Kleros had its token sale this summer, and seems to be outfitted to deliver their ambitious project of making arbitration accessible and affordable.

If you haven’t noticed, our court systems kind of suck. Time. Money. Energy. All of these are sacrificed for a system that seems to be the playground of the rich who can afford attorneys capable of navigating the complex eddies of our legal systems. Meanwhile, the poor drown, unable to mount legal battles against corporations who can simply outspend them, dragging out conflict for years until justice is permanently stalled.

Decentralized arbitration platforms might make justice affordable again. Jurors from around the world can be sourced to make decisions in hours, without the need for a clerk, bailiff, or courthouse. Instead, smart contracts - self executing code - will provide the key infrastructure for bringing human judgment to situations where it is needed.

Make no mistake, there is something monumental about this undertaking. Like Augur and Gnosis, decentralized arbitration platforms will make humans and machines interact in ways that are currently impossible. Hybrid systems that take advantage of a blockchain’s robustness yet can call upon the wisdom of a crowd of humans may very well out-compete mediators, arbitrators, and judges out of existence.

The tokenization of truth

These platforms incentivize honesty. They have similar goals, but vary in how their token dynamics work to build consensus. These algorithms for inserting human judgments into smart contract code will surely end up fighting it out for market dominance over the next decade.

We are starting to see tokens that are actually a means of employment. Eventually, FOAM will permit people to earn from posting points of interest in a global map. Augur is now paying people who are able to answer questions accurately. And Kleros will offer people the chance to be a paid juror, regardless of which jurisdiction they live in.

This new class of people, who earn their income from contributing to decentralized platforms are similar to the 'judicants' of Gibson's Neuromancer. Judicants are like judges, but they can't order you to jail. They gain expertise in a particular domain and are then able provide valuable input, optimizing complex systems. This class of workers may end up replacing the legions of bureaucrats, politicians, and judges.

Kleros had its token sale this summer, and seems to be outfitted to deliver their ambitious project of making arbitration accessible and affordable. Their first ‘mainnet’ test is just wrapping up, and it intentionally encouraged users to try to break the system. This is my experience with trying to break decentralized justice.

Doges on Trial

Kleros’s first ‘mainnet’ test  -  Doges on Trial - was intentionally whimsical. Contributors try to sneak in a cat picture into a collection of doges, prosecutors challenge images that don't contain doges, and jurors decide whether or not a challenged image fits the criteria. All of these roles use MetaMask to interact with the Web 3.0 page. You can check out the dApp here.

Contributors pay a .06 ETH deposit to post a picture. If the picture doesn't get challenged, they get their ETH back, as well as some Dogecoin. However, if they submit a picture of a cat rather than a doge, and this picture is confirmed to the list rather than challenged and voted against, the contestant receives 2 ETH + a CryptoKitty.

The second role is that of a juror. By staking Kleros’s token, PNK, a user enters a lottery to be a juror. If their vote matches with the other jurors, they gain around .03 ETH. If their vote doesn’t line up with the others, they lose a bit of their PNK tokens. This use of a ‘schelling point’ encourages jurors to be thoughtful and honest with their judgments; otherwise they will lose tokens over time rather than gain them.

The third role is that of a prosecutor. After a picture is submitted, it has a period to be challenged. Prosecutors stake some ETH in order to challenge a photo, which sends it to a jury. If the jury sides with the prosecutor, the prosecutor gains some of the ETH that was part of the contestant's deposit.

My first picture I posted, I admit, was not very savvy. I saw the part about the first ten cat photos receiving 2 ETH and figured I was simply ahead of the curve and had a great chance to make some Ether. So I posted a majestic snow leopard... which was promptly challenged. There went .06 ETH.

I tried again with a large fluffy orange cat image that had comments posted on it like a doge. Arguably, a 'doge' is more a style of a meme than a dog. Still, this submission was also challenged.

Still, I wanted to 'win' this contest, if only to prove a point. Perhaps if I bribed the jurors, I could beat the system. So I made took a picture of a cat, and added some text: "Juror! Let's split the winnings for getting this beautiful cat posted - send me your ETH address to receive .3 ETH", along with my e-mail address.

The following day, I received an e-mail from someone claiming to be a juror. He demanded the .3 ETH bribe up front. This didn’t sit well with me: what if the two other jurors didn’t contact me, and I just blew the .3 ETH for nothing? So I told him that I would be willing to give him .06 ETH upfront - roughly twice the amount he would make from playing honestly - with the remainder being paid after the kitty was approved for the list.

Meanwhile, another user with an interest in my case asked to do some research on the ETH address that the supposed juror provided. As far as he could tell, it didn’t seem to be connected to the Doges on Trials smart contract: perhaps this person just faked the screenshots he provided, in order to snag the bribe.

Either way, the juror didn’t contact me back, and both of my "bribe?" submissions  ended up being rejected. I asked one of the project’s founders, Federico Ast, just how many times a picture could be challenged. He told me ‘5’, and I soon realized the futility of my case. Even if I was able to bribe two of the initial jurors, this outcome could be challenged again. Each time it is challenged, the stakes are raised, making it harder to bribe a juror. From what I understand, when their platform launches,  more jurors will be called upon each time an outcome is challenged, making it increasingly difficult to bribe the panel.

Still, it’s not that it is impossible to bribe a juror: it just becomes economically nonsensical to do so. This is important beyond just this playful beta test. Imagine a freelancer who enters into a smart-contract agreement. 10 ETH is held in escrow, delivered upon completion of the task. The freelancer marks the work as complete, and uploads a link to the content. The client believes the work to be incomplete, and thus initiates arbitration on Kleros. Both sides are able to provide evidence, and perhaps the freelancer includes in their ‘evidence’ a bribe offer. Even if the first round’s bribe is successful, so long as the client is able to pay for an appeal, eventually the freelancer will lose all of the ETH they gained from the deal, and the client will regain the 10 ETH, minus some arbitration fees.

Kleros, or its competitors,  will be a key piece to "decentralizing everything". AirBnb, eBay, Uber: all of these centralized platforms require some human input to manage disagreements. By calling upon a set of jurors, conflict can be mitigated, and bad actors can be pushed out through economics rather than punitive force. The current way Kleros is structured, we may still see wealthy people contesting rulings, dragging the process out. Surely this spiteful behavior will force capitulation when the other party cannot afford another round of arbitration that might end up being lost. Despite this, the system seems capable at making it all but impossible for scammers to turn a profit, enabling a new era of decentralized platforms.

Picture from Pixabay.

Verified on Po.et

August 17th 2018, 13:17

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Activist and writer focused on the next-gen applications of crypto networks. He can be reached at @aitherick or aitheric at protonmail dot com.

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