Escrow-protected payments: building trust into every contract

The trust problem

Every freelance engagement starts with the same tension: the freelancer worries about not getting paid, and the client worries about paying for unfinished or unsatisfactory work. Without a mechanism to bridge that trust gap, one party has to take all the risk — and usually, it's the freelancer who fronts the work and hopes the invoice gets honored.

This is why escrow exists. It's the financial equivalent of a neutral third party holding the money until both sides agree the work is done.

How escrow works

In a traditional escrow flow, funds are held in a neutral custodial account until a release condition is met. Only when the client approves the work (or a dispute is resolved) are the funds released to the freelancer.

1. Client funds the escrow — the payment amount is locked in a custodial balance, visible to both parties but not yet withdrawable.
2. Freelancer delivers the work — the work is submitted for review.
3. Client approves — funds are released to the freelancer's wallet instantly.
4. Dispute (if needed) — if the client doesn't approve, a resolution process determines whether funds go to the freelancer or are refunded.

Why this matters for global work

When you're working across borders, the trust gap is even wider. A freelancer in Argentina and a client in Germany have no shared banking system, no shared legal framework, and no easy way to enforce a contract. Escrow solves this by making the payment itself the enforcement — the money is already held, so neither party can walk away without resolution.

How 1TCH implements escrow

1TCH's escrow is built on the same USDB custodial balance that powers all payments. When a client funds an escrow-protected contract:

• The funds are locked in a segregated custodial balance, separate from both parties' available balances.
• Both parties can see the escrow status in real time — funded, pending approval, released, or in dispute.
• On approval, funds settle to the freelancer's wallet instantly, in their preferred currency (USD, EUR, GBP, MXN, or on-chain USDC).
• On dispute, 1TCH's resolution process reviews the contract terms and delivery evidence before releasing or refunding.

When to use escrow

• New client relationships — when you don't yet have a track record with the other party.
• Large projects — when the payment amount is significant enough that non-payment would be damaging.
• Milestone-based work — when you want to release funds in tranches as milestones are completed and approved.
• Cross-border engagements — when the parties are in different legal jurisdictions and enforcement would be difficult without escrow.

The bottom line

Escrow doesn't eliminate the need for trust — it redistributes it. Instead of trusting the other party, both sides trust a neutral, regulated system to hold the funds and follow the rules. That's what makes global freelance work viable at scale, and it's why every 1TCH contract can be escrow-protected by default.

Start your first escrow-protected contract →