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Decentralized Trust & Security
Flame tokens ensure trust and security within P2P rentals, and a insurance pool of reserves funded by the Flame holders offer a guarantee for possible damages and losses of items.

Flames as Trust Tokens and Staking mechanism for securing transactions

As it should be clear by now, Flame tokens are tied to users’ reputation, activity level, and contribution to Flambu because the higher the reputation and the contribution of a user, the more Flames they will have.
Unlike traditional reputation systems with only stars and reviews without any real-world value, Flame tokens also have real-world value, so they can be used for security purposes within transactions.
Each time two peers engage in a transaction on Flambu, they will be asked to lock a certain amount of Flames in escrow. The number of Flame tokens each side needs to lock will be determined by a Machine Learning algorithm that calculates several risk factors, which will be trained in time to provide a better user experience and minimize risk at the same time. For example, for two strangers with no historical record of transactions, the algorithm may determine to ask the borrower to lock a number of Flames that corresponds to the full value of the borrowed item and for the lender to lock a number of Flames that corresponds to the rental’s transaction value.
As an example, let’s say Alice wants to borrow Bob’s surfboard for 2 days for $100 as it is determined according to Bob’s listing ($50/day) and the estimated value of the surfboard is $1K in the market. Moreover, Alice and Bob are strangers and they don’t have a historical record of transactions yet on Flambu. Then a simple algorithm may determine (assuming that at the time 1 Flame = $1 for simplification) that Alice is required to lock 1K Flames and Bob is required to lock 50 Flames for the rental. If Alice doesn’t return the item or the item gets damaged somehow, then a dispute resolution process can determine that Alice loses all or part of her Flames that are locked in the smart contract. On the other hand, if Bob doesn’t show up after approving the rental, then he may lose all or part of his tokens as a result.
This is the way that Flames penalize undesired actions and the penalty is not only at a single point in time, but it also affects future rewards since the damaged reputation will also affect future rewards that a user can potentially get.
On the other hand, if everything goes well in a transaction and both users get good reviews, they will be rewarded after the transaction, as well as in the future as their scores will increase. Furthermore, the more transactions a user gets into and the more reputation score they gain, the more rewards they will get since their overall contribution to the platform grows.
Note that the example above demonstrates a transaction between two complete strangers without any historical records, however, any user that joins Flambu will earn Flames as rewards according to their contribution, their activity level on the platform, and information they provide which may include ID verification, friendships in the network and more. In addition, an insurance pool of Flames will be reserved for potential harms that can happen to lenders’ items such as loss, theft, or damages so in such cases lenders can be compensated by the reserves in this pool. In this way, it will be more practical for people to borrow/rent items in Flambu since they don’t need to deposit the full value of an item that is borrowed. In later phases, the insurance pool can potentially be backed and managed by a consortium of insurance providers and underwriters, and they can be incentivized to take an active part in Flambu's decentralized sharing economy.

Last modified 30d ago