Escrow
A service that holds funds on behalf of two parties until the terms of a transaction are met.
Escrow solves the trust problem in P2P transactions. When you buy USDC from a stranger on a P2P platform, neither side wants to send first. The platform acts as escrow: the seller's USDC is locked until you confirm payment, and the USDC is released to you once the seller confirms receipt of your payment.
In DeFi, smart contracts act as automated escrow. When you deposit USDC into a lending pool, the smart contract holds it and automatically distributes it according to its rules. No human intermediary needed.
Escrow is a fundamental building block of trustless commerce, whether it's P2P trading, freelance payments, or DeFi protocols.
Related Terms
P2P (Peer-to-Peer)
Direct transactions between individuals without an intermediary, used for buying, selling, or transferring crypto.
Smart Contract
Self-executing code deployed on a blockchain that automatically enforces the terms of an agreement.
DeFi (Decentralized Finance)
Financial services built on blockchain smart contracts that operate without traditional intermediaries like banks.
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This definition is provided for educational purposes. USDC.org is an independent resource and is not affiliated with Circle Internet Financial.