In this modern world, there has been an appreciable increase in the use of technology and this is evident through its wide application in various aspects of life ranging from industries to virtually any where one could possibly think of.

As these technologies are used to simplify daily activities, more and more businesses are putting them into use and this serves as an indicator of what the technology is capable of doing.

The advent of bitcoin brings into proper use, the blockchain technology which has been seen to penetrate various aspects of life(businesses and some other areas) and it is nearly becoming indispensable. The use of blockchain is however, extending its power to bringing resolution to disputes between two or more people. A unique and distinguished platform is making this possible!

In this publication, we will discuss about this platform, mode of operation, its benefits and some other important things about it will be discussed.

Disputes in the global, digital, and decentralized economy occur in areas where they cannot be solved by state courts and existing dispute resolution methods.

With the advent of technology, there is a rising number of small businesses. This also means that there are a growing number of cases where the transaction value is too small to incur the additional costs associated with taking the case to court. While a million dollar loss is worth taking to court, what about a two-hundred dollar deal?

Current State Of Dispute Resolution

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Expensive

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Imagine in the business world where a dispute occurs between two parties in terms of a huge amount of money, say two million dollars. It is quite reasonable to litigate this issue so as to get it solved. On the other hand, the amount of money causing the dispute might be considerably low, say $200; it wouldn't be reasonable enough taking such case to a court to reach resolutions due to the huge amount of money that will be charged. In such situation, one of the parties is at a great loss since they wouldn't bother taking such case to the court due to the low amount of money involved.

Therefore, it can be said that the current dispute resolution system is quiteexpensive and not cost-effective.

Too Slow And Sometimes Unfair

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Yes, it's too slow! Putting into consideration the time it takes for a case taken to the court to be settled, one can say it's time consuming since a series of investigation needs be carried out before finally reaching a conclusion which could be sometimes unfair.

Centralized And Lacks Transparency

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During the process of investigation, there might be a situation whereby one of the parties looks for a way to bribe the court by paying a tangible amount of money so as to deliver the judgements in his favour. Sometimes, this happens and makes everyone wondered how the case was judged. Obviously, there is lack of transparency in this system of dispute resolution.

The fact that the power to decide on any issue depends wholly on the court makes it a centralized system which could judge the matter in favour of one party. This makes the whole thing lacks transparency!

In the current state of dispute resolution, there is no cost-effective and fair solution. Freelancing websites often have poor resolution protocols that lead to an unfair assessment by an unqualified individual. In some cases, there is simply no resolution protocol at all, leaving one of the parties with a complete loss.

As the number of individuals offering services continues to grow, this problem will only get worse.

A New Dawn

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Having considered the problems of the current dispute resolution system, a team of people has finally come to provide unique solutions to these aforementioned problems through the use of the blockchain technology.

Kleros

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Kleros is a decentralized application backed by the Ethereum blockchain. The sole aim of this platforms is to acts as an intermediary in settling disputes between two parties and it includes disputes on any and every kind of contract, ranging from the very simple ones to highly complex ones. This platform connects two disputing parties to experts in such field so as to come up with unbiased judgements in a secure and inexpensive way.

In the bid to solve all cases without any form of bias, It depends on game theoretic incentives making jurors rule such cases correctly. In the case of disputes involving funds, Kleros can escrow such funds through the utilization of smart contracts until a resolution is put forth by such selected jurors.

However, unlike the current dispute resolution system which is associated with a form of delay in the execution of its services, Kleros dispute resolution system renders ultimate judgments in a fast, inexpensive, reliable, efficient and decentralized way. The fact that this platform is decentralized means the power of deciding is not restricted to a particular set of people, rather, it is distributed.

Mechanism Of Operation Of The Platform

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Arbitrated Contracts

The Kleros system provides multiple court options from which their clients select any in relation to the matter they are willing to resolve. Here, there is a need for smart contracts to design a Kleros as their arbitrator, such that when they opt-in in case of any dispute, the number of jurors and the particular court( in relation to the issue at hand) that will rule their contracts will be chosen.

In this sense, one is able to choose a court that have an in-depth knowledge on such issue demanding resolution. For an issue relating to E-commerce, a court with vast knowledge of the topic will be selected etc. In this way, the right judgement will be made.

Also, to make the process of judgement a bit easier and faster, the jurors will have a number of possible outcomes presented to them, which they can choose from. In this case, the number of options will be made available by contracting parties. However, the privacy of each party is treated with a high level of respect.

Drawing/Selection Of Jurors

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This will be done through the use of the system token, called pinakoin. This enables jurors to be drawn based on the amount of tokens deposited so as to avoid the selection of inactive members.
The pinakoin token will be discussed later.

After an individual must have shown interest in becoming a juror by doing what is expected of him to do, i.e self-selected specific courts and deposited their tokens, the final selection is done at random. In the case of dispute between involving some amounts of money, the number of times a user is drawn for a dispute will determine the number of votes that will be gotten in such dispute and the amount of tokens he will either lose or win during the redistribution of token.

In order to draw jurors, a process for drawing random numbers which is resistant to manipulation is required. In this case, the use of a protocol to create a random number between two parties doesn't work, in the sense that disputes could be created by an attacker between himself and also select himself as a juror severally, then select another victim juror. This might actually be done on a purpose, in that, he would manipulate manipulate things in such a way as to favour himself and at the end of everything, he would steal tokens from the victim when pinakion are redistributed.

Random numbers will however be generated with the use proof of work(POW) on the blockchain. This will be done through the following processes;

• Initialization
• Computation of the master random value
• Getting the results on the blockchain
• Getting all random values

The Voting System

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After the evidence provided by the jurors must have been assessed, the voting options are made available from which each juror is allowed to choose only one. They submit
hash(vote,salt, address). Here, the address is Ethereum address of the juror which serves of the purpose of making the commitment of each juror unique and subsequently preventing one juror from copying another juror's commitment.

At the end of the vote, jurors reveal their vote/salt which is then verified by the Kleros's smart contract as to whether it matches their commitment. However, any of the Jurors that fails to reveal their vote will be penalized. In addition to this, once a commitment has been made by a jury, his vote cannot be altered. It is not also visible to other jurors or to the parties; this aims at making everyone's opinion unique. Moreover, Jurors have the ability to influence the way they vote and not that of other jurors.

In case a juror would like to show his vote to another party, two options are available for him to do such; he can either reveal only his vote or * reveal it alongside with his commitments.

If he reveal only his vote, the party to which the vote is revealed to will not be able to verify if he has really voted that way, which means he might not be telling such party what he has truly done. However, reverse is the case if he is revealing with its commitment; the party will be able to verify if he has truly voted that way and this will make the pinakoin of this jury to be stolen. Each Juror will be required to justify his vote.

After the votes must have been revealed, they are collated and the smart contract is executed. The option with the highest amount of votes is considered winner

Arbitration fees

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To prevent the system from being spammed, creation of disputes and appealing usually attract what is called arbitration fee which will be used to reward jurors for the job well done and the amount paid to each will be determined by the subcourt where the dispute is solved. Also, the party that would pay the arbitration fee will be determined by the arbitrable smart contract; this could be made simple by requiring either the party creating the dispute or the party appealing to pay the fee. It might not be done using this method alone.
More explanation to be seen at the incentive system...

Appeals

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After the final decision has been made through the voting system, but one of the parties feels dissatisfied about the outcome, he can express his dissatisfaction by appealing so as to have the dispute ruled again. What happens here is that; *twice the previous number of jurors plus one will be made available. An increase in the number of jurors will attract another appeal fees; here, appeal fees= [(new number of jurors x fee per juror )− (fee already paid)]

If a verdict is appealed, jurors of the appealed level are not paid (but they are still affected by the dispute due to token redistribution). This incentivizes jurors to give explanations of their rulings. When proper explanations are given, parties are less likely to appeal as they have more chance to be convinced that a decision is fair.

From Klero's Whitepaper, Pg 8

Incentive System

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The incentive system at Kleros works in such a way that jurors are properly compensated for their work even though low arbitration fees are being paid by the clients. With this system, jurors are incentivized to rule honestly since there will be a penalty of losing some tokens by any jurors that fails to vote coherently with the group.

After a final decision on a dispute must have been reached, tokens are unfrozen and redistributed among the jurors. In addition to this, this system helps to distinguish good jurors from bad ones based on how coherent their votes are. Therefore, it can be said that honestly is assured!
An example of this case is given below;

If there are five jurors, with outcome options "A" and "B". If four choose "A" and one chooses "B", then option "A" will win. In this case, the one judge who voted "B" would be considered to have voted incoherently. Although one dispute is not very telling, if a judge rules incoherently 90% of the time over 100 instances, clearly they are a poor judge and they would lose tokens.

Source

Governance Mechanism

As the Kleros platform grows, a need to add some important features to it will surely arise. To keep it up to such standard, decisions as to how to go about the changes will be left to token holders and this will be done using a liquid voting mechanism.

However, the amount of votes of each token holder will be dependent on the amount of pinakoin token they are holding at that moment.

They will have the option of voting directly or delegating their vote. When a user fails to vote, his voting power is automatically transferred to his delegate.

(From The Whitepaper)

With all these put in place, the way individuals and businesses deal with disputes will be changed significantly

Benefits Of Kleros

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• Its level of Security is maximal
• Highly transparent in resolving disputes
• It does not create any space for Bribery
• Only jurors that specialize in the contract topic are welcome on board
• Everyone remains anonymous which means there is Privacy
• Jury are rewarded to keep them encouraged
• Since jurors are incentivized to make honest decisions, the judgement system remains fair
• It is cost effective
• It ensures that all disputes are settled within a short period of time
• In cases whereby clients show dissatisfaction in the decision made, there is room for appealing
  

Kleros' Application

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The application of Kleros in dispute resolution is not limited as it can be applied in various areas, some of which include;

• Escrow
• E-commerce
• Insurance
• Social media
• Gaming
• Micro Tasking
• Curated Lists
• Crowd funding
• Social Networks
• Arbitration
• Oracles, etc.
  

Use Case

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Acheever works as a freelancer on upwork.com and has worked for a lot of people writing about new projects evolving on the blockchain. These people have dropped various complimentary reviews about his work.

Sam needs a write up on Kleros platform, based on these reviews other clients have made about Acheever's work, he thinks Acheever is the right person to give the Job. So, he contacts Acheever via a Direct message and makes some enquiry after which he gives the job to Acheever. Acheever bills him $1000 for the Job and within a day, Acheever submits Sam's work.

Sam, on receiving the Job seems to be little disappointed and doesn't wanna pay for the Job. Acheever who already knows what Kleros does takes the matter to the platform for a judgement. There, a clear scope of the work and what the client need will be defined.

After going through Acheever's work, the Juries at Kleros certifies it and claims it contains all that is required. With this Acheever wins the case!!! Unlike going through the current court system which might be slow and attract high arbitration fee compared to the fee of the actual Job, it is otherwise here.

The Token

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The Pinakoin Tokens will be used to power the Kleros system in such a way as to keep it functioning and execute all operations on the Klero platform such as creation of contracts, triggering dispute cases, deciding juror's eligibility, making transactions and any other related activities on the platform.

Meet The Team

Advisors

Summary & Conclusion

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Looking at the way disputes are handled from the perspective of fees, the time it takes to come up with judgement and some other things discussed here, it can be said that the invasion of Kleros into the dispute resolution system will change the ways cases are handled, will be beneficial to both small and large scale businesses. For small scale businesses where the posssibility of the amount bringing up the dispute, in monetary terms, might not be much; how do we expect them to bring cases to the court? At the end of the day, one end will be left with loss while the other packs all the gain. However, with Kleros in place such will never happen as the case will be properly looked into by professionals at a low fee.

Also, large scale businesses will also enjoy this benefits! In fact, virtually anyone will!

For More Information & Resources

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Kleros Website
Kleros WhitePaper
Kleros Medium
Kleros YouTube
Kleros Telegram
Kleros Twitter
Kleros Github
Kleros Forums

This is my entry foe the @originalworks contest;Join contest here.

Kleros 2018