How Decentralized Identity Transforms Escrow and Arbitration

Trust in commerce has always been tied to identity. In the past, identity meant handing over your passport or license to a lawyer, broker, or bank. In Web3, we want the same assurance — but without sacrificing privacy, flexibility, or decentralization.

At SmarTrust, we’ve built identity into escrow and arbitration in a way that’s user-first and choice-driven.

Partnerships that power identity

• ClearPass — our partner for fast KYC, providing rapid verification when real-world compliance requires it.
• Cubid — our partner for non-KYC identification, using proof-of-personhood and Sybil resistance methods that let you prove you’re a unique human without exposing unnecessary personal details.

Together, these two systems give us the flexibility to support everything from high-value regulated deals to lightweight, anonymous micro-transactions.

Three identity modes

When you start an escrow on SmarTrust, you and your counterparty can choose how much identity to share. The system supports three modes:

1. Open Identification
   Both buyer and seller openly share their verified identity details with each other.

2. Private to SmarTrust
   Both parties verify themselves (via ClearPass or Cubid), but details are hidden from each other unless a dispute escalates to adjudication.

3. No Identification
   The transaction proceeds with no identity checks at all. This option maximizes privacy and speed but leaves more risk if disputes arise.

What if parties disagree?

If the buyer and seller choose different levels of identity, SmarTrust automatically applies the higher standard and puts both parties through it.

• Example: If one party wants open identification and the other prefers no identification, the system defaults to open identification.
• This ensures that both parties are covered at the strongest agreed standard.

Why this matters

• Flexibility: Freelancers, agencies, DAOs, and individuals can all transact on their own terms.
• Privacy: You don’t have to overshare — verify privately unless absolutely required.
• Fairness: When disputes arise, arbitrators have the information they need to make enforceable decisions.
• Compliance ready: For larger transactions or regulated industries, KYC through ClearPass is available on demand.

Arbitration with identity

Identity isn’t just about escrow funding — it’s crucial for arbitration.

• With open identification, arbitrators can immediately confirm who’s who.
• With private-to-SmarTrust, details are only disclosed if a case escalates.
• With no identification, adjudication may still proceed, but remedies are limited.

This ensures disputes are handled fairly and consistently, while protecting user privacy until disclosure is absolutely necessary.

Bottom line: By combining ClearPass (KYC) and Cubid (proof-of-personhood), SmarTrust creates a layered identity framework. Users can transact with as little or as much disclosure as they need, while ensuring that when trust is tested, the system has the tools to resolve disputes transparently and securely.