Kleros is an application built on Ethereum platform. It acts as a decentralized third-party firm whose primary duty is to arbitrate disputes among various contracts. The system has been built based on Game Theory concepts to hire jurors who can rule the cases appropriately. The team claims to achieve a completely secure arbitration process which is fully automated by relying only on the game-theoretical economic incentives.
This Ethereum autonomous organization has been designed based on a concept called SchellingCoin mechanism. The theory of Schelling Coin is completely focused on honesty and it is being used for decentralized oracles and prediction markets. According to this theory, voting reasonably with other members is an acceptable behavior to be incentivized.
Whereas, in the case of Kleros, the incentives design is slightly different so as to find justice for different types of challenges regarding scaling, subjectivity, and privacy.
How does Kleros work?
Arbitrated contracts and Privacy
Considering the existing dispute resolution technologies which are highly expensive and unreliable, the Kleros team has come up with a fast, transparent and inexpensive dispute resolution mechanism which is completely reliable. The system makes sure that the smart contracts are executed automatically and does not include any judgments which are outside the blockchain.
Under this opt-in court system, the contract creators choose the number of jurors they require and the type of the court which will rule their case. The contract creators will get multiple court options to select from. Some of the existing court arborescences in the system are E-commerce, Transport, Insurance, etc.
Based on the selection of court arborescence, the jurors will have options available to vote.
Kleros ensures that the privileged information of parties which has been disclosed to the jurors will be kept private and the labels of the votes from the jurors are not published on the blockchain. The privacy is handled by implementing asymmetric encryption methods so that only the jury receives information of the contract.
Jury selection and Votes
The self-selected candidates who wish to serve as jurors in Kleros can invest a token called Pinakion [PNK]. There are different technologies to avoid malicious applicants. Only the active token depositors will be considered and given the chance to be a juror. The final selection will be done randomly by the system. Once the selection is done, the jurors are allowed to vote for the options they have given based on the arborescence.
Each juror will receive the payment based on the dispute they have solved. The smart contract is the decision maker of which party will be paying the arbitration fee.
The parties have an option to appeal the final decision if they think that the jurors have not given them complete justice. New appeals will have twice the number of jurors who dealt with the initial decision with an additional juror.
Once the decision has been finalized by the Kleros, tokens are made ready for redistribution among the jurors. Jurors are incentivized based on their honesty and the tokens are given to them if their votes are coherent with the other group of jurors.
Apart from the above-mentioned features, the Kleros team has made the system ‘Bribe Resistance’ which is a mandatory feature which all the parties are looking for.
Kleros can also be used as a multipurpose system for different types of solutions such as Insurance, Oracle, Micro Tasking, Social Networks, Escrow, etc.
Kleros is a decentralized court system which is responsible for arbitration of smart contracts with the help of jurors who are enlisted via the Internet. The software system has been achieved by introducing Game Theory concept along with Blockchain Technology. The system runs on a protocol which supports numerous applications in e-commerce, finance, trade, travel and many other fields.
Kleros use cryptocurrencies to obtain complete justice to a number of contracts which are tedious to be pursued in a court. The ultimate goal of Kleros is to deliver a decentralized, inexpensive and reliable dispute resolution mechanism to the Peer to Peer economy.
AMBCrypto’s reporting team conducted an interview with the Founder and CTO of Kleros, Clément Lesaege.
What are the positive outcomes of blending Game theory with Blockchain which other technologies cannot deliver?
The suppression of intermediaries and the proper incentivization to do a good job. Without game theoretic incentives, jurors could just vote randomly, they would have no interest to look at evidence. Without blockchain, we would run a centralized service and take a huge commission for that (think about the 25% of commission by Uber). Moreover, if we were running a centralized service we would be a single point of failure and hacker could attack us to have their cases ruled in their favor. Using blockchain, also guarantee transparency, without it, we could bias the random number generator to make sure that juries of our taste are drawn.
What made you choose Ethereum platform over all other blockchain technologies?
Ethereum is currently the most advance platform and ecosystem. Kleros by itself is not that interesting. But connecting Kleros to other dapps which need dispute resolution is, so it’s important to be on a platform with a good ecosystem of dapps.
How do you choose a legitimate juror based on depositing Pinakion? And how will you convince the candidates that their Jurors are legitimate?
We don’t, the system provides game theoretic incentives for jurors to rule cases honestly. Those who are dishonest will lose tokens and will get less chances of being drawn in the future.
The random number generator will be decentralized and not run by us, so every party can verify that the jurors are the ones designated by the protocol.
What are the future enhancements you would like to add on to Kleros to present more justice to the common man?
For now, we have a quite simple version with only one court. we will develop a court hierarchy in order to allow juror specialization. Connecting with others dapps (for now, Ink and dether are planned) is also important.
To know more about Kleros, Click Here!
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