KLEROS; Decentralizing the Court System with Ethereum Smart Contracts

princesson (48)in #crypto • 6 years ago (edited)

This project is very significant to me because I have been heart broken on both ends of freelancing.
AS A BUYER
I am on an online freelancing site which allowed for both fiat payment or cryptocurrency payment methods, and I am doing very good on that site as a seller and even got the Level 1 status not too long ago
Recently I ordered a service from another Seller which was around 0.071 Ether, and I usually ask whom ever i bought a product or service from over and over again if he or she could do it or not, and I am usually not disappointed, but this time around, this seller assured me he was up for the task and kept on saying “order me” so of course i finally did the order.
Now after several days, he gave me me my order, but it was of low class, I was not satisfied, he was careless and unsystematic. There was spelling and grammatical errors everywhere, so I lost quite an amount of time fixing his mistakes.
Why didn’t he say it before that he couldn't do the job to a good standard?
This was really very disappointing.
The website has an unsatisfying dispute feature, an the seller took advantage it, but it killed my time and I lost one client, and after so much time wasted, I wasn't even given my money back.

AS A SELLER
When I originally joined this online freelancing site, I received an order about creating an animation video on a project. I completed the order very quickly, but the person who placed the order said I didn’t meet the expectation. He requested for dispute. I offered him revision but he did not agree, he wanted his money back and wanted the dispute (not forgetting that this site has very poor dispute resolution plan).
I really wasted my my hours on the work. If I accepted the dispute, and I got to keep the money then, he would have gone to my profile and probably given me the worst rating ever, which i didn't want. The company doesn’t have too many safeguards in place against buyers. Some experienced sellers suggested that I simply let these thieves have their money back because majority of buyers are good people, looking for good quality work and wouldn't want a low ratings client. I actually let the whole thing go and since then I’ve had a steady trickle of genuine buyers who have helped take the sting out of that ugly first experience.

HOW CAN THIS BE AVOIDED?

So many efficient conflict management approaches are to be developed. Court rooms and traditonal arbitration has been considered the most efficient way to tackle with business-related issues, but its capacity may prove very insufficient when it comes to fast and cost-efficient resolution for average transactions, when the parties live in different countries, or even in different states, these other kinds of dispute resolution can still be expensive, the case may not be resolved for months, or even years. and still create unsatisfying results.
That is where KLEROS comes into play. KLEROS is not an option but an imperative in dispute resolution. KLEROS is a service that exists for cryptocurrencies which renders ultimate judgements enforced by smart contracts in a transparent and decentralized way. KLEROS is a new way of bringing arbitration and justice to everyone at an extremely low cost leveraging the blockchain

HOW DOES KLEROS WORK

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In the case above an escrow contract is used. Alice puts the funds in escrow( which enables payment for an off-chain good or service, which makes room for reimbursing the buyer or paying the seller). If Bob makes the work according to Alice specification she can send a message and have Bob paid from the escrow contract, and if there is a problem, they can go to dispute resolution, and they will both be required to deposit arbitration fee, and the arbitrator or jurors will analyse both sides of the complaint and choose either one of Alice or Bob, the decision gets enforced immediately while the arbitration fees are collected.

I see you asking these important questions below

How are jurors selected and how can one be sure they will do a very trustworthy job?

Pinakion Token (PNK)
PNK is a utility token of which its supply is fixed at 1,000,000,000 units.

In order for a juror in the Kleros ecosystem to be elected to settle a specific dispute, he must deposit PNK. This represents the right of users to be drawn randomly as jurors.

The probability of being drawn as a juror for a specific dispute is proportional to the amount of
tokens a juror deposits. The higher the amount of tokens it deposits, the higher the probability that
it will be drawn as juror. Jurors that do not deposit pinakions do not have the chance of being drawn.
This prevents inactive jurors from being selected.

source: Kleros Whitepaper

HONESTY, TRUST AND SECURITY

Sybil attack is a type of security threat when a node in a network claims multiple identities. This kind of attack affects the fabric of internet commerce and communication Most networks, like a peer-to-peer network, rely on assumptions of identity, an attacker with many identities can use them to act maliciously. In this case, a malicious party could create a high number of addresses to be drawn a high number of times in each dispute, and hence have control over the system and jeopardize the integrity of the system. KLEROS will protects the system against these sybil attacks.
Secondly, it incentivizes jurors to vote honestly by making incoherent jurors pay part of their deposit to coherent ones. The fundamental insight is that jurors voting coherently with the majority should be rewarded. Users who are working hard and doing excellent jobs get rewarded while users who aren't doing a good job or those trying to game the system will definitely lose money

Why should I trust the decision of people I don't know and how credible are they?

The identity of the jurors are anonymous. Anonymity is intended to protect jurors from intimidation and retaliation and biased judgement. A good number of anonymous jurors who do not trust each other can reach consensus on the right decision, and the number of potential jurors can be quite much, so this aids transparency and finally giving the deserving party justice.
So after candidates have self-selected specific courts and deposited their tokens, the final selection of jurors is done randomly. The probability to be drawn as a juror is proportional to the amount of deposited tokens

What if I am not satisfied and I want to appeal?

If, after the jury has reached a ruling, and the party ruled against is not satisfied and thinks the result was not right or
unfair, the affected party can appeal and have the dispute ruled again. Each new appeal instance will have twice the
previous number of jurors plus one, which I personally think is amazing.

HOW WILL KLEROS AFFECT HOW PEOPLE USE CRYPTOCURRENCY

The inability to resolve a disputed transaction and security of funds is one of cryptocurrencies’ biggest barriers to growth and because of these kind of dispute issues, not everyone use cryptocurrency with the same ease that they use existing payment
KLEROS will boost great confidence in the cryptocurrency ecosystem and give a critical step to mass adoption.

IMPACT OF KLEROS ON ECONOMY AND BLOCKCHAIN ECOSYSTEM

We have people building different platforms for e-commerce, freelancing with the economy is now becoming more global and more digital.
Lets see this use case in the freelancing sector;
Terry is a Nigerian in Nigeria, and he contracted a guy Figo in Portugal to build a website for him and payed him fully, and after Figo finished building the site, Terry was not happy with the outcome of the site, and then a dispute arises between them. Terry wants the issue to be resolved and also resolved quickly. Terry sees that it is impossible for the issue to be resolved anytime soon, because he would not want to travel to Portugal to hire a Lawyer or Attorney to present the case to for resolution.
Now going back to when Terry contracted Figo, this issue could have been resolved at that point only if Terry sent the money into a smart contract and the money stays there until both parties are happy then it is then released to Figo. Then if there was a dispute, KLEROS will then select a jury of experts in that line of expertise, in this case website,and these jurors are going to see the evidence and then vote for who they think is right from the evidence provided.
So this solves a very big problem in the global economy and also in the ecosystem of blockchain because there are a lot of blockchain based companies that don't have a dispute resolution feature.
If one is building an e-commerce platform, they do so with with the intent of making their product very quality and try to also focus on getting individuals to use the platform, but most times they don't usually focus on dispute. So if disputes arises, it becomes a major issue for them to handle, hence the credibility of the platform and satisfaction gotten from the platform becomes jeopardized.
This is where KLEROS comes to play. KLEROS is going to be the decentralised protocol for justice for all these platforms people are building in different aspects of the economy.

USE CASES FOR KLEROS

Like I pointed out earlier on, many of the use cases are in e-commerce sector like in the case of the freelancing platform, but there are also other use case.

USE CASE I

Social Media decentralized platform
Most social media platforms don't have dispute resolution team that would receive or resolve a complaint of maybe a hate speech or inappropriate comment on another user and check to see who was wrong and who was right and then punish the wrong individual. For example,
If Mr George made a hate comment on Mr Frank, and this comment violates the terms and conditions of the platform, Mr Frank has no one to go to complain or report and hence feels very terrible. But KLEROS is brought into the picture, such cases would then be sent to KLEROS and KLEROS would then consult the jury, and the jury would analyse the complaint using the terms and conditions of the platform to see if Mr George was found wanting, and if Mr George was wrong or right and then enforce a ruling.

USE CASE 2

Music Platform
Mr Kane uploaded a song on a music platform, and along the line, Mr Tim stole the song and re-uploaded to make some money through a commercial means without obtaining permission from the copyright holder and without giving credit to Mr Kane. Mr Kane eventually finds out and he wants to report thus, but there is no dispute resolution team on the platform, so most of the time, nothing is done about it. But in this case KLEROS can handle this too in the same vain as in Use case 1.

KLEROS COMPETITORS ,HOW KLEROSDIFFERS FROM THEM AND WHY THESE OTHER E-COMMERCE SITES SHOULD ADOPT KLEROS

Some of the competitors are Parle, ODR for e-bay, Paypal. These customer services were not created with the goal of bringing fairness, they were created with the goal of keeping the customers happy, and this dispute is usually handled by just a customer agent, so its a bit centralized. KLEROS gives room for decentralization by giving various jurors the power to make a combined verdict, no one individual can make a ruling. It has to a combined voting.

There are five main steps to eBay's ODR system outlined below

Go to Resolution Center

Resolution Center asks a series of questions to diagnose the problem and ensure the complaint is within eBay’s coverage for a Money Back Guarantee and that the purchaser used the “pay now” option and asserted the complaint within 30 days after the actual or estimated delivery date.

Resolution Center gathers the proposed resolution and encourages the two parties to communicate through the eBay messaging platform.

If that does not succeed in resolving the dispute within 3 business days, the claimant may escalate the case back to the Resolution Center for an evaluation.

Resolution Services team then contacts the Buyer within 48 hours with a determination as to whether the complaint qualifies for a refund. These refunds are enforced through chargebacks.

source

For Paypal,

After 20 days without a resolution, either party can escalate the dispute to a claim
Note:
On PayPal's ODR system, only the seller can appeal meaning the decision was reached in favor of the buyer.

source

The Major downside of these traditional and old dispute resolution bodies is how slow they respond to claims and issues. I can't imagine myself waiting for 20 days which is almost a month before I escalate the dispute to a claim. This methods are too slow. Within the period of 20 days, I might have forgotten about the issue and what transpired. A lot would have happened within 20 days. An escrow system with smart contracts which KLEROS offers would have solved the issue as fast as possible. I believe if e-bay, Paypal and all these other e-commerce site adopts KLEROS, they will have a more reliable, fast and smoother dispute resolution service.

There are other competitor such as Jury Online, but these competitors are still new and not as developed and as solid as KLEROS. KLEROS has been in the system for a while and hence more advanced.

HOW CAN PARTICIPANTS USING KLEROS BE REWARDED

PNK is not a medium of exchange token and neither is it spent to buy arbitration services. So when you stake your token, it gives you the opportunity to be drawn as a juror and rule on disputes people report. So if you incoherently, you loose your PNK, but if you get to rule coherently, you gain the tokens of those that ruled incoherently, so even if you want to be biased, you get to loose your token because the majority would not be biased.

source; Kleros Whitepaper, Page 9

So the most interesting part of all this is that it is very decentralized, a group of jurors that are not communicating among each other would arrive at a ruling. No one person can make a decision, In KLEROS, jurors are penalized if they provably communicate their votes with each other
Users are also rewarded for their time and effort of such disputes with the arbitration fees paid by those involved in the dispute.

KEY MILESTONES ALONG KLEROS's ROAD MAP

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They succeded in building a team of 9 people who are full time members on this project. Federico is the Ast. Co-Founder and CEO of Kleros while Clément Lesaege is the Co-Founder and CTO of Kleros. They also have a proof of concept with a lot of developments. They also have partnerships with a leading project in the decentralization of e-commerce known as Ink Protocol, and Dether

KLEROS will act as a second layer of resolution for Ink Protocol users as a mediator. If a Buyer or a Seller can’t come to a resolution among themselves, KLEROS will be there to adjudicate for them. Members of the community can serve as jurors, and mediate disputes through a voting mechanism.

Medium article

KLEROS also announced a partnership with MARKET Protocol, a company based on the ethereum blockchain that provides the pieces necessary to create a decentralized exchange, enabling third parties to build applications for trading.

BIGGEST CHALLENEGES OF KLEROS AND HOW THEY PLAN TO OVERCOME THEM

One of the major challenges they have is to prove if the system of incentives they have developed for ruling disputes is actually going to work as expected form the use of crowd sourcing, arbitrators producing rulings that are faster, cheaper and more secure than the existing systems. They have started to analyse through experiments with the team, working on mathematical models that represent the Kleros protocol (or in less ambitious cases, some aspect of the protocol), and prove security properties, and are positive that the project will pull through in that regard.
the second challenge is making people to believe that there is a better way of resolving dispute than the traditional arbitration methods of court rooms, and these traditional justice systems have limitations ranging from how slow disputes are solved, some even take a year to fully resolve. So the challenge here is change people's mindset about how arbitration should be done. So they plan to solve this by general awareness through seminars, conferences and various public speaking environments so more people can be reached.

TOKEN DISTRIBUTION

Team Members: 18.00%
First Round of Token Sale: 16.00%
Airdrop: 4.00%
Subsequent Rounds and Juror Incentive Programs: 50.00%
Kleros Cooperative Development Reserve: 12.00%

source

PROJECT ROADMAP AND TIMELINE

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SUMMARY

I am glad about this project because they are using the blockchain very creatively. I have read about a lot of projects, but there isn't real application of blockchain to those projects that makes sense to a lot of them. They are mostly trying to do it to leverage the trend of people including blockchain in their business.
KLEROS is actually using these smart contracts in a way that makes sense for freelancers as we saw earlier on in this write-up, and if you visit the website you would see 6 core use cases. Having done freelancing in the past, it becomes extremely devastating once the time came to accept payment, because a times not everyone was happy with the business transaction. I have a lot of friends that go through dispute on a monthly basis with their freelance work.
So I love the idea of spreading it to the crowd, leveraging smart contracts and tokenizing the people that help the dispute go through.