Definition ∞ Escrow services involve a neutral third party holding assets or funds on behalf of two transacting parties until specific contractual conditions are met. In the digital asset space, smart contracts can automate this function, holding cryptocurrency until predefined criteria are satisfied. This reduces counterparty risk in peer-to-peer transactions. These services provide a secure intermediary for exchanges.
Context ∞ Decentralized escrow services, powered by smart contracts, are increasingly prominent in decentralized finance (DeFi) for secure asset transfers, peer-to-peer trading, and dispute resolution. Their growing adoption highlights a shift towards trustless transaction environments. Regulatory frameworks are also considering how to address these automated arrangements for consumer protection.
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