Ulex Applications: Kleros (Part 2)

Why does an arbitration network need a token?

Kleros is a blockchain-based, crowdsourced dispute resolution platform. An essential part of the mechanism design is the native Pinakion token (PNK).

The name of the token has something to do with the judicial process of ancient Greece. A Pinakion was a bronze plate on which the names of citizens were written. These plates were randomized and citizens were arbitrarily chosen for jury duty and similar civil service roles.

Kleros arbitrates disputes through Jury: they can number as few as 3 persons, who provide a initial dispute ruling. If one of the parties appeals the ruling, the jury numbers more members in each subsequent round.

Holding PNK enables one to serve as a juror — holders can select a “court” that they will serve in until they choose to serve on a different court by placing their PNK in a different court.

Kleros uses a token architecture to combat Sybil attacks. In order for an attacker to flood the juror pool, they need to buy enough PNK so that they are selected enough times to be a juror for the same case in order to change the outcome. Generally, this means that the attacker needs 51% of the total tokens. Even if the attacker succeeds, the rest of the blockchain can fork away from the chain.

PNK isn’t used as a currency (though it can be bought and sold), and is not used to purchase arbitration services on the Kleros network, nor is it fungible: one cannot split a PNK into smaller units.

The lawless problem

Kleros sounds like the perfect system of dispute resolution for cases where start-ups half-way across the world are trying to solve disputes with small amounts on the line, where neither traditional courts, arbitration firms, or online dispute resolution quite cut it. What’s necessary is a system of on-demand jurors and decision, and Kleros seems to deliver.

However, even the Kleros whitepaper does not specify whether which body of common or civil law is to be applied — juries can decide one way in one case and then another jury will decide a different way in a subsequent case with the same circumstances.

This is an ex-post-facto way of thinking about law: whatever the jury decided ends up being correct. Even though this allows for jury nullification (an instrumental aspect of western judicial systems), the jury must have a body of law to nullify — merely accepting the decision of the jury in the aftermath of a proceeding is not good adjudication.

Codifying the common law

This is where Ulex as a codification can be used. Jurors needn’t heed the specifications contained within Ulex, but allowing the jurors free reign in deciding without a reference to common law may lead to an ad-hoc dispute resolution system which fewer will be wont to adopt due to its inherent unpredictability.

If I don’t know how cases similar to mine were decided in the past, I won’t file it.

The Ulex system is one of constant evolution, but previous decisions are almost never overthrown in the common law. This provides the right balance of stability and growth that allows for wider adoption among the skittish, and potential growth for the dreamers.

Kleros can do its task effectively, but adopting a non-binding repository of the common law may serve to deliver justice quicker and with more clarity.

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