KLEROS: Faster, Inexpensive, Transparent and Reliable Dispute Resolution on the Blockchain

blessedben (49)in #originalnalworks • 6 years ago

Introduction: Disputes and the Need to Resolve them

Disputes are a necessary part of interaction that cannot be overlooked hence disagreements may always arise in any interaction. The need for the resolution of disputes therefore can never be emphasized. The natural question then arises as to how to resolve disputes quickly and efficiently and doing so in the best interest of justice and fair play.

However as a student of the law, I dare say that current dispute resolution techniques as even obtainable in courts is nothing but fast, inexpensive, or even reliable. These however are qualities of a dispute resolution system that are so needed in our age of the blockchain and decentralization. For transactions are carried out across jurisdictional boundaries and even so, where transactions are carried out disputes must arise and where disputes arise they must be settled reasonably, intelligently and cost-efficiently.

Whilst the fast growing decentralized world of instant transactions (as obtainable in smart contracts) between parties worlds apart lacked a true system for dispute resolution true and specially made for its kind, that, no more is the case for problems beget solutions and so the problem of lack of a fast, inexpensive, transparent and reliable dispute resolution system on the blockchain has been solved by an intelligent solution. It is called KLEROS.

"Justice for the Unjusticed": KLEROS

Built on the blockchain as a decentralized application, Kleros is the fairest, most cost-efficient, transparent and reliable third-party arbitrator to traverse the paths of dispute resolution in every kind of contract ranging from contracts worth even millions of dollars to even the $50 contract you would not bother taking to court to be resolved but still lose anyway. The KLEROS system is made up of jurors who would vote in order to settle disputes submitted to it for arbitration. Voting by jurors on disputes therefore means that KLEROS is a decision protocol court system that is multipurpose and so handles every kind of dispute. KLEROS therefore relies on game theoretic incentives to have jurors to vote correctly and so enables for justice. The game theoretic model utilized by KLEROS would be explained below to aid understanding:

The Schelling Coin Mechanism.

First developed by game theorist Thomas Schelling, the schelling Point mechanism is utilized by KLEROS to ensure jurors vote correctly or to the best of their impartial judgement, that which is correct. Now imagine you are a juror and you are faced with two options to choose from which include;

(a) It snowed in London on Monday
(b) It never snowed in London on Monday

If you know as a fact it did snow then you'd have no choice than to choose option (a) because you know the majority of other jurors would choose it too. Failure to do results in loss in terms of Schelling coins (Pinakion in this case) while choosing the right answer brings forth economic gain. This way, in resolving disputes jurors would be led to tell the truth or resolve disputes impartially because reasonably other jurors would do so too. KLEROS is also based on this same mechanism though slightly modified for scaling and privacy.

Exploring KLEROS 1.0: Arbitrated Contracts.

In formal and corporate environments, different courts have jurisdictions to entertain certain matters brought before it, a court may therefore lack the requisite authority to hear or adjudicate on certain matters. Hence KLEROS is an opt-in system, in order to enable the KLEROS court to resolve disputes arising from smart contracts, they must design KLEROS as their arbitrator and thus effectively vests it with jurisdiction depending on the type of contract that was entered into which might be concern the broad headings of e-commerce, insurance or some other topic.

1.1. Enabling Jurors Decide: Options for Jurors

The jurors will have to give their judgement by choosing from specified options that are already created by the contract in dispute. Assuming a contract was entered into by Ben and Davies that Davies would for all intents and purposes design a blog for Ben. A sample was shown which Ben liked very much and then went ahead to execute a smart contract with Davies for the design of the blog. However after much unnecessary delays and excuses, Davies finally finishes the design. However, the quality differs radically from the sample shown so Ben is aggrieved and hence KLEROS was added by them to resolve any dispute which might arise in the course of their contract, the jurors would have to decide from a set of options like:

(a) Refund Ben (b) Give Davies more time to design the blog (c) Pay Davies.

Jurors experienced in this area would then have to choose from the available options which have already been stipulated by the parties.

1.2. Privacy

I always go to court, I mean the formal, cloggy courts. When some matters are up for hearing like divorce suits, the Judge requires everyone to go out for absolute privacy because of sensitive information which might be disclosed. KLEROS also incorporates the privacy factor too hence some disputes will require parties disclosing privileged information to the jurors. Therefore to effectively guarantee privacy where it is needed, the natural language contracts and the lbels of the jurors voting options are not put on the blockchain.

2.0. Enabling Functionality: The Pinakion Token (PNK)

In ancient greece, the Pinakion was a small bronze plate used to identify the citizen of a city, it was also used for jury membership and political candidature hence it was an all important asset for those that had it. In the KLEROS Ecosystem, the Pinakion is the token that is at the center of the KLEROS dispute resolution hence it serves the purposes of:

Incentivizing jurors to take up tasks of dispute resolution because of the economic advantage or gain made possible by the gaining of PInakion tokens for coherent. Jurors also self select themselves to resolve disputes in their own are of specialisation through the instru!mentality of the Pinakion token such that the probability of being drawn as a juror in a particular dispute is directly proportion all to the number of tokens deposited. This way inactive jurors would also be kept out.

The Pinakion token also plays the very important function of protecting KLEROS from Sybil attacks, a situation whereby a reputation system is subverted by forging pseudonymous identities in peer to peer networks to gain a disproportionately large influence. Hence the need to deposit larger tokens to be drawn, Sybil attacks are put at bay. The Pinakion token also allows for honesty and justice hence incoherent votes by jurors would make them lose. Sure no one wants to lose!

3.0. A Vote System Designed for Justice

From the pool of evidence available to jurors, they cast their votes accordance with the options provided by the disputing parties in the smart contract created by them. The system is designed in such a manner that votes by jurors cannot be changed and such vote is also not visible to other jurors until after every juror has voted for their option of what they consider justice and think others would choose too (the Shelling Point). A smart contract is then executed after the end of voting which congregates the votes of all jurors and the option which has the highest number of votes is considered the winning one and so the dispute in question is resolved according to such option.

4.0. An Appeal for the Dissatisfied Party

Appeals are a necessary part of dispute resolution. One may not feel too comfortable with the decision of the court of first instance and so may wish to appeal such decision. KLEROS recognises the great need for appeals and so incorporates a system for appeal in its dispute resolution system. Therefore even after the jury has reached a decision, a party may appeal such a decision and have it ruled again. However, the number of jurors who voted the first time would be doubled plus one and so appeal fees must be paid. However jurors who voted in an appealed decision would not be paid arbitration fees, a situation which also encourages jurors to adequately explain their decisions and so narrow the margins of the possibility of an appeal.

5.0. The Drive Towards Honesty and Justice: An Incentive System.

When jurors rule in disputes, they are paid arbitration fees. Jurors want to earn arbitration fees. A juror will not earn any arbitration fee if his vote is not coherent with the majority vote hence the majority will vote honestly for what is justice in the peculiar circumstances of each dispute.

After the end of voting, the tokens payed as arbitration fees are unfrozen and distributed to jurors depending on how they voted. Therefore jurors gain or lose depending on if they voted coherently or not and hence everyone may want to win, they are incentivized to vote honestly and so justice is also achieved. Below is an illustration of token redistribution after a vote which consisted of seven jurors.

A Use Case

Bob is a professional content creator. He has been hired by Marley to write blog posts for him over a period of seven months for the sum of $100 per blog post. Knowing as a fact that a dispute may arise, they set up a smart contract for their agreement and enable KLEROS as its adjudication protocol.

However, six month into their agreement, Marley claims he is not satisfied with the nature of Bob's articles and so will not pay him fully again but rather 50% of the agreed sum. Bob is aggrieved and so he securely sends a statement of claim to KLEROS to adjudicate on the dispute.

Upon the call for the resolution of the dispute between Bob and Marley, a number of jurors who specialize in the KLEROS subcourt in question would be selected randomly to resolve the dispute by voting through the evaluation of available evidence.

The dispute is now resolved presumably by the jurors voting that Bob be paid in full. The smart contract which was created would now enforce the contract between Bob and Marley according to the decision of the KLEROS court. All this is done in a manner that is fast, reliable, transparent and inexpensive compared to a situation whereby Bob would have been left with no remedy nor could he even hire a lawyer to resolve the dispute rather than cries of been scammed. KLEROS effectively remedies the situation.

Further Applications of KLEROS

Human beings interact at different levels daily and enter into various contracts too. The fact that disputes always arise in virtually every field of human endeavour renders a dispute resolution system like the one being offered by KLEROS totally indispensable such that its importance cannot be overemphasized. Below are some inexhaustive use cases in various endeavours where KLEROS can effectively resolve disputes:

(a) E-commerce

Tobi ordered a Rolex wristwatch from from GetYourWatches.com however upon receiving the order he found out that the watch that was sent to him is no Rolex at all. Aggrieved, Tobi submits the dispute to Kleros and the jurors votenin favour of him and through the smart contract created, his funds are returned to him.

(b) Arbitration

As already seen, contracts between individuals which result into disputes can be resolved through a process of arbitration enabled by KLEROS. An example is a contract between Frank and Martha for the development of a corporate website. Which corporate website when developed, according to Martha does not meet her specifications. Such dispute can also be arbitrated and resolved by KLEROS.

Other applications of Kleros include;

Insurance
Social Media
Crowd Funding
Escrow

Advantages of Kleros Over existing systems of Dispute Resolution

Kleros, because of its very nature and mode of operation possesses many advantages over conventional means of resolving disputes such as formal courts. Some of these advantages wouod be discussed below:

Fast and Quick Settlement of Disputes:

Saves Cost of Dispute Resolution:

Reliability and Transparency:

Kleros

Dispute Resolution by Specialized Jurors:

Conclusion

Having read through the Kleros.io whitepaper, i am very intrigued about their product which would very much prove to be an indispensable asset in the era of the blockchain and smart contracts we have just started to explore. However, Kleros will definitely face peculiar challenges because of the novel field they wish to explore. It is my hope that it comes out successful because a fast, transparent, reliable and cost effective decentralized dispute settling application is very much a welcome idea.