Definition
An arrangement where funds for a piece of work are held by a neutral party or smart contract and released to the provider when the work is accepted, with an agreed process if it is disputed.
Why it matters
Escrow lowers the risk for both sides of a service engagement: the client knows money is only released for accepted work, and the provider knows the money exists. The terms matter as much as the mechanism, in particular acceptance criteria and dispute handling.
What to check
- Write down what “accepted” means for each deliverable.
- Agree on who resolves a dispute and how long it may take.
Related terms
- Milestone paymentPaying for a service engagement in parts, each released when a defined deliverable is accepted against written criteria, instead of paying everything upfront or at the end.
- Success feeA fee paid only when an engagement is completed.
- MultisigA wallet that requires approval from several signers before executing a transaction.
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