fee (≤ 10%, default 1%) on successfully settled price — nothing on refunds, nothing on bonds.