KLEROS: The Smart contract Court of Justice!

1.0 ABSTRACT

Dispute is a disagreement between two or more parties. It is the inconsistency in decisions of people or any living thing. It can also be said to be differences in reasoning of two or more people. In this article, I will discuss the dispute problem that is keen to arise in the blockchain ecosystem, how it can be resolved in a digital court called Kleros .

[Theme picture put together by @focygray]

1.2 INTRODUCTION

In our co temporal world, disputes are inevitable. There are disputes in governance, organizations, education, communities, banking, and science etcetera. Animals and plants also have disputes; the survival of territory, dispute over preys, and competition for space. Disputes are what made us free-will creatures. We have to make decisions for ourselves and these decisions will sometimes conflict with the ones of others. That is when disputes come to the picture; disagreement between two or more parties in a particular event, contract, space, land, money, decisions etcetera.

In the human world, disputes are settled in courts. These courts might be traditional courts (community) headed by the oldest men in such community, supreme courts that are usually run by a group of juries and judges to decide who the victor is or vanquish by meticulously deliberating on such disputes with evidence provided by both parties involved. In wild animals, disputes are solve by plainly completion; survival of the fittest.

1.3 THE PROBLEM

Now, with the discovering of the blockchain ecosystem and a promising future that someday the blockchain will take more than 70 percent of the world’s smart contracts, there is therefore bound to be the usual disputes that has plague human race as their nature. These disputes will arise as some contracts will not meet up to the agreed terms in different locations globally since the blockchain is a decentralized system where billions of people will be transacting from thousands of miles apart. Sometimes, contracts are entered that worth just a few dollars but yet the other parties failed to fulfilled their own part of the contract. It will be hard to take such cases of disputes to a court in New York city while the defendant or accuse is somewhere in Nigeria especially with very little money involved in such contracts that are not worth paying a flight ticket to attend a court case thousands of miles away.

No matter how small the money involved in such contracts, lost is lost! Therefore, Kleros has come to put an end to the possible disputes that may arise between digital assets owners over contracts they entered on the blockchain ecosystem.

2.0 KLEROS: THE DIGITAL COURT OF JUSTICE!

Kleros is decentralized opt in court system. It is a system that stands as an arbitrator to smart contracts in case there arises any dispute before the contract finally mature and done with. Before two individuals start contracts, they entered into an agreement with respect to the fulfillment of the contract. This contract is therefore guided by Kleros until the contract is fulfilled to make sure dispute does not arise. And if any such dispute occurs, then the Kleros court takes over to settle it with evidence of agreements both parties entered.
The Kleros court is divided into three phases.

1. Number of jurors
2. Category of contract (subcourt) and
3. Outcomes

2.1 HOW DOES THE KLEROS COURT WORKS?

2.1.1 Arbitrated Contracts:
In the Kleroscourt, when two individuals wish to entered into a smart contract, they select the kind of court that relates to the nature of contracts they wishes to enter. This court comprises different Jurors that are also specialized on the nature of the type of court. For instance, A Banking contract Kleros sub court will have Jurors that are specialized in banking, an exchange contract Kleros sub court will have Jurors that are specialized on exchange. Each of these courts Jurors also have options to choose from when a dispute arises in a contract. This choice depends on what is nature of contract entered.

USE CASES

For instance, an ICO company invited the public to buy their token for a specific price in dollars. This ICO just want to raise some fund without a better plan on the economy significant and the sustainability of the token in the blockchain ecosystem. Mr. Focygray decided to partake in the airdrop of the company. He was lucky to come across Kleros before he buy some of this token. The ICO Company entered an agreement with Mr. Focygray using Kleros Court in case a dispute occurs. After some few months, the company folded up. Now Kleros will summon the ICO Company and Mr. Focygray to judge the case in the E-commerce sub court of Kleros. There, a group of specialized ICO Jurors decide on the case. These Jurors then choose from different options and the option with the highest votes wins the case.

In the case of Mr. Focygray and the ICO Company, options might include that the ICO Company should refund all Mr. Focygray’s money or Mr. Focygray should let go of the money for the ICO Company or the money should be split equal halves. Out of these options, the option with the highest votes from the Jurors wins the case.

The above scenario might involve a huge amount of money Mr. Focygray spent in buying the token. What if it was a small amount? No matter how small the amount is, Kleros court will justify the dispute. Now let us see to how these Jurors operates.

[Photo summary of Alice and Bob Contract entered on Kleros platform]

2.1.2 HOW ARE THE JURORS SELECTED AND WHAT QUALIFIES THEM TO PRESIDE OVER CASES?

Firstly, Jurors are selected by the amount of the Kleros Pinakion (PNK) they possesses. The Kleros token, Pinakion determines the reputation of Jurors. Take for instance; there are 10 Jurors in the E-commerce court of Kleros. A case such as the one of Mr. Focygray and the ICO Company was in the Kleros court. The Jurors to decide on the case are the ones with highest amount of Pinakion.

You might want to ask why are the Jurors not selected randomly after all, it seems fair to choose a case Juror that way. Selecting of Jurors is decided this way because of the security assurance it possesses. A Juror who has a lot of Pinakion that worth a lot of dollars in real time would not want to lie in deciding cases unlike the traditional courts were Judges and Juries can be bribed. In the Kleros system, Jurors with high stake of Pinakion are the ones who are choose randomly to decide on disputes.

It can also interest you to know that these selected Jurors do not even know who the next Juror that is working on the same case is. Therefore Jurors who are deciding on a particular case cannot communicate to know which collective option they are choosing. This will in turn create truthfulness and sincerity in deciding cases. And also, When a Juror made a commitment that is, voted for an option in a case, his vote cannot not be changed which will enhance better consideration of options a Juror will have to choose in order not to pay for his mistake.

2.1.3 HOW DO THE JURORS VOTE ON A DISPUTE TO BE SETTLED

As I have said before, firstly, the Jurors in a particular court are chosen by the amount of Pinakion they deposit. When two individuals wants to enter a contract, they pay the money for the contract into the Kleros contract platform with all signed agreement made by them. This money for the contract remains with Kleros until both parties certified that there is no disagreement or dispute with respect to the contract. And Kleros go ahead and pay settle all agreement entered in the contract. But if there arise any dispute, Kleros then forward the dispute to the chosen court for the contract that was personally chosen by the contract participants. Then, the Jurors who have been qualified due to the reputation the amount of Pinakion gave to them are then selected randomly to decide on the case.

Afterwards, The Jurors that has been selected randomly for the final judgment on the case then chose from the different options that are available concerning the case. Each of the Jurors vote to their own perspective on the case guided by the options provided.

2.1.3 VOTE WRONGLY AND PAY FOR IT. VOTE RIGHTLY AND BE COMPENSATED FOR IT

When the result of the final votes by the selected Jurors comes out, the option with the highest votes from the Jurors wins the case. And the option with the lowest votes lost the case. Jurors who voted wrongly are made to pay and their stake on the Pinakion gradually goes down that is, the more cases a Juror loses, the more such Juror lost Pinakion and the less their chances of becoming a juror for subsequent cases. On the other hand, Jurors who voted rightly, that is, the votes that won the case are compensated with more Pinakion (Arbitration fees) paid by the parties involved in the case and their reputation increase and the more chance they get selected for subsequent cases.

It interesting right? Everyone will want to tell the truth because they will always pay for the lies they tell.
**Arbitration fees: **This is the fee paid by parties involved in a dispute apart from the money involved in the contract. This fee is refunded to the party who won the case and the other party’s fee is used in compensating Jurors who presided over the case.

2.1.4 DOGES ON TRIAL

Kleros has launched a trial version of how the Kleros court works; the Doges trial. In this trial, Jurors test their ability to identify if image they see is a doge or not.

2.1.5 Significant of the Arbitration Fee:

When only one party deposited the Arbitration fee and the other did not, it is concluded by the Kleros court that the party who deposited won the case and the court rule in favor of him. But in a case were both parties deposited the arbitration fee, the Kleros court then proceed with the case.

It is also used to regulate the manner in which appeals are made. When one party felt that the ruling of the Kleros court is not fair enough, He can appeal by paying extra arbitration fee. The more appeal a party filed for, the higher the arbitration fee paid.

2.1.6 INCENTIVE SYSTEM

In the Kleros court, Jurors are incentivized for the cases they preside over. If a Juror voted wrongly when the outcome finally shows, he pays with his Pinakion but if he voted rightly, he is being incentivized by the arbitration fee paid by the parties involved in the dispute. This Pinakion token paid as arbitration fee is divided between the coherent parties proportionally to their weight or reputation that is determined by the worth of their initial Pinakion they possesses.

2.1.7 THE KLEROS PINAKION (PNK)

The Kleros Pinakion is the token which runs on the Ethereum platform. This token is the key functional parameter that is needed in the Kleros tech. Without it, Jurors are not able to be selected. Jurors are also incentivized with the Pinakion token (PNK).

2.1.8 APPLICATION

The Kleros court has an unending application; as long as the Internet and smart contract is concern, it is applicable to all fields and profession. Some of these categories include:

• Micro tasking
• Escrow
• Insurance
• Oracle
• Social networks
• Curated lists

2.1.9 CONCLUSION

It is no doubt that the Klerostech will solve a lot of dispute relating to smart contracts. Dispute can now be solved while parties involve sit at home. Below is a recap on the phases of the Kleros court system.

Step 1 CONTRACT: User create contract on the Kleros Court platform.

Step 2 DISPUTE: Dispute may occur during the execution of the contract. When this happens, Step 3 is carried out.

Step 3 SELECTION: A tribunal is draw from the crowd of Jurors who cast their votes with on the case.

Step 4 ENFORCEMENT: The final decision by the Jurors is enforce by the smart contract.

With Kleros, everything is fair!

3.0 TEAM

Below is a photo gallery of the team behind the Kleros court idea.

ADVISORS

PARTNERS

WATCH THE VIDEO ILLUSTRATION OF THE KLEROS TECH