The Daily Chain Primers: An Introduction to Kleros


Everyday technology is becoming more ingrained in our lives. The world is becoming increasingly digitized.

The power of the internet is simply unmatched. It connects individuals from all around the world. A business based in New York City can hire a freelancer based in Thailand without ever meeting, with an online platform facilitating the connection and work process.

However, with new opportunity comes new problems. The digital revolution has introduced scenarios and disputes that simply aren’t solvable in traditional court systems. 

Introducing Kleros

Kleros, a media partner of The Daily Chain, is a blockchain platform that uses crowdsourcing and advanced cryptoeconomics to resolve disputes efficiently and affordably. Kleros is built on Ethereum and is suitable for any time of contract, no matter how simple or complex. 

Kleros provides individuals the opportunity to raise disputes and have them adjudicated by a real community of jurors who are incentivized to rule the case fairly. Pinakion (PNK) is the native token of the Kleros platform and is leveraged to ensure all cases are properly adjudicated. 

Kleros is a live product – there are already more than 200 staked jurors on the platform and more than 135 cases have been resolved thanks to the platform. Kleros is the first court of its kind and solves a very real problem that grows every day. 

The Daily Chain Primers: Kleros Introduction

Many academics and leading business names are impressed with the potential of Kleros and have been impressed with the service, including Thomson Reuters, Barry Weingast (Hoover Institute) and Gillian Hadfield. Kleros has made a number of presentations at Stanford, Berkely and Columbia universities. Vitalik Buterin, a co-founder of Ethereum, has suggested using Kleros numerous times and is a keen follower of the project. 

The Daily Chain Primers: Kleros Introduction

Applications of Kleros

Kleros Court is the main decentralized application (dapp) on the Kleros Platform, which is the dapp that facilitates the resolution of digital disagreements. However, there are other fully working dapps on Kleros which leverage Kleros court to operate. Kleros are also integrated with Realitio offering a true decentralized oracle service along with Uniswap.Ninja which is a Kleros fork of Uniswap working in tandem with their Token Curated Registry.  

The first decentralized token listing program

Kleros has teamed up with EthFinex to offer the world’s first completely decentralized token listing process. This means that the community now decides what tokens are listed on the exchange and that they meet the requirements. 

Anyone can submit a token to this listing process. The token must meet the listing guidelines of EthFinex and the user must pay a small deposit fee, which would be returned if the submission is either unchallenged or is rejected by jurors. 

As a result, the listing process on EthFinex is now entirely decentralized and controlled by the community. 

Decentralized Escrow 

The Kleros Escrow service allows parties to remove risk from online contracting. One can send a payment into the escrow account and ensure that payout only happens if both parties are satisfied. If this isn’t the case, Kleros court will ensure that a resolution is reached. 

How does Kleros Court work?

When two parties are creating an agreement they can choose to use Kleros just in case a dispute occurs. For example, if a business is hiring a freelance writer they would create an agreement outlining exactly what they expect from the freelancer. This would be handled by Kleros Escrow. 

Once both parties are agreed on the work requirements, the business will place the freelancers payment into a smart contract. Once the writer has completed the work, if the business are pleased with the work they freelancer will receive payment. 

A dispute occurs

If the business is not satisfied with the work, Kleros will use crowd sourced jurors to review the evidence and settle the dispute. Jurors will consider both sides of the story and reach a decentralized conclusion. If the jurors decide that the freelancer met the requirements, the smart contract will pay the freelancer and the jurors will be paid an arbitration fee. 

If a decision is reached on Kleros that one party is not satisfied with, they have the power to appeal. This will cost an additional fee, but it provides the opportunity to have a larger set of jurors to review the case. Continuous appeals are possible, but the number of jurors increases by more than double, which increases the arbitration fee required by over 2x for every appeal. The exponential rise ensures that only a reasonable amount of appeals will be carried out.

Finding and incentivising jurors 

When a smart contract is created and Kleros is assigned as the arbitrator, the contract creator is required to select the number of jurors and the type of court that would be required, should a dispute occur. The court selection process ensures that disputes are resolved by jurors with relevant experience so they can properly reach a fair conclusion. 

Jurors self select to serve as a juror – it’s a completely optional task. 

In order to self select one must stake PNK tokens. To enhance the probability of being picked, one can stake more tokens. The more tokens staked, the more likely you are to be selected as a juror. Kleros randomly selects jurors and the chance one has to be selected is represented by the proportion of their stake relative to the total amount of staked tokens in the corresponding court type. 

Jurors are paid for their work. Each juror will collect an arbitration fee in exchange for their contribution to a case. However, the token staking mechanism financially incentivises jurors to do their best and reach a fair conclusion. If a juror’s ruling does not match that majority decision, the ‘incorrect’ juror will pay a portion of their staked tokens to the jurors who agreed with the majority. 

By Alex Aves

Alex is a crypto enthusiast that has been enthralled with the crypto space for over two years now. He currently works in the marketing team for Liquid, one of the leading crpytocurrency exchanges. Alex is passionate about spreading knowledge, introducing more legitimacy to crypto and stopping traders from losing money.

You can follow Alex on Twitter here.

*Disclaimer – Kleros are our Media Partners and therefore this content is sponsored by them. The fees paid by this project are used to pay for The Daily Chain salaries, dev work, hosting services, travel expenses etc.. that are required to make this company a success and continue to provide the community with great content on a daily basis.

Alex Aves
Alex is a crypto enthusiast that has been enthralled with the crypto space for over two years now. He currently works in the marketing team for Liquid, one of the leading crpytocurrency exchanges.

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