A new DeFi project could let smart contracts buy physical goods

But the solution isn't exactly simple.

Boson Protocol, a project that seeks to connect the real world of physical commerce to smart contracts, announced a successful $350,000 investment round on Monday.

The project is creating the “building blocks for next-gen dCommerce apps” by providing a way to redeem blockchain tokens for their real-world physical counterpart.

The project received an oversubscribed investment round led by Outlier Ventures, joined by Ocean Protocol’s Trent McConaghy and others. The funding will be used primarily for operational costs and building a working pilot, the company said.

Justin Banon, the project’s founder, told Cointelegraph that the purpose of Boson is “enabling decentralized commerce with minimal arbitration, like a DEX for physical assets.”

The solution, built on Ethereum, relies on nonfungible token vouchers that can be described as a claim to the underlying product. The NFT represents a two-way escrow between the buyer and seller, which seeks to ensure that the exchange of the physical good occurs in an orderly fashion. “Mediation, arbitration and reversal are automated in a dynamic game where incentive rewards decrease the need for human arbitration over time, allowing for progressive decentralization,” Banon added.

One of the use cases described by Banon is a blockchain-based loyalty program, as the system allows “to airdrop rewards such as tickets or t-shirts directly to wallets.”

Boson Protocol falls outside the traditional focus on financial markets seen in DeFi. When asked if it could be used as a DeFi bridge to centralized finance platforms, Banon replied that “This is potentially one of the many use cases where Boson could be useful, but this is not Boson’s primary purpose.” Nonetheless, the project is designed to be composable with other protocols in the DeFi space:

“Boson’s most important bridging function is connecting the physical world with DeFi, allowing users to purchase physical goods and services directly via a smart contract, in an entirely permissionless way.”

Boson’s trustless exchange mechanism, as detailed by its white paper, involves complex interplay between various parties in many different scenarios. Monetary incentives are required to maximize the number of successful transactions, requiring more funds to be committed than in a traditional escrow.

The mechanism appears to show similar benefits and drawbacks to tBTC, a trustless bridging mechanism from Bitcoin to Ethereum. The project has often been criticized for being much more complex than centralized solutions like Wrapped Bitcoin (WBTC), but that appears to be dictated by the wish to maintain it completely trustless.