To understand the power of Boson Protocol, it is worthwhile understanding the theory supporting it. Promise Theory starts with intentions: the Seller has an intent to sell something and the Buyer has an intent to purchase it. They are the elementary actors and it doesn’t matter here if they are humans or machines.
Public announcement of intentions drive promises
In order for the two complementary intentions to match, they must be publicly announced. A stated intention is a promise. It is interesting to note that an actor can only make a promise about itself and only to another actor, because here we treat them as autonomous agents (e.g. “I promise to give this light saber to whomever gives me one MANA.”).
The value of the promise is the actor’s internal function. The Seller evaluates a promise by the price they set (money) and the Buyer evaluates a promise by evaluating the worth of the promised outcome (artifact or service performed).
Boson is a general purpose protocol
For Boson Protocol it only matters that the two are matched, while the potential negotiation can be done in arbitrary ways and it is out of scope of the protocol (but can be facilitated at higher layers in the Boson Stack, see for example Core SDK Components).
Similar to the boundaries of observability in blockchain, the assessment of whether a promise was kept is subjective, but can be done by anyone with some insight.
Boson Protocol provides a contractual template between a Seller and a Buyer that specifies the acceptable assessment representations (e.g. a photo of delivery, a collection code etc.) and, as a last resort, provides a means to resolve conflicts via the dispute resolution mechanism.
Thus, in Boson Protocol the Seller and Buyer cooperate by entering into a mutual promise.
Phases of exchange with Boson Protocol
Offers instantiate the seller’s promise
The Seller’s promise is instantiated as an Offer, stating the delivery of a promised item against some economic benefit, under specified conditions.
An Exchange is instantiated when the buyer accepts an offer
When the Buyer accepts an Offer an Exchange is instantiated (mutual promise) and the Buyer receives a tokenized promise that can be redeemed. The token behaves like a voucher that is consumed (i.e. burned) once redeemed.
Both parties Commit funds to maximise cooperation
In order to maximize their cooperation, especially when they don’t trust each other, these actors put their skin in the game by committing some funds as a strong signal that they won’t break their promise. The Seller does that explicitly via a security deposit, while the Buyer agrees to be charged a penalty if not redeeming.
In other words, making promises by untrusted actors works better if they make some commitment to it, else they could be empty words with no rational reason to keep them.
The trustworthiness of an Offer is a function of the Seller’s reputation combined with the size of the Seller deposit in relation to the price of an Offer. With this mechanism, risk is reduced for both buyer and seller irrespective of the reputation of either; a natural outcome of this across exchanges is the increase of mutual beneficial transactions.
Sellers provide assets to conclude the Fulfillment
Keeping a promise in Boson Protocol simply means that the Seller provided the asset offered via the exchange to the Buyer. This is called fulfillment as both actors have, in their opinion, kept their side of the promise. Unless a dispute is raised within the allotted time the payment and other funds are then released by the protocol.
Buyers may raise a dispute
The Buyer is afforded some time post redemption to raise a dispute. This could be for non-delivery of the item, or if the item is not of the expected quality. Buyers and Sellers can resolve disputes mutually or ultimately escalate to an external actor called a Dispute Resolver. Mutual resolution aims to be maximally automated and can be modeled as a 2-player game with an equilibrium in which the players coordinate. In the event where the Buyer and Seller can not come to a mutual agreement Escalated Dispute Resolution is there as a last resort. It bears corresponding costs, is external to the protocol and can be facilitated by a centralized or decentralized actor. The cost for dispute resolution can be mutualized (across Sellers and their Offers), where any such configuration must be done when an Offer is created.
Conclusion
Ultimately every exchange will end up in one of the finalized states. The specific state into which an exchange finalizes will determine the payoffs that each actor will receive.
Read on: download our v2 whitepaper
Boson enables the decentralized exchange of physical assets- tokenized as redeemable NFTs.
The launch is planned later this year, and over the coming weeks, we will be releasing additional information about what Boson is, how it works, and how you can build on the protocol, and participate as either buyer, seller or integrator.
To read more in our white paper, you can download it here