🔬 Circles of Trust Architecture

Technical documentation on how the protocol behind P2P.me works.

System Overview

Circles of Trust is a decentralized reputation system that replaces centralized verification with community validation.

┌──────────────────────────────────────────────────┐
│                   P2P.me App                      │
├──────────────────────────────────────────────────┤
│                  Protocol Layer                   │
│  ┌──────────┐  ┌──────────┐  ┌──────────────┐   │
│  │  Users   │  │ Merchants│  │ Circle Admins│   │
│  └────┬─────┘  └────┬─────┘  └──────┬───────┘   │
│       │             │               │            │
│       └─────────────┼───────────────┘            │
│                     ▼                            │
│           ┌─────────────────┐                    │
│           │ Circles of Trust│                    │
│           │    Protocol     │                    │
│           └────────┬────────┘                    │
│                    │                             │
│       ┌────────────┼────────────┐               │
│       ▼            ▼            ▼               │
│  ┌─────────┐ ┌──────────┐ ┌──────────┐         │
│  │ Staking │ │ Disputes │ │ Rewards  │         │
│  └─────────┘ └──────────┘ └──────────┘         │
├──────────────────────────────────────────────────┤
│              Base Blockchain (L2)                 │
└──────────────────────────────────────────────────┘

Main Components

Circles

• Groups of merchants managed by an admin
• Each Circle has its own stake (protection fund)
• Limit of 300 merchants per Circle
• Identified by blockchain address

Staking

• Admin stake: Minimum $250 in P2P tokens
• Merchant stake: Minimum $250 USDC
• Stakes serve as collateral for disputes
• Automatic slashing in cases of misconduct

Capital Delegation

• Investors can delegate capital to Circles
• Delegated capital increases merchant capacity
• Rewards distributed proportionally

Transaction Flow

User initiates purchase
        │
        ▼
┌───────────────────┐
│ Select Circle     │ ← Ranking by score/volume
└────────┬──────────┘
         │
         ▼
┌───────────────────┐
│ Match with Merchant│
└────────┬──────────┘
         │
         ▼
┌───────────────────┐
│ On-chain Escrow   │ ← Crypto locked in contract
└────────┬──────────┘
         │
         ▼
┌───────────────────┐
│ Fiat payment      │ ← Off-chain (PIX, etc)
└────────┬──────────┘
         │
    ┌────┴────┐
    │         │
 Success   Dispute
    │         │
    ▼         ▼
Release    Admin
 funds    arbitrates

Dispute System

Flow

1. User opens dispute with evidence
2. Merchant responds with their version
3. Circle Admin analyzes and decides
4. Decision executed on-chain
5. Losing party can appeal

Penalties

Infraction	Penalty
Merchant abandons transaction	Partial stake slashing
Admin decides incorrectly (2x)	Stake slashing
Proven fraud	Ban + total slashing

Rewards Distribution

Per transaction (1.8% total)

Recipient	%
Merchant	60%
Delegators	20%
Circle Fund	10%
Circle Admin	10%

Example: $1,000 Transaction

• Merchant: $12
• Delegators: $4
• Circle Fund: $2
• Circle Admin: $2

Smart Contracts

Main contracts

• CircleRegistry.sol — Circle Registry
• MerchantRegistry.sol — Merchant Registry
• StakingPool.sol — Stake Management
• DisputeResolver.sol — Dispute Resolution
• RewardsDistributor.sol — Rewards Distribution

Network

• Mainnet: Base (Ethereum L2)
• Testnet: Base Sepolia

Links

• Source code (coming soon)
• Verified contracts (coming soon)
• API Docs (coming soon)