When the seller puts BCH in escrow, they are creating an on-chain Bitcoin Cash transaction. The transaction contains two relevant outputs:

  1. Escrow output - This output can be spent by either the buyer or seller.
  2. Fee output - This is the fee portion of the trade. If the trade is unsuccessful, the fee can be reclaimed by the seller; if the trade is successful, the fee will be swept by Local Bitcoin.

Both outputs are P2SH addresses generated from Script templates developed by Local Bitcoin. You can view the annotated Script templates here: escrow script and fee script.

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