How does GNEISS create a contract that is backed by an asset and holds collateral?
GNEISS uses smart contracts to hold collateral in the form of actively traded crypto-assets.
We allow the user to trade assets, goods, and services knowing that the value of their crypto-asset is held in escrow by Ethereum's Blockchain.
Cointelegraph.com explains Ethereum’s escorow as the following:
An escrow is a way to control and protect financial assets.
An escrow is a legal concept where a financial instrument or an asset is held by a third party on behalf of two other parties that are in the process of completing a transaction. In other words, when you use an escrow, a third party acts as a guarantor. The funds or assets are held by an escrow agent. This party controls the whole process and makes sure the commitments are fulfilled. Therefore, nobody can use money on their own without the agreement from other participants.