Crypto loves Kleros, even if it doesn’t know it yet. I’m going to show you why.
When you’re on the hunt for a new cryptocurrency investment, due diligence is key. After all, it’s your responsibility to analyze each and every investment opportunity to find the most promising projects.
Personally, a unique idea, a strong team and an endorsed product are some of the key things I’m on the lookout for. This is simply because when I find a unique product that is being crafted and operated by intelligent, highly suitable minds and has been organically endorsed by reputable sources, I feel like I’m on to something special.
Kleros is the world’s first decentralized court. By leveraging blockchain technology and advanced cryptoeconomics, Kleros is able to resolve disputes in an interesting, unique and arguably extremely fair way. Not only that, Kleros has been referenced multiple times by one of cryptocurrencies most well known and rightfully respected faces.
Using crypto to solve disputes
Kleros uses a crypto-incentive backed Schelling point mechanism to resolve disputes in a new, innovative way.
A Schelling point, first proposed by Thomas Schelling in his book in 1960, is a solution in game theory which is often chosen by individuals without communication. In other words, a Schelling point is a result or solution that, when presented to a number of people who aren’t communicating, is more likely to be picked. This logic has been observed and explained in studies and is thought to be due to environmental characteristics that influence human decision.
This mechanism is utilized in Kleros’ solution to reach cheap, efficient and enforceable decisions. Jurors are economically incentivized to reach the Schelling point, also thought to be the correct result of a case. Jurors will be rewarded for ruling with the majority and matching the Schelling point, while jurors that don’t conform with the majority will suffer a financial penalty. Here’s a brief overview of how the system works.
Resolving an issue with Kleros
Two parties create an agreement and choose to use Kleros as a mediator and potential dispute arbitrator. Upon completion of the agreement, if one side is not satisfied with the other then Kleros will use crowd sourced, subject expert jurors to review the evidence and settle the dispute. Jurors will consider both sides of the story and reach a decentralized conclusion.
Jurors must stake PNK tokens to be selected. Each juror will collect an arbitration fee in exchange for their contribution to a case. But 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.
There are two things combined here to enhance the likelihood of reaching the correct, fair conclusion.
- Financial incentivization spurs jurors to rule fairly
- A group of individuals that aren’t communicating are thought to reach the Schelling point
When a Schelling point mechanism is coupled together with financial incentives, one assumes that the subject expert jurors would be able to resolve disputes amicably consistently by reaching the ‘fair’ and ‘correct’ decision. In the case that one party isn’t happy with the result, there is the option to dispute the ruling which invokes a fair dispute process with more jurors.
Vitalik’s interest in Kleros
Co-Founder of Ethereum Vitalik Buterin is one of the most well known and highly respected people in crypto – and for good reason. That’s why it’s so interesting to see Vitalik’s clear interest in Kleros’ solution.
To start with, back in 2014 Vitalik wrote an article about a potential SchellingCoin where he outlines the Schelling point theory and explains how it could work with cryptocurrency – a system that has been applied to Kleros today. Interestingly, a reddit post by Vitalik in 2016 suggests a decentralized court solution using Ethereum. He clearly likes the idea.
Also in 2014, Vitalik wrote a post with a number of hard problems that he believed were important in crypto, one of which was the Schelling point suggestion mentioned above. Revisiting this in 2019 Vitalik recognized Kleros as both a reputation system and a system that can achieve decentralized success metrics.
At the ETH New York Summit Vitalik talked about Kleros and suggested using it as a decentralized resolution platform.
Vitalik even tweeted about Kleros praising their work in December 2019. Awesome!
A great idea backed by a strong team
As we’ve seen, Kleros is a powerful solution with perhaps the most meaningful endorsement available in cryptocurrency.
Even better is that behind the scenes is an international, multi-disciplined team that are dead set on leveraging the power of blockchain to transform law and governance. The Kleros team is highly skilled and diversified, with experts in smart contract security, computer science, cryptoeconomics, business, marketing and communications they have the perfect team composition for the job. Together the Kleros team aims to bring fairness to disputes and empower courts of the future.
A different, fairer ICO
In true Kleros spirit, the project is hosting their ICO in a slightly different way to present a fairer offering to investors.
In short, it is thought that token sales present investors with a flawed investment opportunity because token distribution happens prior to any real progress.
To combat this issue Kleros delayed the first round of their token sale until a working prototype is available and will be hosting the ICO in rounds. Rounds will be held when a critical roadmap item is fulfilled.
The second round of the Kleros ICO is live from January 11 to February 11, where 150 Million PNK is on sale. 33% of the total offering has sold in the first three days!
The Daily Chain
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