Kleros is all about settling disputes in the decentralized world

animaya (55)in #crypto • 6 years ago (edited)

Kleros Main.jpg

Believe it or not we are moving towards a decentralized world. Thanks to the internet the world is shrinking we as a race are forging new alliances and striking new deals across continents and countries.

The geographical boundaries are blurring. There is more interaction with people of different beliefs, intellects ideologies and sensitivities.

When we interact or conduct businesses then disagreements and disputes are as much part of the dealings as there is agreement. So one must be prepared for all consequences.

Now one may argue how legal services apply to a world where the provider and the buyer of a service or a product are located in different parts of the world. Often the deals are bound and executed via a smart contract.
So what happens in case of a dispute and whose court can one approach for getting a legal redressal?
Another reality of the legal system is that it is quite expensive and slow.

The reality

The laws that a legal court or body follows hold for only its geographical boundaries or unless there is a legal bilateral agreement between the residents of the 2 different countries whose national identities need to be proved in the court of law .
This is a cumbersome process and in a lot of cases where the amount of dispute is small such as a few hundred dollars the cost of litigation goes far higher than the amount to be recovered.
Thus the legal system fails in this regard.

The Need

Thus there is a need to have a legal system that binds people in a decentralized worlds, is quick, delivers justice and would be binding to all parties irrespective of the location of the dealing parties.

The Solution

The Solution is Kleros. It it a decentralized solution to impart justice and solve disputes between the disagreeing parties.
Take for instance a company that is launching an ICO. They are located in Europe and they hire a guy in another part of the world to write the white paper.
They agree on a fee of $150 to write the white paper. An amount of $50 is released upfront and the remaining amount is to be paid upon completion of work.
When the guy turns in the work the company finds a lot of things lacking. They want him to fix the facts and complete the job but the guy keeps delaying the work and demanding payment.
The agreement between the company and the freelancer is bound by a smartcontract that would release the payment upon completion of the job however there is no way a smartcontract can deal and handle a dispute. So there is a virtual dead lock with the funds stuck in a smartcontract and both parties blaming each other.

Enter Kleros with its revolutionary dispute resolution system.

At the time of creating the terms of agreement both parties could have safeguarded the deal using Kleros.
With Kleros they can create a system of getting a resolution system that is economical, effective and does not require and elobrate arrangements.

The Three things required to incorporate Kleros in a contract.

A dispute and the terms of contract are presented to a set of jurors who individually make a decision as to the outcome of the case based on the facts presented to them.
Therefore on the onset it is required to set a number of jurors that would be appointed in case of a dispute. If there are two disputing parties then there can be 3 jurors appointed.
ii) Decide upon the category of contract. Based upon the nature of the business , a court needs to be selected. The idea of such a selection is that people who are knowledgeable and qualified to make a decision can be appointed as jurors to make a decision.
Iii) What are the possible outcomes of the dispute. Considering the whitepaper writing example they can be. The company is right get $50 refunded ,
b) The technical writer is right release the balance $100 as his rightful fee
c) Grant him extra 1 week to finish the project. In this case no new dispute can be taken in this regard for a perion of 1 week. Thereafter the resolution clauses woud be a) and b) as stated above and there would not be the option of an extention.
The Current State
The Kleros: Resolution

How to ensure that a dispute is rsolved?
Incorporate the Kleros option that is

Number of jurors
Category of contract (subcourt)
Outcomes

Experience Kleros in action Live via this Experiement
The concept of Kleros is based on sound mathematical principles and can be seen with the help of a live experiment here . Here the jurors are supposed to evaluate pictures od dogs and based on the correctness of the decision it would be decided if their decision is coherent or incoherent.
The collective decision of the jurors would decide the fate of a picture. For example if there are 9 jurors out of 7 out of them say it is a dog and 2 say it is not a doge then by virtue of a 7 to 2 majority the picture would be declared to be that of a doge.

The money used in the Kleros judiciary system would be the pinakion token or the currency of the Kleros ecosystem.
In order to be selected as a juror the participants have to offer pinakions. They can give as many pinakion's as they wish to. The idea is that a person who wants to be selected as a juror who gives higher number of pinakion tokens has a higher chance of getting selected as a juror.
All the selected jurors have to make a decision if the image is that of a doge or not.
The incentive to make the right decision is that they would earn an arbitration fee for making the right decision.
The deterrent for not making a right decision is that those jurors who make a wrong decision do not earn any new tokens and instead they have to pay a penalty deducted from the tokens that they have deposited to be a juror.

A running Kleros trial and experiment that anyone can witness

Doges on Trial

In this trial the jurors are supposed to make a decision if the image is that of a Doge
For a correct decision they earn tokens as reward and for a wrong decision they lose tokens.

Kleros Incentive System

This scheme of rewarding the action of making the right decision with pinakion tokens works as an incentive.
Also the penalty of token deduction for taking a wrong decision works as a deterrent for the juror.
Similarly the disagreeing parties have to deposit a fee for carrying out the legal process.
The party that loses the arbitration ends up paying the fee and for the winning party that is deemed to be on the right side of law is refunded the arbitration fee.
This system makes the system run efficiently and smoothly.

Here is a nice Video that explains how Kleros works