Meet Kleros - The Fast, Efficient and Easy Way to Dispute Resolution On the Blockchain
As a keen observer myself, I can recount many instances where I have being less satisfied with an online product or services I deployed but unfortunately any attempt to fight for my claims even through their customers help desk is often futile at best. But my story does not end there because I still love to use eCommerce website to procure many of my product and services, although I can only trust a few to deliver quality service. I must admit there are still some fails in the system which could make one to have a rethink about using online platforms to procure services.
As such, running an eCommerce website on ethereum blockchain for instance eBay, disputes could arise from any transactions when the conditions of the smart contract is not met by either side of the transaction, in this case, could be the buyer did not receive the goods/services correctly. In another instance, it could be that the identity custodian exposed the privacy of its clients, say a cryptocurrency exchange and many more. All these issues could be resolved by a court in the physical realm. Kleros introduces a similar protocol on the blockchain to help businesses and individuals resolve disputes that may arise in a Business to Customers (B2C) relationship or a Customers to customers (C2C) relationship, albeit in a fast, inexpensive and trustless way.
Therefore, kleros will serve as an arbitrator for any transactions on the blockchain which means that any defaulting party can pay for not keeping their part after an agreement has being made via the smart contract execution.
Every steps of an arbitration process such as securing evidence, selecting of jurors is fully automated on kleros which means that disputes doesnt take much time to be resolved once either party files their complain and evidences as the case maybe just as is done in the traditional court.
A Video of How It Works
Business incorporates kleros as an arbitrator into their smart contract for example a freelancing website deployed on the blockchain
A new user just signed up on the freelancing platform and gets a job to develop a website for his new client
The client states his terms and conditions and locks the payment into the kleros smart contract
The developer meets the terms and condition of the client and his funds are released to him
If the client is dissatified with the work, he files his claims submitting clear evidences via the kleros apllication.
Developer deposits the pinakion token (PNK) to present his evidences as well
Kleros crowdsourced jurors randomly from a pool of jurors who have deposited the PNK token. Probability to be drawn is proportional to amount of deposited tokens.
Note : Random numbers are generated via sequential proof of work using a scheme similar to Bunz et al. to avoid users from manipulating the system.
*Source : Whitepaper, Page 6
- Once selected, jurors are presented with the evidences and are required to make decision based on the evidences presented by voting for any of the options provided
'Reimburse' the client
'Give' the website developer an extra week
'Pay' the developer
Once the jurors cast their votes, the result is revealed to both parties almost at the same time.
Source : Whitepaper, Page 9
Quick facts from the diagram above:
* Bob lost the dispute and pays arbitration fees
* Tokens are redistributed from jurors who voted incoherently to jurors who voted coherently
- Therefore smart contract is deployed to execute the details of the final judgement and the case is closed!
Justice is delivered in a fair and transparent manner at the end thereby providing Justice to the Unjusticed!
Why I will love my business to choose Kleros is because they
In the near future, when blockchain technology has being global accepted and businesses both small or big begins to adopt cryptocurrency as their means of providing goods and services. There is every chances that trade disputes may arise between these businesses and their consumers or clients to contractors or even doctors to patients; And this would present an even bigger problem due to the anonymity of each party, distance barrier or national barrier example cross-border trade regulations may not allow a party from taking actions in the case of a contract breach or an agreement not met as stated in the terms and condition.
Integrating Kleros into such smart contract as their arbitrator will remove the need for businesses demanding for the KYC informations of its customer before doing business which I believe most customers want to avoid because of their security concerns and this is limiting most businesses from gaining valuable customers. Because Kleros will be deployed to resolve any dispute between both parties arising from either party not keeping up with the terms and conditions as stipulated in the contract.
So Kleros will act as a third party to settle this disputes effortlessly in a fair and transparent manner. All in the bid to maintain a good positive image,businesses will seek to deliver the best services to their client, freelancers will ensure they adhere to terms and condition of a project, doctors will keep to agreed time of appointment to avoid any extra cost. Therefore consumers get value for what they paid for and patients gets professional services from their online doctor as the case maybe. Via their underlying principle of truth, Kleros will promote a total derivative economy from every users on the blockchain because honesty has a price!
Kleros leverages the technology behind crowdsourcing, game-theory and blockchain to immutate a decentralized multipurpose court system built ontop of the ethereum blockchain to solve every kind of dispute!
Source : Whitepaper, Page 1
To ensure that a party or group of party doesnt take control of the court system. Kleros adopted the Interactive Coin Offering (IICO) method to ensure fair distribution of the Pinakion token (PNK) which will serve some very crucial purpose in the selection of the juror inorder to settle any dispute.
In an IICO, participants have a choice to set a personal cap which guarantees the participants the following
- Certainty of participation. If you select a personal cap that is high enough, you can be 100% sure you will participate.
- Certainty of valuation. Your personal cap gives you control over the valuation at which you will enter the sale.
This method allows both small and big investors to participate and also ensures fair distribution of token and offer a wide range of users access to an inexpensive dispute resolution mechanism.
Read more about their IICO here
Therefore the kleros ecosystem will serve the interest of different stakeholders
- Parties: This is people doing transactions and potentially having disputes to solve. They will want to participate in Kleros in order to reduce their counterparty risk: the risk of the other party not complying with their end of the contract.
- Jurors: These users can use their skills for evaluating evidence and adjudicating disputes. They will want to participate in Kleros because they will earn arbitration fees for their work.
- Platforms: These are platforms connecting users supplying some good or service with other users demanding that good or service in e-commerce, freelancing, sharing economy, crowdfunding, etc. They will want to use Kleros because it provides fast, affordable and transparent arbitration. It solves their arbitration problem better than the alternatives.
- Entrepreneurs: They will build business’ that depend on the Kleros protocol. As Coinbase built a company on top of Bitcoin, entrepreneurs will build customer facing dispute resolution systems on top of Kleros. They will want to use Kleros because it provides a network of jurors able to arbitrate a large number of disputes.
- Developers: They will contribute to the development of Kleros’ open source technology and to the cryptoeconomics of the platform to increase Kleros security and develop more use cases.
- Other actors The ecosystem will surely include other actors such as educators (who will contribute to educating jurors) and consultants who will help platforms implement Kleros dispute resolution technology.
Gambling Industry
A bookmarker can lock funds into the kleros smart contract and use real-time outcome as inputs to determine whose favour the contract is executed. This is an automated process and customers will only need to deposit the stipulated amount they wish to bet to activate the contract. Varrying terms and condition can be easily designed for different customers.
Elections
Kleros could be a useful tool to procure a secret and secure election where the election personnel just need to procure a smart contract on kleros which parameters could be based on timezone, computer/device information of users under such region or any such parameter that could be use to group those eligible for the election while still maintaining anonymity of the voters.
An highlight of other use cases is shown in the chart below
I see Kleros as a really interesting project which tries to combine the idea of proven ancient method of deriving truth based n the schelling coin principle with a trustless, secure technology such as the blockchain.
This is a really innovative technology which can bring some sanity into the blockchain ecosystem. Just like Blockchain served as a bank for the unbanked, Kleros seek to be the Justice for the Unjusticed via this four simple way ladder
- July, 2018: Launch on Main Net and Early Pilots
- October, 2018: First Version with Real Enforcement
- April, 2019: Multiple subcourts and governance mechanism release
- July, 2019: Abstraction Release
- September, 2019: Complex Disputes Release
This post has been submitted for the @OriginalWorks Sponsored Writing Contest!
You can also follow @contestbot to be notified of future contests!