Abstract
“Whoever controls the courts, controls the state”. Aristotle.
The world is experiencing an accelerated pace of globalization and digitalization. An exponentially growing number of transactions are being conducted online between people across jurisdictional boundaries. If the blockchain promise comes to a reality, in a not so distant future, most goods, labor and capital will be allocated through decentralized global platforms. Disputes will certainly arise. Users of decentralized eBay will claim that sellers failed to send the goods as specified in the agreement, guests in decentralized Airbnb will claim that the rented house was not “as shown in the pictures” and backers in a crowdfunding platform will claim a refund as teams fail to deliver the promised results.
Smart contracts are smart enough to automatically execute as programmed, but not to render subjective judgments or to include elements from outside the blockchain. Existing dispute resolution technologies are too slow, too expensive and too unreliable for a decentralized global economy operating in real time. A fast, inexpensive, transparent, reliable and decentralized dispute resolution mechanism that renders ultimate judgments about the enforceability of smart contracts is a key institution for the blockchain era.
Kleros is a decision protocol for a multipurpose court system able to solve every kind of dispute.
It is an Ethereum autonomous organization that works as a decentralized third party to arbitrate disputes in every kind of contract, from very simple to highly complex ones. Every step of the arbitration process (securing evidence, selecting jurors, etc.) is fully automated. Kleros does not rely on the honesty of a few individuals but on game-theoretical economic incentives.
It is based on a fundamental insight from legal epistemology: a court is an epistemic engine, a tool for ferreting out the truth about events from a confusing array of clues. An agent (jury) follows a procedure where an input (evidence) is used to produce an output (decision) (15). Kleros leverages the technologies of crowdsourcing, blockchain and game theory to develop a justice system that produces true decisions in a secure and inexpensive way.
Kleros whitepaper
