Pledge Contract

Progressive settlements contracts with flexible milestone enforcement, conditional escrow, and on-chain guarantees.

Overview

A Pledge Contract is a non-custodial progressive escrow and settlement contract, between two parties where all obligations, milestones, and deliverables are digitally anchored. It serves as a self-executed contract where every participant signs with their private key, ensuring integrity, accountability, and traceability without relying on centralized intermediaries.

A Pledge Contract may optionally include:

• Milestones: Multiple Pledge Contracts can be linked to one document, using different coins for payments and different parties for each payment.
• Verifiable Documents: For document verification, authentication, and binding.
• Agreement Encforcement settlements: Triggered by contract actions.

Context & Problem

Traditional contracts rely on manual signing, legal enforcement, banks, escrow providers, and administrative processes throughout their lifecycle, making them expensive and inefficient. Electronic signature services typically charge subscription fees, escrow services charge around 0.5–3% of the transaction value, bank transfers incur additional fees and delays, and legal disputes can cost thousands to tens of thousands of dollars while taking months or even years to resolve. Progress tracking, document version control, and payment verification are often handled manually, increasing operational costs, reducing transparency, and creating opportunities for disputes.

The Pledge Contract eliminates these inefficiencies by cryptographically binding documents to an immutable smart contract, automating contract enforcement and milestone verification, integrating on-chain escrow with automatic settlement, and maintaining a transparent, tamper-proof record of all deliverables and payments, resulting in lower costs, faster execution, and a trustless contracting system.

Step-by-Step Tutorial

Prerequisites

Before you begin, ensure you have:

• A non-custodial wallet installed (e.g., MetaMask, Trust Wallet).
• An active subscription or sufficient usage credits.
• An Issuer/Creator DID: either a did:key or an ERC-1056 DID with the issuer key as its delegate.
• Network tokens for contract deployment gas fees.
• (Optional) A Verifiable Document if the settlement will be linked to a document.

A. Creating a Pledge Contract

1. Navigate to the Pledge Contract section in your application.
2. Fill in the contract details:
   • Seller/Contractor/Issuer DID: Your decentralized identifier.
   • Contractee/Buyer Address: The recipient's wallet address.
   • Network and Token: Select the blockchain network and the token for payment.
   • Verifiable Document Contract DID: (Optional) Enter the DID of the document to bind to this contract.
3. Tap Create and approve the transaction in your wallet.
4. After the transaction is minted, go to the History section.
5. Locate the document history record for the newly created contract.
6. Tap the More options menu and select Initialize and Setup. Confirm the initialization transaction.

Important Notes:

• Unlike an Escrow, the Pledge Contract should be created by the seller. The contract's DID should then be shared with all other parties.
• Critical: Immediately after deployment, You must initialize the contract quickly to secure it and set up its rules.

B. Sharing the Contract DID with Parties

1. Go to the History section.
2. Find the "Issue" record related to your contract.
3. Tap the More button options menu and select Show Transaction Info.
4. Copy the DID from the transaction details and share it with the other party.

Pledge Contract Status Guide

This guide explains every state in the contract lifecycle, who can act, and what actions are permitted.

Linked Document Rules

If your contract is linked to a Verifiable Document, these additional rules apply:

• To move to Executed, the seller must sign on-chain in the Document Contract.
• To move to Completed, the buyer must sign on-chain in the Document Contract.
• To move to Canceled, the Document Contract must be in a suspended or revoked status.

Real-World Use Cases

Use Cases

• Employment & Contractor Agreements: Employment offers, onboarding documents, probation milestones, bonuses, or contract completion payments can all be managed through verifiable agreements with automated settlement.

• Freelance & Service Agreements: Clients lock cryptocurrency in escrow before work begins. Payments are automatically released as milestone deliverables are verified through Verifiable Documents.

• B2B Supplier Agreements: Businesses secure high-value crypto payments in escrow for manufacturing, shipping, and delivery milestones, ensuring suppliers are paid only after contractual obligations are fulfilled.

• OTC & Large Crypto Transactions: Buyers and sellers securely exchange large digital asset positions using on-chain escrow, eliminating counterparty risk and removing the need for trusted intermediaries.

• Cross-Border Business Payments: International companies settle contracts using stablecoins without relying on banks, enabling faster, lower-cost payments with transparent on-chain records.

• Crypto Mergers, Acquisitions & Asset Purchases: Large acquisitions of digital assets, protocols, domains, or businesses use escrow-backed contracts to ensure funds are transferred only after all contractual requirements are completed.

• Real Estate and Goods Transactions: Purchase agreements, rental deposits, or property transfers can use on-chain escrow, releasing funds only after all contractual documents and conditions are satisfied.

Tips & Best Practices

• Always attach a Verifiable Document detailing the scope of work, deliverables, and acceptance criteria to prevent misunderstandings.
• Break work into separate milestone contracts with required tokens. This reduces risk by allowing progressive payments and isolating disputes to a single milestone.
• Keep communication in-app where possible to maintain a transparent and traceable record linked to the contract.