It won't be an exaggeration to say that we are officially in a digital world. Almost all activities powered by man labor and traditional process of execution are getting replaced by automated systems. Online businesses and digital means of communication have so far proven to be multiple times better than the old traditional system.

Beyond that, we now have the Blockchain technology which has been a revelation in the world of digital transaction as it offers high security, speed, anonymity and more importantly, protection against breach of contract.

These days, people no longer drive around to companies or institutes looking for whom to contract their work to. They simply open the world wide web and get their man. With these developments, many times, trust becomes the major issue. The client wouldn't be totally sure if the person would deliver in time, execute the job as agreed or in reverse, the contractor would also doubt that the client will pay up as agreed. Though we have many platforms offering reviews to ascertain the credibility of some freelancers but so far it remains a virtual contract, trust will still be an issue.

When a breach of contract happens in the real world, most times, the service of the court of law is usually sought for justice and resolution of a dispute. Most times, however, digital and decentralized contracts especially those involving a relatively small amount doesn't fit into this existing dispute resolution methods as it could be expensive, time wasting, and structurally rigid. Hence, we need a platform that help solve this issue and that is why we have a platform like Kleros.

So, what is Kleros.

Kleros is a decentralized dispute protocol system operating as a multipurpose court system for solving every kind of dispute. It is an Ethereum autonomous organization that works as a third party arbitrating disputes in every kind of contract, from very simple ones to highly complex ones. It is a fully automated system that incentivizes jurors by offering tokens in exchange for their expertise in resolving disputes.

As curled from a statement by Aristotle which goes thus:

“Whoever controls the courts, controls the state”.

Contractors and clients need to seek the service of a fair, unbiased and quick resolution platform whenever they are about to commence a contract agreement in case of any breach of contract. Thus, this justify their need for the service of Kleros

How does Kleros work and how will it change the way individuals and businesses deal with disputes?

Project Description

Kleros is simply an opt-in court system whereby the parties involved in a smart contract i.e the client and the contractor will have to choose Kleros as their arbitrator before the commencement of the contract. Kleros which operates as a general court with sub-courts specific to the field of business there are to preside on gives the parties the options of choosing the number of jurors, the specific court and the possible outcomes of the contract either to favor the client, the contractor or a 50/50 case.

In simpler terms, Kleros let a contract involving software development be judged by specified number of jurors in the software development field and let them choose some outlined outcomes for which Kleros will sanction its judgement on. So, at the end of the contract, when a contract breach arises, jurors vote in favor of the outcomes and judgment is based on the outcome having the major vote.

How Kleroschanges the way individuals and businesses deal with disputes

In the existing dispute system, when a contract breach arises, a court helps to decide who wins the case. This being physical can be polluted by bribe or sentiments from the judge leaving the real winner to lose the case or even pay for losing.

However, with Kleros, say we have an instance where a client named Alice and a contractor John named selects Kleros as their arbitrator in a painting job contract with a specified period of execution. If at the end of the period John doesn't complete the painting, the jurors are to either vote in favor of one of these three outcomes; "A refund to Alice", "Give John an extension of a week" or "Pay John". So, after the vote is cast by the juror and it is submitted, an automated system disburses the fund or in case of an appeal holds the fund till all the contract duties are met thereby leaving us with a fair and unbiased dispute resolution.

Why should we trust and accept Kleros decisions?

Definitely, this will be the next question from anyone who feels this platform will prove helpful. Undoubtedly, Kleros is an automated court system, but how do we trust the jurors about their voting preferences?

This brings us to how Kleros ensure fairness through its incentivization system.

Kleros has a system designed for jurors selection as well as an incentivization system that ensure that they vote with sincerity. Firstly, Jurors are attracted by the economic benefit of earning an arbitration fee for the service rendered in form of a token called pinakion (PNK) used by Kleros as its utility token. But to get selected, they must first commit their money to the system by purchasing the pinakion token and depositing on the platform to show their commitment. So, the higher the pinakion deposited, the higher a juror's chance of being picked for a case. The real incentivization then comes after an automated random selection from a pool of committed jurors.

So, for a case where 7 jurors presides a case if a particular juror votes in favor of option B while others go for A, the juror is considered to have voted incoherently and the tokens, including his own, are distributed amongst the other jurors. So with this in place, jurors are incentivized to rule honestly.

Some Technical advantages of using Kleros

Privacy

Since Kleros runs on the Blockchain, security and privacy of contract is no issue. Many contracts aren't meant to be open to the public and by so, Kleros ensures that the details of the contracts and the labels of the jurors voting options are not put on the blockchain. A contract after creation is usually submitted as a hash which is an encrypted form of the original contract. During the dispute resolution, only assigned jurors to have access to the original language of the contract and all the options in the outcome are also encoded in an encrypted form.

Unique vote counting and anonymous voting system

To avoid duplicate in voting by jurors, votes are being submitted using the Juror's Ethereum address thus ensuring uniqueness in voting. The voting is also being done anonymously so that other jurors will not be influenced by the decisions of others' vote.

An Appeal system

Despite the fact that Kleros is a digital platform, it allows for an appeal option for an unsatisfied party during a dispute resolution. So, at the end of a dispute resolution, a party can submit an appeal request to be considered by an additional jury which is usually double of the previous number of jurors plus one. However, to ensure this opportunity isn't abuse, Kleros has designed a system that ensures that only cases worth of appeal makes a request. It does this by stating that:

The Jury is given incentives to explain comprehensively how they arrived at a certain decision.

The Cost of appeal is greatly increased with each appeal made.

Governance Mechanism

The system also gives power to existing users to decide how the system is run overtime. As expected, new users will be gained and there would be a need for more and more sub-courts, and some modification of policy. So, token holders are then given chance to vote according to the liquid token they possess to vote or delegate their token to the sub-court they represent so that the modification can favor them. This liquid voting mechanism is illustrated below

Applications of Kleros: What are the types of disputes that can be resolved through Kleros?

Kleros is not limited to some cases and thus makes use applicable to many cases. The image below shows different cases that can be employed the services of Kleros

_{Source: Kleros Webiste}

A Good use case of Kleros

Say we have an artist named Bob who sourced a job online from Alice at an agreed price and specified time. At the end of the agreed time, Bob delivers but Alice refuses to pay due to the fact that she feels the work wasn't well done. Bob who had received only a quarter of the payment will be left without option but to agree to Alice condition.

But because there is a pre-agreement that the issue would be submitted to Kleros is an issue arises, Bob was able to have the case reviewed. So, with the help of Jurors, Alice will either be compelled to pay Bob in full or give him an extension to redesign the work hence helping them to resolve the dispute with fairness.

Below is an image that shows that Kleros works and gives us an idea of how it can be applied: