Draft:Kleros

Kleros is a dispute resolution software, built on the Ethereum blockchain, founded in 2017 by Argentinian entrepreneur Federico Ast and French computer scientists Clément Lesaege and Nicolas Wagner, pioneering the field of decentralized justice. Kleros is a dispute resolution software, built on the Ethereum blockchain, founded in 2017 by Argentinian entrepreneur Federico Ast and French computer scientists Clément Lesaege and Nicolas Wagner, pioneering the field of decentralized justice..

Background
The founding team met after Lesaege and Wagner presented a concept of a decentralized court system at a hackathon in France. Susanne Tarkowski Tempelhof, founder of Bitnation and one of the jurors of the hackathon, introduced Lesaege and Wagner to Ast, who had previously done extensive research on the matter and developed the concept of crowdjury while he was doing his PhD in Argentina. The emergence of crowdsourcing in dispute resolution had already been observed in 2011 by van den Herik and Dimov in ODR s developed for e-commerce.Jaap van den Herik and Daniel Dimov.

The original name of the project was Kleroterion, in reference to the randomization device used in Ancient Athens for drawing jurors in popular trials. The project name was afterward changed to Kleros (randomness, in Greek) for simplicity.

Technology
Kleros has a native token, Pinakion (PNK), the name of which originated from the Ancient Greek pinakion: a metal plate that identified jurors once they were randomly chosen in the Kleroterion. Kleros uses smart contracts to create a decentralized dispute resolution mechanism based on game theoretical economic incentives—allowing crowdsourced juries to resolve any disputes that arise from these contracts.

The main innovation in Kleros is the use of focal points, as proposed by Nobel prize laureate Thomas Schelling, in the context of dispute resolution. Some previous work had been done by Paul Sztork in TruthCoin and Vitalik Buterin’s SchellingCoin.

The use of a cryptographic token, PNK in Kleros’ case, provides three key functions: protection against a Sybil attack, incentives jurors to vote honestly in their ruling, and allowing a fork in the case of a 51% attack on the network. Requiring jurors to stake PNK, as opposed to random juror selection, prevents a malicious attack on the network. In order for a malicious party to succeed in being chosen more than other jurors, they would need to have a significant amount of PNK—thus nullifying any benefit they may get from attacking the network.

History
In May 2018, Kleros was selected to join the Thomson Reuters Incubator program—the newly available resources helped Kleros further progress the idea of “democratizing access to justice.” Kleros’ token was initially distributed to the community in July 2018. That same month, the first version of Kleros was launched on the Ethereum mainnet with an experiment named Doges on Trial, aiming to test the concept of decentralized list curation. The experiment allowed users to curate items on lists themselves, in this case, doge memes, instead of centralized entities, such as moderators.

In 2019, Kleros launched their Token Curated List, a decentralized curated list of tokens. The idea of decentralized curated lists was expanded in June 2020 with the release of Kleros Curate. Within the lists created on Curate, users act as their own moderators. Users are incentivized to flag content irrelevant to the list on a monetary incentive basis.

In May 2019, Kleros developed Escrow, a decentralized platform utilizing crowdsourced jurors to act as an arbitrator for transactional disputes. The intent behind Escrow was to provide a low-cost decentralized justice service that did not have the traditional buyer/seller bias that many ODR platforms have.

Built on the mechanism design of their original curation product, Kleros launched a project called Proof of Humanity in 2020, one of the first blockchain-based decentralized identity protocols with an integrated UBI component.

In November 2020, Kleros was recognized by a Mexican civil court as a valid dispute resolution mechanism in the case of a rental dispute, marking the first time a blockchain-based entity was accepted as a valid dispute resolution system in a civil court.

Academic Conferences

 * University of Leicester Law School
 * SIAA Inaugural Arbitration & Technology Conference, Stanford Law School
 * DAO Harvard Conference, Belford Center, Kennedy School of Government

Kleros is currently in collaboration with multiple intergovernmental and international organizations, such as the United Nations and WIPO

Criticism
Kleros has resolved over 1500 cases by 2023; however, it is still considered experimental technology. Critics point out downsides to using a cryptographic token to incentivize users, particularly the onboarding time from fiat to cryptocurrency, which can be challenging for the average user, especially if the coin is not readily available.

There is also a challenge to ensure arbitrators use the same set of rules to evaluate and settle disputes. Critics suggest adopting an international model of laws and enforcement mechanisms to ensure an even playing field across blockchain-based dispute resolution services. As of now, no model has been implemented across BDR services.

Skeptics raise concerns about the possibility of jurors voting with the majority, potentially disregarding the fair outcome. This concern arises from a possible 'wrong' natural Schelling point of the case. There is criticism of the underlying Schelling points on which the system was built, as jurors are incentivized economically if they vote coherently with the majority. According to this criticism, distortions may arise between choices made based on economic incentives and judgments made based on morals.