smart.mouth.is

Smart Mouth is a smart contract that allows two parties to make a binding agreement to have a financial matter settled by a third-party trustee. The contract is immutable and offers the following guarantees:

  1. Both parties must lock the amount they might owe the other party into the contract until the trustee makes a decision.
  2. Only the trustee can transfer the locked funds, and they can only distribute the funds to the two parties involved.
  3. If the trustee does not transfer the funds before the specified deadline, both parties can withdraw their locked funds.

To initiate a binding agreement, one of the two parties first creates an offer. On the blockchain, the offer is identified by a hash of the document describing the financial matter. Put simply, a hash is a small piece of text that corresponds to the document. Anyone can derive the hash from the document, but the contents of the document can’t be deduced from the hash.

When informing the other parties about an offer on the blockchain, the creator should include an unmodified copy of the document. This way, the other parties can verify that the contents of the document match the offer on the blockchain (identified by the hash). In practice, we expect services similar to mouth.is to simplify this process.

An offer on the blockchain consists of the following things:

Theoretically, if the last option is not set, anyone can enter the agreement, although it would be very strange to blindly do so without access to the document describing the financial matter.

Parties entering an agreement should ensure the trustees are indeed trustworthy. Bad-faith trustees can:

Trustees have the option to annul offers before and after they’re accepted. This option will usually be exercised when a trustee refuses to handle a particular matter.

Trustees can resolve the matter in any manner, as long as the total amount distributed to the parties equals the total amount locked, minus the resolution fee.