Escrow is the mechanism that lets a stranger ship to you without taking the risk of never getting paid, and lets you pay without taking the risk of never receiving the goods. Understanding where the money sits while the order is open is the whole game, because that is where the risk lives.

The sequence

You deposit coins into the market wallet. When you place an order, the amount moves from your available balance into an escrow state tied to that order. The vendor sees that the funds are secured, and ships. When you confirm delivery, the escrow releases to the vendor. If you open a dispute, the escrow freezes, staff review the case, and the ruling decides where the funds go. At no point between your deposit and the release does the money sit in a wallet you control.

What market-held means

On Nexus, as on most markets, the escrow is held by the platform. The practical meaning is that the market is a counterparty for your deposited funds. If the platform is healthy, that is invisible. If it is not, the funds in escrow are part of whatever is left. This is not a flaw unique to Nexus. It is the standard model, and the multisig markets are the alternative, where the buyer, the vendor, and the platform each hold a key and two of three are needed to move the money.

The trade is simple. Market-held escrow is faster, simpler, and works everywhere. Multisig is slower to set up and removes the platform from the money path, at the cost of complexity and a smaller set of markets that offer it.

The habits that reduce the exposure

Three of them, in order of importance. Keep only what you plan to spend on the platform, and withdraw the rest. That is the single biggest reduction in exposure, and it costs nothing. Use a dedicated wallet for market payments, so a problem on the market side does not touch your main holdings. And confirm deliveries promptly, because every day an order sits in escrow is a day the funds are in the platform's hands rather than yours.

What escrow does not cover

Escrow protects the payment, not the product. A vendor can ship the right quantity of the wrong thing, and the escrow will still release when you confirm. The protection against that is the vendor's review history and your own reading of the listing, which is why the first order guide spends a step on picking the vendor. Escrow is the floor. The vendor selection is the ceiling.

For the fees attached to all of this, see Nexus Market fees.