The DeFiEscrow Protocol Fee

The DeFiEscrow protocol fee is a payout written into the escrow when the deal is created. It is not a monthly subscription, and it is not a spread that an operator skims after the fact. On this version of the contract the rate is 1% (100 basis points). When the asset is native ETH and 1% would be smaller than 0.05 ETH, the fee is 0.05 ETH instead. USDC and USDT escrows do not use that ETH minimum. You also pay Ethereum gas on each transaction. Gas goes to the network, not to the protocol.

The app reads the fee recipient, the rate, and the minimum from the deployment, then shows the amounts before you sign. This article is the arithmetic behind that screen, so a review step does not feel like a surprise.

How the 1% is measured

The contract computes the required fee from the total amount allocated to parties other than the fee recipient. In words: add up what the humans are supposed to receive, take 1%, and require the fee recipient's own payout to be at least that number. For native ETH, if that 1% is under 0.05 ETH, the required fee becomes 0.05 ETH.

The app treats the deal amount you type as the gross amount before the fee line is added. For a two-party escrow it then asks who pays.

Take a 100,000 USDC deal where the depositor pays the fee.

• The withdrawer is set to receive 100,000 USDC.
• One percent of that amount is 1,000 USDC.
• The depositor must send 101,000 USDC.
• The fee recipient is allocated 1,000 USDC.
• Deposits (101,000) equal payouts (100,000 plus 1,000).

Take the same deal where the withdrawer pays the fee.

• The depositor sends 100,000 USDC.
• The withdrawer receives 99,000 USDC.
• The fee recipient is allocated 1,000 USDC.
• The totals still match.

In the simple two-party flow, one side or the other bears the fee, not a custom split. In the multi-party flow you can mark more than one party as a fee payer. The app divides the fee across those parties. A depositor who pays a share deposits more. A withdrawer who pays a share receives less. If a withdrawer does not have enough incoming amount to cover their share, the app stops you. The contract would reject an underfunded fee line anyway.

When the ETH minimum replaces 1%

The minimum applies only if the token address is the zero address, meaning native ETH. It exists so a tiny ETH escrow cannot round the fee down to dust, and so the minimum is expressed in ETH rather than being misread as a token amount.

One percent of 5 ETH is 0.05 ETH. At a non-fee payout of 5 ETH, the percentage and the minimum are the same. Under 5 ETH, the minimum is larger. Over 5 ETH, you pay 1%.

Example: the intended payout is 1 ETH, and the depositor pays the fee. One percent would be 0.01 ETH, which is below the minimum, so the fee is 0.05 ETH. The depositor sends 1.05 ETH. The withdrawer can receive 1 ETH. The fee recipient is allocated 0.05 ETH.

Do not convert 0.05 ETH into a dollar figure in your head and then freeze that dollar figure into a USDC deal. The minimum is an ETH rule. A 1,000 USDC escrow is charged 10 USDC, because 1% of 1,000 is 10, and there is no 0.05 ETH floor on token escrows.

What the fee does not buy

The fee does not hire a mediator. A dispute still freezes the escrow, and the 30-day path still refunds deposits rather than asking someone to judge the PDF. The fee does not pay your gas. Creating the escrow, approving a token, depositing, approving the deal, releasing, and withdrawing are separate transactions, and each one can cost gas even when the commercial fee is a round number.

The fee is not taken by stealth after release. If the deal refunds, depositors withdraw what they deposited. A buyer who deposited 101,000 USDC, fee included, is credited that 101,000 back. The fee recipient, who typically deposited nothing, is not paid on a refund. You are not charged 1% for a deal that never completed.

The fee also does not make DeFiEscrow a party to your underlying sale. It is a protocol charge for using the contract, disclosed as a line in the same escrow. The humans still owe each other whatever the off-chain agreement says.

How to check it before you sign

On the review screen, find three numbers: what the depositor sends, what each recipient can later withdraw, and what the fee address receives. They have to balance. If you are the withdrawer paying the fee, your receipt is the deal amount minus the fee, and you should see that reduced number, not the headline price.

If you are comparing this with a custodial escrow quote, compare the full cost: protocol fee, ETH minimum if it applies, gas at the time you transact, and any mediator or title fee you still pay outside the contract. A USDC escrow and an ETH escrow of the "same" dollar size will not have the same fee shape, because of the minimum.

The create flow is covered in how DeFiEscrow works. Nothing in the fee math changes the rule that every participant must approve, or the rule that a missed deadline refunds deposits instead of inventing a new price.