Escrow Smart Contracts Explained: Trustless Transactions on Polygon

Creating Your First Escrow Contract

999PAY provides both UI and API for escrow creation. Here's programmatic implementation:

import { EscrowClient } from '@999pay/sdk';

const escrowClient = new EscrowClient({
  apiKey: process.env.NINENINEPAY_API_KEY,
  network: 'mainnet'
});

// Create escrow with auto-release
const escrow = await escrowClient.create({
  buyer: buyerWalletAddress,
  seller: sellerWalletAddress,
  amount: 5000,
  currency: 'USDC',
  description: 'Website Development Project',

  // Auto-release after 14 days if no dispute
  autoRelease: {
    enabled: true,
    days: 14
  },

  // Milestone configuration
  milestones: [
    { name: 'Design', percentage: 30, description: 'UI/UX mockups' },
    { name: 'Development', percentage: 50, description: 'Full functionality' },
    { name: 'Launch', percentage: 20, description: 'Production deployment' }
  ],

  // Arbitrator for disputes
  arbitrator: '0x999PAYArbitratorAddress',
  disputeFee: 150, // USDC

  // Metadata for tracking
  metadata: {
    projectId: 'PRJ-12345',
    invoiceNumber: 'INV-67890'
  }
});

console.log('Escrow created:', escrow.contractAddress);
console.log('Funding URL:', escrow.fundingUrl);

// Buyer funds the escrow
await escrowClient.fund(escrow.id, {
  from: buyerWalletAddress,
  amount: 5000,
  token: 'USDC'
});

// Seller delivers work, buyer approves
await escrowClient.release(escrow.id, {
  from: buyerWalletAddress,
  milestone: 1 // Release first milestone
});

// Check escrow status anytime
const status = await escrowClient.getStatus(escrow.id);
console.log('Escrow state:', status.state);
console.log('Amount released:', status.releasedAmount);
console.log('Amount remaining:', status.remainingAmount);

Handling Webhook Events

app.post('/webhooks/escrow', async (req, res) => {
  const event = req.body;

  switch(event.type) {
    case 'escrow.funded':
      // Notify seller that payment secured
      await notifySeller(event.data.sellerId, event.data.amount);
      break;

    case 'escrow.released':
      // Payment released to seller
      await updateOrderStatus(event.data.orderId, 'completed');
      await sendReceipt(event.data.sellerId);
      break;

    case 'escrow.disputed':
      // Dispute raised
      await notifyBothParties(event.data.buyerId, event.data.sellerId);
      await escalateToSupport(event.data.escrowId);
      break;

    case 'escrow.resolved':
      // Arbitrator made decision
      await executeArbitrationDecision(event.data.escrowId, event.data.decision);
      break;
  }

  res.status(200).json({ received: true });
});