Dispute System

The Nector dispute system is designed to resolve conflicts without human intervention, using time-based rules and economic incentives. Instead of relying on moderators or arbitration, disputes are handled through a structured process where outcomes are determined by user actions and deadlines.

Overview

A dispute can only be initiated by the buyer during the review phase if:

  • The item has not been received
  • The item does not match the description

Once a dispute is opened, the transaction enters a time-bound resolution flow involving both parties.

1. Dispute Initiation

The buyer opens a dispute directly from the order interface. The reason for the dispute is automatically derived from the buyer’s review responses:

  • Item not received
  • Item not as described

Each order can only have one active dispute, preventing repeated or spam disputes.

2. Seller Response Window

After a dispute is opened, the seller has 24 hours to respond. The seller has three options:

Refund

The seller may choose to cancel the transaction.

Outcome:

  • Buyer receives full refund (price + bond)
  • Seller receives their bond back
  • No penalties are applied

This path is designed to encourage fast resolution without conflict.

Respond

The seller may choose to contest the dispute.

This moves the order into the discussion phase, where both parties can negotiate.

No Response

If the seller does not respond within 24 hours:

Outcome:

  • The dispute is resolved in favor of the buyer
  • The seller is penalized

Penalty structure:

  • 20% of the product price is taken from the seller’s bond half of that goes to buyer and other half goes to the platform wallet

All remaining funds are returned to their original owners.

This ensures that ignoring disputes is economically irrational.

3. Discussion Phase

If the seller responds, the dispute enters a 24-hour discussion window.

During this phase:

  • Both parties can communicate and resolve the issue
  • No funds move unless an action is taken

Available Actions During Discussion

Buyer:

  • Release payment to the seller (complete the order)

Seller:

  • Issue a refund (cancel the order)

4. Draw Resolution

If the discussion period expires without any action:

The dispute results in a draw

Outcome:

  • All funds locked in escrow are forfeited
  • Both parties incur financial loss

This mechanism discourages:

  • Endless negotiation
  • Strategic stalling
  • Bad-faith disputes

By making inaction costly, the system forces participants to actively resolve conflicts.

5. Final Outcomes

Every dispute ends in one of the following:

Refund

  • Initiated by seller
  • No penalties
  • All funds returned

Buyer Win

  • Seller fails to respond
  • Buyer receives compensation
  • Seller is penalized

Draw

  • No resolution during discussion
  • Both parties lose funds

6. Abuse Prevention

The dispute system is designed to prevent manipulation:

  • Single dispute per order prevents spam
  • Response deadlines prevent stalling
  • Economic penalties discourage dishonest behavior
  • Draw mechanism prevents infinite negotiation

The system ensures that:

The most rational strategy for both parties is to act honestly and resolve disputes quickly.