😎How Joint is Different

The Joint Protocol works like centralized P2P exchanges, sharing almost exact concepts that users already recognize and are comfortable with. However, Joint decentralizes and democratizes these concepts for good. For better understanding, It is essential to highlight the lifecycle of a typical peer-to-peer trade on centralized exchanges and then outline the approach taken by the Joint Protocol.

Lifecycle of P2P Trade

Registration

On CEX:

New users looking to trade on a centralized P2P exchange must create an account and provide their legal names, email, password and other private and identifying information. The exchange uses the data to create an identity, a profile and a custodian wallet for the user.

On Joint:

Users do not need to create an account. Users are not required to provide any personal information as they interact directly with the protocol. There is no need to collect private information. They only need an Ethereum wallet with the assets they want to trade.

KYC Verification

On CEX:

After registration, most centralized P2P exchanges will not a users to start trades or create ads. Government regulations require centralized exchanges to know the user before offering services in most jurisdictions. Therefore, users must complete a KYC (Know Your Customer) onboarding process before they are allowed to trade.

On Joint:

As a protocol, Joint cannot collect or store private information as a smart contract. It does not need users’ confidential information before it can provide service. As a blockchain application, it operates autonomously and forever.

However, interfaces and DApps that build on the Joint Protocol and operate in jurisdictions where KYC is mandatory may require users to go through KYC on their apps.

It is important to note that even when an interface requires KYC, users can switch to an alternative interface, deploy their own or interact directly with the contract using tools like Etherscan.

Since all interfaces and DApps building on the Joint Protocol are automatically non-custodial, users’ funds cannot be locked up, confiscated or mismanaged.

Liquidity Provisioning

On CEX:

After completion of KYC, most centralized P2P exchanges set additional hurdles that users must overcome before creating ads (liquidity provisioning). For example, some exchanges require new users to be active for some time or have reached an arbitrary set usage target before being allowed to become liquidity providers (or merchants).

On Joint:

The Joint Protocol does not have these arbitrary requirements — the rules are open to everyone. Users can join anytime, open/access a market, and provide and swap liquidity. Users can also create their market, provide liquidity, and trade with people in their community (e.g., WhatsApp, Telegram, etc.).

Markets

On CEX:

Centralized exchanges limit trading to several handpicked trading pairs (or markets). Liquidity providers can only add liquidity and trade on these markets. They have no options and must accept the terms and fees associated with these markets.

On Joint:

On Joint, liquidity is collected into a market. A market comprises two assets: a base asset and a quote asset. Liquidity providers bring the base asset (the liquidity), while the taker swaps exchange the quote asset (in their wallet) for the base asset.

Anyone can create a market, optionally set a fee and invite liquidity providers to add liquidity.

A market can also be open or permissioned. Liquidity providers can provide liquidity to any open market. Permissioned markets require users to be added to an allowlist before performing certain operations; this is useful for private or trusted markets.

Trade Engine

On CEX:

Centralized marketplaces run and manage a trade engine responsible for managing accounts, markets, liquidity, orders and disputes. This system is critical and must always be up and running; otherwise, users risk losing time, money and opportunity if they cannot enter or exit a trade.

On Joint:

The Joint Protocol also features a trade engine. However, the protocol’s trade engine is implemented as a smart contract on the blockchain. By existing on the Ethereum blockchain, the Joint Protocol’s service will always be available with 100% uptime. That’s not all! It will also be censorship-resistant - nobody can make it inaccessible.

Dispute Resolution

On CEX:

Not all peer-to-peer trades involving fiat go as expected; payment issues, disagreements, or fraud attempts can occur unexpectedly. Centralized marketplaces use a combination of an internal escrow, security deposit, and dispute system to resolve trade issues.

These systems allow users to trade with the comfort of knowing they can plead their case to the platform operators when problems arise.

However, centralized dispute systems are prone to human error and fraudulent manipulations; the mediators can erroneously or unfairly rule in favour or against a party leaving the other party with no other option than to accept the ruling.

On Joint:

The Joint Protocol takes a different approach by decentralizing the mediation system. No longer can one company have a monopoly to mediate a trade. Instead, anyone can purchase a mediator ticket, stake some JOIN tokens as a security bond and join a market to provide mediation service.

Multiple mediators are randomly selected and drafted into pending disputes during a dispute. The chosen mediators must vote on the correct dispute outcome based on the evidence received from the trade participants. Mediators who vote with the majority are rewarded with JOIN tokens, while those who vote with the minority lose a fraction of their security bonds as a penalty.