Kleros (PNK) is a decentralized arbitration platform that uses crowdsourced jurors and smart contracts to resolve disputes efficiently and transparently.

In today’s digital times, the need for a reliable, impartial, and decentralized dispute resolution system is more critical than ever. By leveraging smart contracts, disputes can be resolved efficiently without relying on traditional legal systems. This innovative approach ensures transparency, reduces costs, and speeds up the resolution process, making it ideal for the fast-paced world of blockchain and decentralized applications. Kleros stands at the forefront of this movement, providing a robust and decentralized protocol for resolving disputes fairly and efficiently within the crypto ecosystem.

What is Kleros (PNK)?

Kleros (PNK) is a decentralized dispute resolution project launched in July 2018. It is an open-source online dispute resolution protocol that uses blockchain and crowdsourcing to adjudicate disputes fairly. Founded by Federico Ast, Clément Lesaege, and Nicolas Wagner, Kleros acts as a middleman service for decentralized applications (DApps) and their users, providing a trustless third-party payment service when services are in dispute.

Source: kleros.io

Kleros was conceptualized as Coopérative Kleros in 2017 in France. Its foundation is inspired by the ancient Greek democratic method of kleroterion, a system used to randomly select decision-makers. By leveraging the Ethereum blockchain and smart contracts, Kleros ensures fast, cost-effective, and reliable dispute resolution for all types of contracts.

In July 2018, Kleros released its Court Core Protocol on the Ethereum mainnet, starting with the Doges on Trial experiment. Since then, the protocol has undergone significant updates, such as the Athena release, to improve usability and decentralized governance. Key milestones include the implementation of the Kleros governor contract for on-chain governance in Q4 2019, support for multiple tokens and non-binary decisions in Q2 2020, and the development of inter-chain compatibility by Q1 2021.

Kleros has also launched several DApps, including a Token Curated Registry in March 2019, an Escrow DApp in April 2019, and an Oracle use case in May 2019. Each DApp integrates Kleros’s dispute resolution capabilities, allowing users to resolve disputes efficiently.

Today, Kleros continues to expand its ecosystem, fostering adoption, integrating new partners, and building technical capabilities to revolutionize decentralized justice.

How Does Kleros Work? Resolution Protocol and Proof of Humanity

Kleros is a decentralized dispute resolution protocol implemented on the Ethereum blockchain. It serves as a decentralized third party, providing decisions on disputes by applying a set of rules to various questions, ranging from simple to complex. Using game-theoretic incentives, Kleros enables crowdsourced jurors to analyze and rule on cases accurately, offering judgments that are inexpensive, reliable, fast, and decentralized. This makes Kleros particularly useful in creating a form of decentralized justice.

The core of the Kleros Dispute Resolution Protocol is the Kleros Court. It is designed to provide arbitration for subjective conflicts that smart contracts cannot resolve. When a dispute arises, decentralized applications (dApps) send the case to the Kleros Court, where a set of jurors is randomly drawn to vote on the outcome. The process begins with the evidence submission period, during which all interested parties, including disputing parties, jurors, challengers, and any external agents, can submit their evidence.

After the evidence period, jurors vote on the case. The options available to them are typically Yes, No, or Refuse to Arbitrate. The third option is used for invalid submissions, illegal, or morally unacceptable content. Jurors’ votes are committed and then revealed in a secure manner, ensuring that the voting process remains unbiased and fair. Each dispute can go through several stages: evidence submission, vote commitment, vote revelation, and appeal if necessary. The final ruling is executed, and tokens are redistributed accordingly.

Kleros Court operates through a hierarchical system of courts and sub-courts, each specialized in different areas like software development, insurance, and more. This specialization ensures that the jurors chosen have the relevant expertise to make informed decisions. The selection of jurors is done through a random process, with the probability of being drawn as a juror proportional to the amount of staked Pinakion (PNK) tokens. This staking mechanism prevents sybil attacks and incentivizes jurors to vote honestly.

Jurors who vote in line with the final ruling are rewarded with arbitration fees, while those who vote incoherently are penalized. This ensures that jurors have a strong incentive to evaluate evidence thoroughly and vote accurately. If a party is dissatisfied with the ruling, they can appeal, which involves additional jurors and higher arbitration fees, making the process increasingly expensive and thereby discouraging frivolous appeals.

Kleros uses a token-based system to maintain fairness and incentivize participation. The Pinakion (PNK) token is central to this system, serving as a means for jurors to self-select and increase their chances of being drawn. PNK tokens also is a safeguard against malicious activities, as only those who stake PNK can be selected, ensuring that participants have a vested interest in maintaining the protocol’s integrity.

The Kleros protocol ensures a fair and decentralized dispute resolution mechanism, fostering trust and reliability in decentralized applications. This protocol serves as the foundation for various services offered by Kleros, including arbitration, escrow, and data curation. Kleros has integrated with multiple decentralized platforms and continues to expand its reach, offering a robust and scalable solution for dispute resolution in the decentralized ecosystem.

Source: docs.kleros.io

Next, we will explore the concept of Proof of Humanity, an innovative system that further enhances Kleros’ offerings by providing a verified identity layer to ensure participants’ authenticity and uniqueness. This system aims to prevent fraud and bolster the trustworthiness of interactions within the Kleros ecosystem.

Proof of Humanity

Proof of Humanity is a revolutionary system that combines social verification with video submission to create a Sybil-proof list of real humans. This decentralized approach addresses the growing need for authentic human verification in the digital age. By integrating webs of trust, reverse Turing tests, and dispute resolution, Proof of Humanity ensures a robust and economically incentivized method to verify unique human identities.

The primary function of Proof of Humanity is to provide a reliable and decentralized identity verification system. Users who wish to be included in the registry must create a profile and submit information about themselves for verification. This information typically includes a video submission and other personal details. Existing members in the registry can vouch for new applicants, guaranteeing their authenticity and confirming that they are not duplicates. This vouching process helps build a trusted network of verified humans.

One of the key features of Proof of Humanity is its challenge mechanism. If a suspicious submission is detected, any member can challenge it. These challenges are resolved through a dispute resolution system, such as Kleros, which adheres to the ERC792 standard. This process ensures that only genuine and unique human identities are included in the registry, maintaining its integrity and reliability.

Proof of Humanity unlocks numerous possibilities for various applications that require Sybil-resistance. For instance, it can be used in Human DAOs (Decentralized Autonomous Organizations) to ensure that all participants are real individuals, thus fostering trust and transparency. Quadratic funding projects can benefit from fair fund distribution, as Proof of Humanity ensures that unique individuals can participate. It can also be used for certifications, social key recovery, self-sovereign identities, credit scoring, fair airdrops, and antispam tools.

The Proof of Humanity system stands out from other verification methods due to its decentralized nature, resistance to AI manipulation, and economic incentives for participation. While digital government IDs are simple and scalable, they are vulnerable to duplication or censorship by rogue nation-states. Though decentralized, Reverse Turing tests and social graph analysis have their own complexities and vulnerabilities to AI advancements. Despite being more complex, Proof of Humanity offers a more secure and reliable solution.

In the future, adding privacy layers to Proof of Humanity will enhance its capabilities even further. By incorporating technologies like traceable ring signatures and zero-knowledge proofs, it will be possible to create anonymous yet Sybil-resistant identities. This would allow individuals to prove their humanity without revealing personal details, enabling privacy-preserving KYC and reputation scoring.

Source: proofofhumanity.id

In conclusion, Proof of Humanity is a groundbreaking system that provides a decentralized, secure, and economically incentivized method of human verification. It not only addresses current identity verification challenges but also opens up a wide array of applications, paving the way for a more trusted and transparent digital ecosystem.

Kleros Use Cases

As the economy becomes global and digital, disputes arise in many areas that cannot be solved by courts or traditional arbitration systems. Kleros can solve them in a fast, affordable, and secure way.

• Escrow: Kleros provides a trustless dispute resolution mechanism for online transactions. Whether freelancing, domain name transfers, e-commerce, or payroll, Kleros Escrow ensures secure and transparent transactions. Users can confidently engage in P2P transactions, knowing disputes will be resolved fairly by Kleros Court, enhancing trust in online commerce.
• Governance: Kleros streamlines and secures DAO governance as a Supreme Court for decentralized organizations. It ensures that decisions align with the DAO’s constitution, protecting against mistakes and attacks. By enabling optimistic decision-making and trustless on-chain execution, Kleros accelerates decision-making processes while safeguarding the integrity of the DAO’s operations.
• Curation: Kleros empowers communities to curate information, whether for token listings, marketplace items, or social media content moderation. By integrating Kleros, communities can make fair and transparent decisions, adhering to predefined guidelines. This decentralizes the curation process, ensuring that lists are maintained in a way that reflects the community’s standards and interests.
• Oracle: Kleros enables products to verify event outcomes on-chain, bridging the gap between the physical and digital worlds. It efficiently resolves questions through a bond escalation mechanism and handles subjective outcomes with fair arbitration. This is crucial for applications like prediction markets, social betting, and gaming, where accurate and trusted event verification is essential.
• DApps: Kleros is utilized by prominent platforms like CoW Swap and 1inch. CoW Swap, built on CoW Protocol, enables gasless token transactions with MEV protection. 1inch aggregates decentralized exchanges, optimizing trades for the best rates and minimizing slippage.

In conclusion, Kleros provides versatile and efficient dispute-resolution solutions for various sectors, enhancing trust and security in the digital economy. While escrow, governance, curation, and oracles are notable examples, Kleros’s applications extend far beyond these, addressing a wide range of disputes in a decentralized and fair manner.

What is the PNK Coin?

PNK is Kleros’ native token, used for staking, juror selection, and incentivizing fair dispute resolution. Its total supply is 776,626,704 units, all of which are already in circulation (June 2024).

The PNK token is central to the Kleros platform, vital to its decentralized dispute-resolution mechanism. It was inspired by “Pinakion,” the tokens used in Ancient Athens to draw trial jurors. PNK tokens serve multiple purposes within Kleros, including jury selection, juror incentives, and governance.

To become a juror in the Kleros court system, users must stake PNK tokens. The more PNK tokens a user stakes, the higher their chances of being selected as a juror. This staking mechanism ensures jurors are vested in the platform’s integrity, as they risk losing their staked tokens if they vote dishonestly. Jurors are compensated with PNK tokens for their service, which provides an economic incentive to participate and contribute accurately to dispute resolutions.

Moreover, PNK tokens are integral to Kleros’ defense against Sybil attacks, where an attacker could flood the juror pool with fake identities to manipulate outcomes. By requiring users to stake PNK tokens, the platform makes it economically challenging for any attacker to control the jury selection process. This mechanism ensures that only genuine, economically invested participants can become jurors, thus maintaining the system’s trustworthiness.

In addition to jury selection and incentives, PNK tokens are also used to govern the Kleros platform. Token holders can vote on key decisions, such as the introduction of new features, changes to the platform’s rules, and creating new subcourts. This decentralized governance model empowers the community to have a direct say in the platform’s development and ensures that it evolves according to the users’ needs and preferences.

PNK tokens are available for purchase on various decentralized exchanges, including Uniswap and Sushiswap, as well as on centralized exchanges like Bitfinex and Gate.io. The total supply of PNK is capped, and any changes to this supply must be approved through the platform’s DAO governance structure.

The token distribution for Kleros (PNK) outlines that 16% was sold in the first token sale, 15% will be sold in a second sale, 35% is reserved for future sales and juror incentives, 12% is held in a cooperative reserve, 4% allocated for airdrop, and 18% for team and initial funding.

Source: blog.kleros.io

The PNK token is essential to the functioning of Kleros. It provides the economic incentives for jurors, safeguards the platform against attacks, and enables community-driven governance. This multifaceted utility makes PNK a cornerstone of Kleros’ mission to deliver decentralized, fair, and efficient dispute resolution.

Kleros Main Features

Kleros offers a range of innovative tools designed to enhance trust and security within the decentralized ecosystem. These features provide various functionalities, from contract insights to decentralized governance, ensuring efficient and reliable operations across multiple domains.

Kleros Scout

Kleros Scout pulls contract metadata from Kleros’s decentralized token curated registries, providing vital insights into the contracts users interact with. This Metamask Snap add-on enables users to identify safe tokens, suspicious addresses, and correctly mapped contract domains. By leveraging community-curated registries, Kleros Scout enhances user confidence and security in their transactions, mitigating risks associated with malicious or insecure contracts. Users can also earn rewards for valid submissions to these registries, promoting a collaborative and trustless ecosystem.

Source: kleros.io

Oracle

Kleros Oracle, in collaboration with Reality.eth, combines a dispute resolution system with a cryptoeconomic mechanism for verifying real-world events on-chain. This crowd-sourced oracle can answer any question with a publicly verifiable answer, utilizing a bond escalation mechanism to ensure accuracy. If disputes arise, Kleros acts as the final arbitrator, confirming or correcting answers. This system allows dApps and individuals to quickly and reliably obtain answers to various queries, enhancing the functionality and trustworthiness of decentralized applications.

Source: kleros.io

Governance

The Kleros Protocol operates through a decentralized governance process, empowering PNK token holders to propose and vote on changes. This system involves creating Kleros Improvement Proposals (KIPs), receiving community feedback, and voting on proposals via Kleros Snapshot. Accepted proposals are implemented by the Kleros Governor, ensuring the protocol evolves according to community consensus. This participatory model fosters a democratic and transparent environment, where users collectively shape the future of Kleros.

Source: kleros.io

Incentive System

Jurors in Kleros are incentivized to vote honestly through a system that rewards coherence with arbitration fees and redistributes tokens from incoherent jurors. After disputes are resolved, coherent jurors receive fees and additional tokens, while incoherent jurors lose their stakes. This mechanism, inspired by SchellingCoin, ensures fair and honest rulings, with penalties for non-revealed votes to maintain integrity. The system promotes reliable dispute resolution by aligning juror incentives with accurate and fair outcomes.

In conclusion, Kleros’s innovative features offer robust solutions for contract insights, decentralized oracles, governance, and incentivized dispute resolution. These tools enhance trust, security, and efficiency in the digital economy, addressing various challenges across multiple sectors.

Source: kleros whitepaper

Is PNK a Good Investment?

PNK, the token for Kleros, supports a unique and innovative decentralized dispute resolution system. This intriguing concept has applications in various sectors, such as e-commerce, freelancing, and insurance, providing quick and fair resolutions. However, the need for a dedicated blockchain solely for this purpose is debatable. Similar functionalities can be integrated into more established and versatile blockchains like Ethereum. While Kleros presents an exciting use case, its long-term viability may depend on broader adoption and integration within the larger blockchain ecosystem.

How to Own PNK?

To own PNK, you can use the services of a centralized crypto exchange. Start by creating a Gate.io account, and get it verified and funded. Then you are ready to go through the steps to buy PNK.

News on Kleros

As announced by the Kleros team in early 2024, Harmony, the Kleros Mediator Bot, has been launched, combining OpenAI’s GPT-4 with Kleros’ Mediation Bridge principles. Designed to revolutionize dispute resolution, Harmony facilitates constructive dialogue, guides parties through mediation, and transitions cases to the Kleros platform for transparent resolutions. This innovative AI tool introduces a structured mediation process, enhancing efficiency and fairness. With voice interaction capabilities and seamless human mediator integration, Harmony offers a versatile, cost-effective solution for various disputes, marking a significant advancement in the field.

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