Decentralized Escrow Protocols for High-Value B2B Transactions Using Hybrid Blockchain Models

Abstract

High-value business-to-business (B2B) transactions often suffer from trust asymmetry, lengthy
settlement cycles, and lack of transparent dispute-resolution workflows. Traditional escrow systems rely heavily on
centralized intermediaries, increasing operational overhead, the risk of collusion, and cross-border enforcement
complexity. This paper introduces a decentralized escrow protocol designed to secure large-scale B2B trade by
combining on-chain asset locking mechanisms with off-chain arbitration supported by cryptographically verifiable
evidence. The proposed framework leverages a hybrid blockchain architecture that integrates Ethereum public smart
contracts for transparent settlement with a permissioned enterprise blockchain for confidential document exchange.
Zero-knowledge proofs (ZKPs) safeguard commercially sensitive data such as pricing, contractual terms, and
milestone deliverables without exposing them to the public ledger. Smart contract–driven workflows automate
digital invoice validation, purchase order confirmation, and milestone-based fund release. The protocol is optimized
for cross-border transactions involving suppliers, manufacturers, logistics firms, and financial institutions.
Experimental evaluation demonstrates improved transaction finality times, reduced trust dependencies, and
enhanced dispute-resolution efficiency. This hybrid escrow model offers a scalable, secure, and legally enforceable
alternative to traditional centralized escrow systems, paving the way for interoperable digital trade automation in
global B2B ecosystems.