Dispute handling by DAO

Any potential trading disputes that may arise will be resolved by randomly selected nodes with high public ledger trust scores. This is similar to the blockchain’s Proof-of-validation (PoV) mechanism that works to achieve consensus through staked validator nodes.

Validator

Nodes are incentivized to resolve the disputes because they will be rewarded with PEX tokens. We believe when there are sufficient trades on the marketplace, the value of the PEX token will rise accordingly, which will invite more validators to be part of the process. This will speed up the whole trading process, leading to smoother and better trading experiences. Eventually, a virtuous circle will be established.

Dispute fee

The appeal initiator has to pay an upfront fee to the dispute handling node for handling the dispute. The fee will eventually be deducted from the party that loses the dispute (from the staked PEX). Whereas the paid PEX token will be returned to the user who won the arbitration.

Appeal

If users are not satisfied by the decision of a dispute handling node, an appeal can be initiated. Appeal decision requires a vote signed by multiple randomly selected DAO nodes, the decision will be final only when more than 67% of the DAO nodes have voted for a final outcome. The DAO nodes can each initiate contact with users to join a group chat to collect evidence and vote on-chain on the final decision. If the DAO nodes find any fraudulent activity, they can initiate a penalty deducting from the security deposit. These behaviours will be recorded on-chain and included in the calculation of the trust score.