Table of Contents

🤔 What is Kleros ?

Kleros is a decentralized online justice platform. It connects users who need to resolve disputes with crowdsourced pool of judges who specialize in the particular field. It is fast, affordable and transparent way to resolve disputes globally.

It offers justice as a service(JaaS). Other crypto DApps can integrate Kleros to resolve disputes among their users.

💡 What is the role of PNK token ?

Pinakion(PNK) is the native token for Kleros. It is an ERC-20 token that has following use cases:

  • Staking: Judges stake PNK tokens to get selected to arbitrate the case. Their stake is slashed in case they do not give the correct judgment.
  • Governance: PNK token holders submit and vote on proposals to upgrade Kleros protocol. Each PNK token gives 1 vote to the holder.

📝 Origin

  • Kleros was founded by Federico Ast and Clement Lesaege in 2017 in Paris, France.
  • The team held ICO sale in July 2018 and Jan 2020 raising 2.5 million dollars.
  • Kleros was launched on Etherium mainnet on 31st July 2018.
  • The team decentralized the governance of Kleros protocol on 9 December 2020.

👴🏻 Founder

Federico Ast

  • Education:
    • Graduated from the University of Buenos Aires in philosophy and economics.
    • Earned Ph.D. in management from IAE Bussiness school in 2017.
  • Career:
    • He has worked in MATERIABIZ a digital media startup.
    • He also has experience working as freelance journalist and CEO of Houseboard.
    • He founded Kleros in May 2017 and is the current CEO.

Clement Lesaege

  • Education:
    • He did his engineering at the University of Technology of Compiègne(France).
    • Did master’s in computer science from the University of Technology of Compiègne(US).
  • Career:
    • He has experience working as smart contract freelancer.
    • He is co-founder Kleros and is the current CTO.

😌 What problems does it solve ?

  • The number of online disputes is increasing exponentially. The current judicial system does not have the resources, expertise and jurisdiction to solve these disputes.
  • People do not have the choice but to follow the law of the country they are born in. Whereas, Kleros is opt-in. Users decide in advance that they will resolve their disputes using Kleros.

Innocent women being punished for witchcraft in the 16th century 👇.

  • It takes a lot of money, energy and time to fight cases in the current judicial system.
  • The current system gives complete control of the judicial system in hands of few.
  • Kleros allows judges to choose their specialization. Judges have the option to pass on cases they are not confident in. Judges can choose any of the following specializations in Kleros:

* The list of specializations is growing.

  • The judges remain anonymous. This helps to avoid:
    • Chances of violence against judges.
    • Bribery.
  • Kleros protocol stores all records on a transparent blockchain. Unlike the traditional judicial system, which makes it impossible for the average person to access records.
  • Judges do not have skin in the game. They are paid monthly salaries. They do not face repercussions for wrong judgment and do not have any incentives for speedy and correct decisions.
  • Anyone can become a judge in Kleros ecosystem. A case can have judges from any place in the world. These judges will judge based on morality and not academic knowledge of a particular place.
  • Governments have to spend enormous amounts of funds on the judicial system( judges, courts, enforcement agencies) to make it run.
  • A person with talented lawyer has higher chance of winning. A lawyer with better track record also gets to charge higher fees. Justice should not depend on how an adept lawyer navigates a complex and corrupt judicial system.
  • There are many places where the judicial system is so corrupt that people have completely given up hope of justice. Image of people burning Supreme court in Venezuela 👇.

💡 Inspiration for Kleros

kleros is inspired by the democratic process of ancient Greece.

Every citizen had a unique “Pinakion” which represented their identity.

Citizens used to gather and put their “Pinakion” in a device called “Kleroterion”.

Kleroterion was a randomizing device that would select random Pinakions. Holders of these Pinakions were chosen for a limited time to become judges and magistrates.

The fundamental principle behind the process originates from the firm belief that “power corrupts.” For that reason, when the time came to choose people to be assigned to empowering positions, the ancient Athenians resorted to picking randomly by a lot. 

🤖 How does it work ?

Kleros is build on Etherium. It is justice as a service platform to be integrated by applications like eCommerce, insurance etc.

Wide range of apps in varied fields like insurance, eCommerce, freelancing, finance, escrow etc make use of Kleros.

How does the process work ?

  • Users create a smart contract to use Kleros in case of a dispute.
  • Kleros is used in case of a dispute.
  • Jurors are selected
  • Users submit evidence
  • Jurors study the evidence and cast their votes.
  • Jurors’ decision is enforced using a smart contract.
  • Stake of jurors who did not vote with the majority is distributed among the jurors who voted as per the consensus.
  • Looser can stake additional Kleros to appeal the decision. The number of jurors and additional stake is doubled every time the loser appeals.
  • The cost of appeal rises exponentially every time looser appeals. Eventually, the final decision is made and enforced using smart contracts.

Schelling point

Kleros assumes that most judges will cast their votes honestly is based on game theory concept called “shelling point”.

Schelling point is the solution that the people choose in absence of communication. 

For example, pick a square.

Most of you would have picked square number 2, which is a shelling point.

Similarly, judges vote honestly because they believe others will vote honestly, because they expect others to vote honestly and so on…In simple words, honesty is the Schelling point.

⚙️ Working Demo

Many apps use Kleros to resolve disputes.

How to become a juror:

🏛️ Governance model

The team decentralized the governance of Kleros protocol on 9 December 2020. PNK holders submit and vote on proposals. Only the proposals that get voted in are implemented.

😨 Competitors

  • Aragon court

🤑 How much money does _____ have for future development ?

  • The team held ICO sale in July 2018 and Jan 2020 raising 2.5 million dollars. They are planning to spend capital as follows:
  • The project has kept 12% of the supply as reserve for future development.
  • The project does not have any ongoing source revenue other than the money raised and reserves held.

👍 Tailwinds

  • Growth of e-commerce: online disputes will increase as more and more industries move their operations online.
  • First mover advantage: Kleros was the first decentralized justice as a service platform and does not have any significant competition.
  • Switching cost: judges would not migrate to another platform after spending considerable time and effort earning PNK tokens.
  • Network effects: quality of judgment will improve as more and more judges join the network. More apps will integrate Kleros as the project becomes more efficient. Price of PNK token will increase as the ecosystem grows, attracting more judges to join the network.

😨 Risks and challenges

  • Chances of being drafted as a judge depend on the number of PNK staked. Rich judges who can afford to buy a lot of PNK and those who joined early at a cheap price have a serious advantage.
  • Kleros is built on Etherium. This exposes Kleros to scalability issues and high gas fees. Users would not spend hundred dollars on gas fees to resolve issue with their 25$ online purchase. This limits the adoption and use-cases of  Kleros.
  • Kleros team holds sizable amount of funds. However, they do not have a profit model that generates revenue. Kleros is a long-term project whose growth can be affected by lack of funds.
  • One of the biggest threat to Kleros is from ‘AI Judges’. It is possible that AI turns out to be a better judge than humans.

💰 Tokenomics

There are  764,626,704 PNK tokens(max supply). Tokens have been distributed as follows:

Token Inflation

PNK token does not have any inflation because complete max supply is already in circulation.

Demand pressure

Token’s price increases due to demand pressure.

Demand pressure on PNK token will come from:

  • Judges: They will acquire PNK for staking.
  • Users: They need to stake PNK tokens to appeal the decision.
  • Governance: Users willing to take part in Kleros governance will also acquire PNK token.
  • Speculators: There will acquire tokens for price appreciation.

Market cap

Governments all over the world spend trillions of dollars of taxpayers’ money to run the judicial system. PNK token will be worth a lot more even if it replaces a part of the system.

🧐 Indicators to watch out for

  • Kleros YouTube channel is growing:
  • Kleros Twitter account is growing:
  • Number of disputes on Kleros is growing:

👋Final remarks

Bitcoin taught us that several anonymous computers, who do not even trust each other, can come to a consensus if incentives are correctly structured. Kleros extends this to human decision-making.

Most governments have outright banned cryptocurrencies. One cannot go to courts to resolve issues relating to cryptocurrencies. Kleros project is an attempt by the industry to regulate itself.

The team has a working project. All that remains is to scale the current ecosystem.