INTRODUCTION

Life on earth is increasingly dynamic and almost everything around us is changing fast - the way we eat, dress, do business, travel etc... However, certain things about us will never change. one of such things is the fact that we will continue to have occasional misunderstanding so long we are still alive. Who could have been praying to be at loggerhead with people? I don't know any! But certainly, dispute will continue to live along side with humans because it is one natural aspect of human.

In our traditional life style, a dispute that is left unresolved can linger on and cause greater problems that may end up affecting other parties that were not originally involved. To avoid this kind of problem, the world has, for long, adopted a judicial system where disciplinary measure are applied against any offender of the law. As a result, this has, to a very great extent, molded our behavior towards accommodating one another and being reasonably peaceful.

But these are things that only take place offline with no functional replication to also regulate the conduct of people working and earning their living from the internet.

In today's world, the seemingly ever increasing number of people who explore the benefits of blockchain and internet in general has revealed the potentials of the blockchain as well as its downside. These same factors that cause misunderstanding between people in the physical world are still there on the internet. But unfortunately, there was no reliable dispute resolution mechanism that was in place to effectively resolve conflicts when they arise between people until the arrival of KLEROS.

KLEROS explainer video

Get to Know Kleros

It's a blockchain-domiciled justice system that settles all manner of disputes resulting from online transactions failure, breach of contract etc.... be it the simplest of disputes between individuals or the most complex ones between corporations.

Operational system

Kleros is built based on the "Schelling Point" - the concept that people tend to coordinate themselves even without communication (E.g., if you and your friends were going to the beach, and you all left from different locations, chances are you would all head to your favourite spot even without discussing it). Kleros aims to monetize the application of the Shelling Point and use it as incentive to derive honesty. This is accomplished by a majority vote. Take for example you called 10 people currently residing in Japan and asked if it was raining. 9 said yes, 1 said no. According to the Shelling Point, if 9 out of 10 people say it's raining in Japan right now, it's probably raining and the 10th person is lying. Now what if the people asked the question had input stake to gain or lose, would the 10th person lie? The Shelling mechanism rewards the majority vote and causes the deviant vote to lose points.

With Kleros, experts in different fields of life apply to be jurors in their specialized fields. They do this by depositing Pinakoin(PNK). The amount of Pinakoin staked helps increase the likelihood of selection. On the other side, any two parties about to go into business(E.g. Client and Worker) can choose to setup a contract via Kleros. This contract would include all the terms of agreement between the parties and state that Kleros would be the arbitrator in the case of any dispute. The Kleros contract holds the funds of the trade until all set parameters are met. They also choose the type of court(typically a court experienced in the business matter) to preside over their case, the number of jurors desired and possible options of the jurors. Example:

Refund client"
Pay Worker"
Allow more time for worker to meet agreed quality of service"

If all goes well, then the smart contract automatically pays the worker. In the case of a dispute (E.g. worker fails to do work to the agreed quality, or client refuses to pay) the aggrieved party can easily invoke the Kleros contract with an email containing details of the agreement and evidence to back claim.

Jurors are randomly selected and assigned to the case. The jurors review all the evidence and make educated judgment within 3 days. Both parties (client and worker) receive the notice of judgment and the smart contract automatically follows the delivered command. If either party is not satisfied with the juror ruling, he/she can appeal the ruling and a higher number of jurors is assigned to review the case for final judgment (twice the first number of jurors +1)

Use-case example

Sam is a blogger with a bit of fame. One day, an online company that goes with the name "Toy n Stuff", approaches Sam. They wanted him to write a 4000-words article about there new line of stuffed toy called "Hi Doggy!", and promises to pay him $500 if he could complete a satisfactory article within a week.

Sam asked the requirements for the article and how the payment will be settled. The company told him their requirements and promises to pay $50 as downpayment and the remaining $450 after the completion of the article. Sam agreed but insist that they should use Kleros and put the agreement in a smart contract.

*The company didn't argue and an agreement was drafted. After putting everything in order and receiving the promised downpayment of $50, Sam started working in an article. To make sure that he would put up a satisfying article, Sam worked tirelessly. *

Five days later, Sam finally completes his article. After that, he did spelling and grammar checks, just to make sure that no typo nor misspelling is found. Satisfied with the results, Sam send the completed article via e-mail. He then received an e-mail from the company telling him that he will received a reply after 3 days.

Three days passed quickly, and when Sam looked at his e-mail he saw a message from the company "Toy n Stuff", telling him that the article he sent didn't passed the scrutiny of higher up, and therefore, didn't satisfy the requirements. Sam, was disappointed and thought that his article was more than exemplary. He sent a long e-mail arguing his case, telling them that he explicitly followed all requirements they put up, and cometes the article before the time limit.

Sam waited for a reply but received a short reply that the decision stand. Sam didn't buy it and quickly went to Kleros to ask for an arbitration. Kleros replied quickly and set up a team of juror to settle the dispute. After reading the content of the smart contract and the completed article, the jurors unanimously vote in favor of Sam, stating that the article he had written more than satisfy the requirements set by "Toy n Stuff".

The jurors then told the "Toy n Stuff" that they should pay Sam the promised amount and an additional fee for the breach of contract. The same day, Sam received the full amount and a letter of apology from "Toy n Stuff".

Advantages of Kleros over traditional courts

Privacy
Kleros acknowledges that in the course of proceedings, confidential information may be revealed so it doesn't keep the details of the case and even the language used in the agreement on the blockchain. When the contract is created, the creator submits a hash product (encrypted version of the contract) to the jurors who can only decrypt it using the Kleros platform. This encryption is done using Ethereum's keccak256.
Speed of Resolution
Judgment using Kleros is typically delivered within 3 days. A major advantage over normal courts that can take years to deliver a ruling.
Cost Savings
Using Kleros, both parties save up on thousands or millions that could've been spent in long court proceedings on legal fees.
Incentive
Jurors are incentivized to deliver proper and honest judgment knowing that an incoherent vote would result in loss but an honest vote would result in income.
Experienced Judgment
Kleros connects disputes to jurors experienced in that field who can accurately gauge the matter in a depth that a normal judge would not be able to understand. E.g. a normal judge wouldn't be able to judge a case of art quality or app code quality as he(the judge) has no experience in the field.
Anonymity
The identities of the Jurors are kept secret to checkmate bribery and intimidation.

Token

Kleros system is powered by using Pinakoin Tokens (PNK). These will be used to create contracts, activate dispute cases, indicate eligibility for juror duty, pay jurors, proof of stake for holders to vote and many other activities. According to the whitepaper, Pinakoin will be distributed in a Token Distribution event. And also sold on exchanges.