“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
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.