GoodsHope White Paper：The Next-Generation Decentralized Trading Platform

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Background:

Since the birth of Bitcoin, value exchange driven by blockchain technology has become increasingly convenient. A series of virtual assets represented by tokens and NFTs exist on the chain and are easily monitored with high transaction feasibility. However, when trading physical goods through virtual tokens, the difficulty in monitoring goods off the chain poses a challenge. Currently, there has not been an intelligent contract that can effectively help users buy and sell physical goods and resolve credit issues. To address this issue, the GoodsHope trading platform was born.

Blockchain technology has enabled unprecedented on-chain value transfer, and the development of NFTs and lightning networks has drawn attention to the other side of blockchain value transfer: off-chain transactions. The GoodsHope market aims to utilize blockchain technology to establish a peer-to-peer physical goods trading market based on game theory, ensuring proper payment and correct value transfer of goods.

Current situation of on-chain peer-to-peer trading:

In order to facilitate the exchange of goods and convenient transfer of value, a large portion of traditional goods' online trading is conducted through Bitcoin, which is based on blockchain 1.0 and can only be used for simple ledger records for transfer payments (although it is possible to implement related contract calculations, which will not be considered in this article).

In a transaction, there is often a credit issue between the buyer and seller:

• In a two-person online trading system, should the seller ship first or should the buyer pay first?

• In a three-person trading system with intermediaries, how can the trustworthiness of the intermediary be determined?

For example, in the current physical cryptocurrency trading, we can gain some inspiration from it. Generally, transactions follow a three-person intermediary trading model: in the trading process, individuals with a high reputation in such trading markets act as intermediaries, and their credit comes from a series of successfully executed transactions in the past. Currently, the intermediaries are jointly operated by a group of people and profit from transaction fees.

The transaction process is mainly as follows:

• 1) The buyer makes a purchase request and the seller contacts the intermediary;

• 2) The buyer pays Bitcoin to the intermediary, and the seller ships the goods;

• 3) The buyer receives the goods, informs the intermediary that they have received them, and the intermediary pays Bitcoin to the seller. The transaction is completed.

In the example above, we can see that the transaction is mainly based on the trustworthiness of the intermediary. Admittedly, an intermediary who is absolutely "trustworthy" solves the problem of whether to pay or ship first, but there are still several problems:

• 1) The credit issue of the intermediary, what if they plan to run away this time?

• 2) As the price holder, how should the intermediary handle the money if the recipient of the goods does not inform the intermediary that they have received them? (If the intermediary only makes payments upon the buyer's command, as the buyer who has already paid Bitcoin equivalent to the value of the goods, they can completely punish the seller by not sending a message confirming the receipt of the goods, without any loss to themselves.)

• 3) If the buyer originally paid for 10 packages of cookies but only received 5, how should they negotiate?

Because these problems have not been solved, "Rug pull" and other situations often occur in the process of online crypto currency trading, causing losses to traders. In transactions, buyers have relatively low rights, while sellers are often not trusted,the main problem lies in the value difference in the transaction and the choice of a trusted intermediary,this is the main reason for the underdevelopment of physical commodity trading in cryptocurrency transactions at present . To achieve fair trading, the influence of both the buyer and seller on the transaction must be balanced.

The GoodsHope trading platform based on smart contracts and game theory

And mainly consists of three parts:

• Blockchain staking and trading module

• Token incentive module

• Web frontend interface based on IPFS implementation

To balance the rights of buyers and sellers and solve the three issues mentioned above, we use a combination of pledge and pre-payment in transactions. Buyers need to pay the purchase price to the GoodsHope platform at the time of the transaction, and both parties need to pay a certain percentage of the deposit based on the price of the goods. The reasons for this are as follows:

• GoodsHope is a decentralized platform that avoids the risk of third-party "rug pull" situations.

• Excess pledges solve the problem of non-feedback of receiving goods mentioned in issue 2.

• Excess pledges create a "lose-lose" situation for dishonest participants, making it difficult to retrieve the pledge if the transaction fails to achieve a mutually beneficial result.

Since the buyer has fulfilled their obligation by paying the agreed-upon amount, as long as the seller delivers the goods properly, the transaction can be successfully completed. Therefore, it is crucial for the buyer to verify the seller's goods. The decision on whether the transaction is completed should be made by the buyer.

The process of implementing a transaction is as follows:

1.Creating a transaction:

• A transaction is initiated by the seller, who can specify the buyer's address(es) that can participate in this transaction in the transaction order. Participants can be a single address or any address (the buyer can be specified as 0x0 in the transaction order).

• When creating the transaction, the seller needs to specify the price of the goods and complete their own share of the collateral.

• If the buyer has not joined after creation, the seller can cancel the transaction on their own.

2.Buyer participation in the transaction:

• The buyer pays for the goods and provides a deposit equal to the seller's deposit.

• If the buyer wishes to cancel the transaction at this time, both the buyer and seller must reach an agreement.

3.Transaction progress:

• Transaction success: After the buyer confirms receipt of the goods, the collateral will be returned to the depositor, and the contract will pay the proceeds to the seller.

• Transaction cancellation: The transaction order is invalidated, and all funds are returned to their original source.

• Unilateral cancellation by one party at the beginning of the transaction order

• Both parties agree to cancel after the buyer joins the transaction order

• Transaction dissatisfaction: The buyer and seller continue to coordinate the transaction until an agreement is reached before the deposit can be returned and the payment made.

How to calculate the deposit required for both parties in a transaction?

On the GoodsHope marketplace, there are many different transactions, with some involving large amounts and others involving small amounts. If each transaction requires the same deposit ratio, it would result in low capital utilization and reduced transaction liquidity, potentially causing loss of potential returns on the corresponding capital.

Therefore, in the GoodsHope smart contract, the community specifies an appropriate deposit interval [A,B] as a function of the goods' price:

• Within this interval, the deposit ratio decreases continuously.

• Beyond the upper bound (B), the deposit ratio is fixed at 0.1.

• Below the lower bound (A), the deposit ratio is fixed at 1.

To reduce platform usage costs while ensuring the deterrence of honesty and integrity for both buyers and sellers.

A token incentive module

To create a positive community atmosphere, a corresponding token reward will be given for each successfully completed transaction. The reward amount will be proportional to the commodity value. Additionally, if the transaction duration exceeds a certain threshold (A days), the token reward will be reduced accordingly until it reaches zero (after B days). This is to incentivize both parties to maintain honesty, reduce transaction friction, and receive greater profits compared to dishonest behavior.

The incentive tokens can be used to pay for future transaction fees, and the tokens will be anchored to the fees that need to be paid. Additionally, in the future, incentive tokens may also be used for governance, liquidity mining, and other purposes.

The IPFS Frontend

Using decentralized IPFS technology, our application can communicate with the blockchain without the need for a server. The community will perform daily "pin" operations on IPFS to ensure the proper functioning of the front-end code.

Future work includes the following:

1.Token holders will be able to participate in community decisions through multi-signature wallets and voting. The role of owner for the GoodHope Market and token contracts will be given to a specific contract to make changes and upgrades to the relevant parameters to avoid centralization.

2.Liquidity mining (possibly following the example of Sushi?)

3.Token dividends

4.Best Card NFT issuance: representing high-quality users, who will have corresponding rights.

Q&A:

Q1: As a user, how can we ensure that your GoodHope contract is reliable?

A: We will ensure the reliability of the contract in the following ways:

• The code will be open-source.

• The community will govern the contract to avoid arbitrary changes to its functionality by users (to be implemented later).

• We will deploy it using IPFS to reduce the vulnerability of a single server to attacks.

Q2: As a user, will you collect my data?

A: We will never collect any information from users! All contracts will be deployed in a decentralized manner, and actions will be visible to users.

Q3: Why not use forms of identity such as "DID" and "personal portraits" to ensure the honesty of transactions?

A: "Rough and simple" over-collateralization often achieves good credit effects.、

• The cost of forging an on-chain identity is low, making it easy for attackers to implement.

• Past credit is not a guarantee of future behavior, at best it is a reference.

• Even long-standing traditional credit systems still have many problems, with many loopholes for the powerful to exploit, making it difficult for the poor to participate or prove their creditworthiness, exacerbating the "Matthew effect."

• Creating a credit evaluation system and decentralized identity verification requires collecting a large amount of data, which may expose your privacy. GoodsHope is designed to be decentralized, efficient, and private; we are not OpenAI.