Kleros Information Thread

[Anonymous No.26621278]

This board has obviously experienced an influx of newfags and plebbbitors lately, and as a result a lot of you probably weren't around for the PNK crowdsale that happened a year ago, or the critical discussion and passionate shilling that accompanied it. Since then, PNK threads have been primarily devoted to memes. There's nothing wrong with that, since it helps filter out those too lazy to do their own research and entertains the community, but out of love for this board that has made me so much money I want to give even the dumbest and laziest of you a chance to make it by explaining what Kleros is and why it's so important.
Crypto is valuable because it eliminates the need to trust third parties. If you hold bitcoin, you can transfer millions of dollars across international borders without having to trust banks or governments. With Ethereum, you can program a financial transaction that is guaranteed to execute in a certain predictable way if given certain inputs without having to trust middlemen or regulators. But in the real world, most complex transactions—almost anything you'd actually write a contract for—depend on information that is not provided natively on the blockchain. That's where oracles come in.
An oracle is just a third-party that provides information to the blockchain. But remember, the whole point of crypto is to eliminate the need to trust third-parties, and a smart contract is only as trustless and secure and its weakest link. Say my friend Bob and I make a bet and I write a smart contract that is guaranteed to pay out if the Cubs win the World Series, and I trust my friend Bill to input the correct outcome onto the Ethereum network. Obviously, Bob and I might as well have just given our money to Bill for safekeeping in the first place; the overall level of trust has not been reduced. (continued)

[Anonymous No.26621361]

>>26621278
Designing an oracle that approaches the low level of trust required by the Ethereum network as a whole is known as the oracle problem, and a solution to this problem would be extremely valuable as it would allow crypto to swallow more and more of the existing economy.
ChainLink offers a partial solution. If all the parties to an agreement can agree on a trusted data feed (or a series of data feeds for additional security), Link can guarantee that that data feed will be faithfully transcribed on the blockchain. It's no longer necessary to trust an individual oracle or the company that hosts the oracle network since the network will automatically punish defectors. That's extremely valuable.
However, it also has obvious limitations. Most real-world contracts rely on information that is not publicly available from a trusted data feed. Even if there is a "trusted" data feed, it would be nice to have recourse if the feed provider makes a mistake. Finally, especially after the well-publicized DAO disaster, many conventional businesses are extremely wary of trusting smart contracts and would prefer to have some recourse if the code executes in some way that contradicts the actual terms of agreement.
Kleros can address all those remaining issues and finally solve the oracle problem for good. Using game theory, the Kleros team has designed a system where "jurors" have a financial stake in coming to a consensus that corresponds to whatever terms they are given on any dispute. There's a 45 page whitepaper that gets into the details of how this is actually guaranteed, but I'd prefer to explore some of the consequences. This technology is often mockingly described on /biz/ as an alternative to courts of law, but the potential applications are actually much broader than strict "dispute resolution." (continued)

[Anonymous No.26621442]

>>26621361
First some obvious applications: commissions and escrow. These are often described as areas where crypto might offer substantial advantages over conventional services, since freelancers are often fucked over and the court system is so slow and expensive, and yet crypto is very rarely actually used for these applications in the real world. Why is that? Well, commissions and escrow rely on data that is not usually publicly available from a trusted data feed. Let's say you commission someone to build you a deck. You write up a contract describing the terms of your agreement and a smart contract to hold the money until the work is completed. You take some pictures of the area where you want the deck built. A month later, the contractor claims the deck is completed and asks to be paid. However, you refuse to pay—maybe you claim the deck wasn't actually built, or he broke the agreement by using inferior wood or by putting the flooring in crooked. You and the contractor both had the opportunity to take lots of photos to support your arguments. This isn't a dispute Link can solve, but if you both agreed to appeal to Kleros you can make your arguments there and trust that the smart contract will execute correctly, with a fraction of the cost and trouble of small-claims court or a lawsuit. Kleros has already implemented a successful pilot for commissioned translations through a partnership with Linguo and released an escrow dapp for wider use.
Second a less obvious application: proof of humanity or credentials. Suppose you want to program a smart contract that pays out a fixed amount to any address that you can prove belongs to a distinct human being without duplicates. Or suppose you want to form a Kleros court where every potential juror is guaranteed to have a degree in international finance without compromising anonymity. (continued)

[Anonymous No.26621521]

>>26621442
There are actually many more situations where you might want to implement a sybil-resistant identity system online, prohibiting people from creating multiple accounts to vote, leave reviews, or receive rewards more than once. However, conventional solutions require trusting a central authority, which can bring its own problems and is often expensive to boot. Crowdsourcing the problem and incentivizing the discovery of fakes or duplicates offers a cheap and easy alternative. The team is working on this issue and expects to roll out a solid protocol later this year.
Finally an absolutely vital application if smart contracts are ever actually going to be used in business: decentralized insurance. Business want to eliminate their reliance on trust not because trust is bad but as part of a general reduction in risk. Unfortunately, even if smart contracts can reduce the need for trust, they can still be hacked or perform in unexpected ways, even if written by the most experienced programmers, and once they execute there's no going back. The DAO hack provides a prominent example. As such smart contracts remain unattractive, especially in established industries where CEOs tend to be risk-adverse and follow conventions in order to reduce their own culpability in failures. Here Kleros again provides a solution. Using Kleros, it is possible to design an insurance dapp that can be called if a smart contract acts contrary to a written contract. This should allow companies to increasingly take advantages of the speed, security, and trustlessness of smart contracts without taking on unchecked risks.
So far I have discussed the utility of a trustless dispute resolution mechanism strictly in relation to smart contracts, but "dispute resolution" broadly conceived underlies much of the internet. If Kleros can offer a cheaper, faster, and less trustful solution, it could be incorporated behind the scene in much of the technology you use every day. (continued)

[Anonymous No.26621595]

>>26621521
"Alternative dispute resolution" is not just used to settle contractual disputes before appealing to the law. It's used when you buy something on eBay and don't get what you ordered. It's used when you appeal a ban on Twitter. It's used when someone reports an ad on Facebook. It's used when a video gets demonitized on YouTube. It forms the primary task of customer service on and off line. Companies want to be seen as fair and trustworthy in order to elicit customer loyalty. However, conventional solutions to ADR are often frustrating and expensive. Many companies end up outsourcing these services to third parties in India as an alternative to hiring full time workers in the United States who would have to be paid at least minimum wage and receive a host of costly benefits. Unfortunately, this shoddy service, where the customer service reps often have no financial stake in the outcome, tends to produce customer dissatisfaction.
Kleros solves this problem through crowdsourcing. Think of it as the Uber or Airbnb of customer service. It eliminates all the costs of hiring full-time workers in the first world while incentivizing reps to judge fairly according to a predetermined standard and to stay within their area of expertise. If Kleros can actually succeed in providing a cheaper alternative in this sector, its potential is almost limitless.
Finally I encourage you to research the team. They're all smart idealists who really believe in the project and aren't after a quick pump. They've been a part of the crypto community for a long time and are close enough to Vitalik to get regular shoutouts. They are hosted by the Thomson Reuters Incubator and have received funding from the EU and Bpifrance(French national bank). And yet, Kleros is only #153 by market rank, with a market cap of only $73 million. There is almost no community on reddit or twitter. The potential for growth once normies catch wind of this is immense. (continued)

[Anonymous No.26621673]

>>26621595
Participating in Kleros is slow but somewhat rewarding even now. Almost half a million dollars in ETH has been paid out to jurors and there are plans to introduce a staking reward program in the next couple of months to incentivize further staking.
The main problem currently facing Kleros is scaling. Small transactions are too expensive on Ethereum to make many applications practical. If Ethereum can solve scaling, this project has a much better future. Its basic service is already totally functional, unlike, for example, Link's.
For further information, read some of the following:
Whitepaper, short:
https://kleros.io/static/whitepaper_en-8bd3a0480b45c39899787e17049ded26.pdf
Whitepaper, long:
https://kleros.io/whitepaper_long_en.pdf
Dispute Revolution: The Kleros Handbook of Decentralized Justice (461 page book, prologue written by Colin Rule, who built the dispute resolution systems at eBay and Paypal):
https://kleros.io/en/book/
Blog:
https://blog.kleros.io
Forum:
https://forum.kleros.io
Activity Stats:
http://klerosboard.com
The Subjectivity Problem (article):
https://medium.com/the-definancier/the-subjectivity-problem-39bdd2704cb3
Why Do I Own An Irresponsible Amount Of Kleros's Pinakion (PNK)? (article):
https://www.publish0x.com/lankyashaman/why-do-i-own-an-irresponsible-amount-of-kleross-pinakion-pnk-xjgrjx
If you have any further questions, feel free to ask away and I will attempt to answer them to the best of my ability.