KLEROS - an effective and efficient way to resolve disputes

okipeter (52)in #crypto • 6 years ago (edited)

Introduction:
The advent of blockchain has brought about a whole lot of revolution in our day to day activities. Nowadays, the idea of decentralization is been welcomed and embraced by a large number of people. This means that the number of small businesses coming up keeps increasing as the day goes by. I mean, we have decentralized peer to peer freelancing platforms, where users meet up to exchange time and services in a peer to peer manner.

While the increase in the number of small business is a welcomed development, users of these small business are however faced with a great hurdle when dispute arises. I mean, I can hire a user on a peer to peer freelancing platform to design a website for me, for a price of 250$. However, in the case where I am not satisfied with the website designed for me, I basically cannot do anything, since it would be more additional cost for me to take a 250$ worth case to the court of law.

However, what if there was a platform that could handle a case of this nature? Come with me, let us talk about KLEROS.

KLEROS:
KLEROS is a blockchain based project that resolves dispute. KLEROS is an opt-in service. KLEROS consists of a number of jurors that specializes in different categories. These jurors are always available to settle disputes.

To enable us understand KLEROS, let us example a use case.
TotoPaul requires a website for his business. He hears about “dummywebsitebuilder.io”, a peer to peer freelance platform, where he can get an expert to build the website for him. He visits the platform, and then he meets BlorkosPeter. TotoPaul and BlorkosPeter comes to an agreement on the price, which is 500$. Let us take a look at the project description:

Project Description:
Arbitrated Contracts:
Recall that I made mention that KLEROS is an opt-in service. Both parties involved (TotoPaul and BlorkosPeter) in the smart contract must design a KLEROS as their arbitrator, right from the onset on the creation of the smart contract. When the parties involved in the smart contract opt in to the KLEROS service, they must specify the number of jurors they want and the type of court that will settle any dispute that may arise. It should be noted that the parties involved in the smart contract would choose a court specialized in the topic of the smart contract they are involved in. For instance, an e-commerce contract will choose an e-commerce court, while a transport contract would choose a transport court. In this case, TotoPaul and BlorkosPeter would choose an e-commerce court. The diagram below shows a number of courts which users can pick from.

Options for Jurors:
Also, both TotoPaul and Blorkos Peter would also specify the options for jurors to vote in the smart contract. These options may either be: “Reimburse TotoPaul”, “Pay BlorkosPeter”, or “Extra time for BlorkosPeter to make changes to the website”. The smart contract would also include the way the contact would behave after jurors have voted for any of those options. In our case study,

“Reimburse TotoPaul” means the smart contract would credit the funds to TotoPaul’s wallet
“Pay BlorkosPeter” means the smart contract would send funds to BlorkosPeter’s wallet
“Extra time for BlorkosPeter to make changes to the website” means that new disputes would be ignored for a specified amount of time, and after that time is elapsed, this option is removed from the options for jurors in further dispute.

Privacy:
In the case where disputes arises in the discharge of the smart contract, both TotoPaul and BlorkosPeter may be required to share private information with the jurors. To prevent outsiders from gaining access to this information, the language of the contracts and the voting options of the jurors are not made available on the blockchain. This is to ensure privacy.

Drawing/Selection of Jurors:
Users of KLEROS that serves as jurors have the benefit of earning cool cash in the form of arbitration fee. Before a user is chosen as a juror, he must deposit a token called pinakion (PNK). The higher the number of pinakion a user deposits, the higher the probability of him being a juror in the smart contract between TotoPaul and BlorkosPeter. Pinakion serves two functions, it ensures that no malicious party can cause the drawing of jurors to favour a particular party, and it also ensures that jurors are incentivized to make honest decisions, because jurors that make illogical decisions would pay part of the pinakion they deposited to jurors that make logical decisions.

A dispute occurs between TotoPaul and BlorkosPeter, due to the fact that TotoPaul is not satisfied with the website which BlorkosPeter builds for him. So the jurors have to vote and make a decision.

Votes:
The jurors assess the evidence, and then each of them choose one of the three options. The voting system is designed in a way that, when a juror votes, he cannot change his vote, and no other juror see his vote, so no juror is influenced by another juror. When voting is over, the jurors have to reveal the options which they each voted for, and then a KLEROS smart contract verifies that the options match. The votes are then aggregated and then, the smart contract is executed. In the case between TotoPaul and BlorkosPeter, after the votes are aggregated, the option “Extra time for BlorkosPeter to make changes to the website” is picked, and then then the smart contract executes. After this, TotoPaul is satisfied with the website.

Arbitration fess:
To compensate the jurors that take their time in resolving the dispute between TotoPaul and BlorkosPeter are compensated with arbitration fees. Each juror will be paid a fee which is specified bty the subcourt where the dispute is solved. The arbitrable smart contract will also determine the party that pays the arbitration fee.

Appeals:
If any of TotoPaul and BlorkosPeter is not satisfied with the decision reached by the jurors, he can appeal and then the dispute would be revisited and judged again. Each new appeal will have twice the previous number of jurors plus one. This is to ensure fairness.

Incentive System:
We already know that jurors are compensated with arbitration fees after ruling over disputes. KLEROS employs an incentive system that ensures honesty and fairness. KLEROS does this by making sure that jurors whose vote are not in line with the group loses some tokens which are then redistributed to other group of jurors whose vote are coherent. Thus, honesty is ensured, because no one wants to lose his or her hard earned money.
Advantages of KLEROS:
Secured

Bribe Resistance

Only jurors that specializes in the topic of the contract are picked

Privacy is guaranteed

Transperancy at a high level

Rewards for jurors

Honesty is guaranteed, since jurors are incentivized to make honest decisions
Ability to appeal (this comes to play when one or more party(ies) feels that the previous ruling is unfair)
Applications of KLEROS:
Escrow

Insurance

Social media

Arbitration

Micro Tasking
Social networks, etc.

Conclusion:
From the use case which we analyzed between TotoPaul and BlorkosPeter, we have seen that KLEROS works in an effective and efficient way. Small business get to benefit from KLEROS, since they now have a platform that can handle any dispute that may arise in their small transaction cases. Large corporations are not left out, as KLEROS can also effectively and efficiently manage all disputes that may arise at a low cost. Hence, everyone should thrive and integrate KLEROS into their business.

KLEROS has launched a pilot experiment just to show us how KLEROS works. In this experiment, doges are uploaded unto the website, and then users can try to check the authenticity of the doges uploaded. Click this link to check it out

The image above shows the complete decision making associated with checking the authenticity of the uploaded doges.

For more information and resources:
Kleros Website
Kleros WhitePaper
Kleros Medium
Kleros Youtube
Kleros Telegram
Kleros Twitter
Kleros Github
Kleros Forum

KLEROS in the News:

https://venturebeat.com/2018/05/08/kleros-joins-thomson-reuters-incubator-to-build-a-justice-protocol-for-the-internet

https://m.nasdaq.com/article/predicting-the-emergence-of-common-law-through-blockchain-cm948582

https://www.forbes.com/sites/kimjay/2018/04/04/in-the-future-blockchain-will-solve-most-real-world-problems-even-arbitration/#7efe84c1bd2f

https://www.ibtimes.co.uk/kleros-ethereum-smart-contracts-meet-ancient-greek-legal-democracy-1665300

https://news.bitcoin.com/this-week-in-bitcoin-courtroom-drama

https://www.bankingtech.com/2018/01/blockchain-and-bitcoin-round-up-23-january-2018

KLEROS Team:

KLEROS Advisors:

KLEROSPartners:

Check out the video/animation I made about KLEROS