KLEROS: A Fast, Inexpensive & Reliable Way To Resolve Disputes

cxxxv (15)in #crypto • 6 years ago (edited)

INTRODUCTION

Dispute occurs in every aspect of our society. In every agreement made between two or more parties, there will be a time where one party will disagree with another which could due to one reason or another. Dispute consumes a lot of time and energy, and its resolution may be unsatisfactory to one or more party.

"Existing dispute resolution technologies are too slow, too expensive and too unreliable for a decentralized global economy operating in real time".

What if a platform exist that helps in resolving disputes amicably, in a short amount of time, and is available at anytime for anybody?

Kleros is a blockchain dispute resolution platform that help in s disputing parties in resolving their disagreements. Kleros has a network of jurors with varying specializations available to help clients resolve disputes 24/7.

" Kleros is a decision protocol for a multipurpose court system able to solve every kind of dispute. It is an Ethereum autonomous organization that works as a decentralized third party to arbitrate disputes in every kind of contract, from very simple to highly complex ones. Every step of the arbitration process (securing evidence, selecting jurors, etc.) is fully automated. Kleros does not rely on the honesty of a few individuals but on game-theoretical economic incentives."

Kleros uses crowdsourcing technologies to resolves disputes amicably between parties, with the disputing parties assured that the final judgement is impartial.

How Does Kleros Works?

Kleros is opt-in court system, both parties in the smart contract have to design a Kleros as their arbitrator. They determine the type of court and the number of jury they want, the court selected will be one based on the topic of the smart contract.

Source : Kleros Whitepaper

Contracts will also specify on options available for jurors to vote on and the behavior of the contracts after ruling is done. Both parties are assured of unbiased decisions from jurors. Kleros uses encryption to ensure that privileged information shared with jurors are protected from external observers, both parties are assured of privacy.

How Jurors Are Selected

Kleros Website

A token called pinakion (PNK) is used by all jurors. The probability of a jury being chosen for a dispute has to do with the number of token it deposits. So, the higher a jury deposit, the higher the chance it has to be chosen as a jury. Jurors with no deposits are never chosen. This is to stop inactive jurors from being chosen.

Arbitration fees were introduced to ensure jurors are paid for their work and to prevent an attacker from spamming the system. How the arbitrate fee is paid is indicated in the smart contract.

Appeals

If the final decision reached by the jurors is unsatisfactory to one party. An appeal can be called where the number of jurors is doubled plus one and an appeal fee is paid for the service rendered by the new jurors.

An Incentive System

Since jurors rules disputes to collect arbitration fees, they are incentivized to rule honestly because, after a dispute is over, jurors whose vote is not coherent with the group will lose some tokens which will be given to coherent jurors.

The majority vote is the coherent decision while the the minority votes are incoherent. A jury that makes a lot of inherent decision is seen as a bad judge and loses tokens.

Source: Kleros Whitepaper

Delegation

Source: Kleros Whitepaper

Jurors can choose to delegate their votes. So, when a jury fails to vote, his voting power is automatically transferred to his delegate which will add more weight to delegate's voting power.

Source: Kleros Whitepaper

Application

Kleros is a general, multipurpose system which can be used in a large number of situations

• Escrow : To pay for an off-chain good or service, the funds can be put in a smart contract. After receiving the good or service, the buyer can unlock the funds to the seller. In case of dispute, Kleros can be used to have the smart contract either reimburse the buyer or pay the seller.

• Micro tasking: Taskers would put a security deposit and submit answers to microtasks. The tasks would be replicated. If a task gets different answers, taskers could admit their mistake, this would transfer a part of security deposit to the taskers who performed the task correctly. In case multiple taskers stay on their position, a dispute resolution process would ensue and the losing taskers would have part of their security deposit transferred to the winning ones.

• Insurance : When an insured event happens, the insurer can validate it and compensate the insuree. If the insurer does not validate the event, a dispute resolution process would ensue. If the insuree wins the dispute resolution process, funds from the security deposit of the insurer would be transferred to the insuree. In case the security deposit is linked to multiple insurees claiming more than the deposit, a dispute resolution process would also be needed to determine how those funds should be split between insurees.

• Oracle : If there are multiple answers, a dispute resolution procedure ensues. The Oracle returns the answer given by the dispute resolution process and parties who put wrong answers lose their deposits which are given to honest submitters.

• Curated lists: Curated lists can be whitelists or blacklists. Parties could submit items to the list by putting a security deposit. If no one contests that the item belongs to the list for a sufficient amount of time, the name is added and the deposit refunded. If some parties contest by putting a security deposit, a dispute resolution process ensues. If the item is considered belonging to the list, it is added and the submitter gets the deposits of the contesting parties. Otherwise, the deposit of the submitter is given to the contesting parties.

• Social networks: • Social networks: Preventing spam, scams and other abuses is a challenge for decentralized social networks. Parties can report violations of the network policies and put a security deposit. If the violation is contested, a dispute resolution process ensues. If it is ruled that no violation happened, the reporter loses his security deposit to the accused party. If the violation is not contested or confirmed by Kleros various effects can be implemented: the content can be removed, the content poster can lose a sign-up deposit and the reach of his other posts can be lowered.

Source: Kleros Whitepaper, page 12-13

Large Corporations And Kleros

Large corporations with many disputes cases could benefit massively from Kleros as it resolves disputes faster and they can be assured of impartial judgement from jurors from all around the world.

Issues that could halt production are resolved quickly and depending on the final decision, the manufacture process could continue without any delay.

Use-Cases

Source: Kleros Website

Edward is a writer based in England. He hired John for the interior decoration of his house. After they agree on a price, terms and conditions, John gets to work. A week later, John was done. But Edward was not satisfied, he argued that the work was poorly done. Edward was frustrated, going to small claims court or engaging in a lengthy dispute would cost more than to just accept it as a loss.

Had Edward secured their agreement via Kleros , there would’ve been a panel of judges that could’ve helped to settle this dispute. But without it, Edward has to accept his loss.