Kleros

Kleros, a decentralized dispute resolution protocol, was founded in 2017 by Clément and Susanne, pioneers in decentralized governance. The project aimed to create a critical dispute resolution layer that would work across all of Web3, solving claims arising from subjectivity. This vision was to provide "justice as a service" for the decentralized internet, allowing any decentralized application (dapp) to "plug in" and send cases for transparent decision-making.

In July 2018, Kleros conducted a public token sale using the Interactive Coin Offering mechanism suggested by Vitalik Buterin. This marked the beginning of the Kleros token, PNK. The first version of Kleros launched on the Ethereum mainnet in July 2018 with a pilot called "Doges on Trial," which implemented the "decentralized sheriff mechanism." This allowed users to challenge non-compliant submissions, which would then go to dispute resolution in Kleros.

In March 2019, the Kleros Athena release was launched, significantly improving user friendliness and ease of integration. This version, known as Kleros V1, was built with the tools and infrastructure available in the nascent Ethereum ecosystem. However, it had limitations such as high gas fees for lower-value claims and a lack of an on-chain identity system.

Kleros continued to evolve, with a focus on research in cryptoeconomics to make the platform more efficient, secure, and flexible. This included implementing ideas from social choice theory, mechanisms to improve the flow of information, and more efficient methods for defining court parameters. The research program was directed by William George.

In 2023, Kleros 2.0 was launched, addressing the limitations of the previous version. This new version made it easier to coordinate and execute forks, reducing the payoffs of attacks on disputes or the platform. Kleros 2.0 also introduced cross-chain functionality, expanding its reach beyond Ethereum L1.

Throughout its history, Kleros has been driven by the vision of decentralized justice, using blockchain technology to support arbitration mechanisms and relying on anonymous, economically incentivized juries. The project has grown significantly, with its business model based on the tokenization of its crowd-sourced decision-making platform. The value of the PNK token is tied to the attractiveness and competitiveness of the dispute resolution platform, which generates a significant caseload and encourages participation from PNK holders.

Kleros (PNK) is a decentralized arbitration service that uses blockchain technology to resolve disputes in the new economy. Here's how it works:

PNK is an ERC-20 token based on Ethereum, with a fixed supply of 1 billion units. It is a utility token that cannot be replaced by ether. The token plays a crucial role in the Kleros ecosystem, serving multiple purposes:

1. Staking and Juror Selection: PNK is used to stake and participate in the juror selection process. Users who stake PNK have a chance to be selected as jurors in disputes, with the probability of selection proportional to the amount of tokens staked. This ensures that only active and committed users are chosen as jurors.

2. Governance and Voting: PNK holders have voting rights in governance decisions, allowing them to participate in shaping the direction of the Kleros platform.

3. Protection Against Sybil Attacks: The use of PNK as a native token helps protect against Sybil attacks, where malicious parties create multiple addresses to manipulate the system. An attacker would need to acquire a significant portion of the total PNK tokens to successfully execute such an attack.

Here's how the dispute resolution process works on Kleros:

1. Dispute Registration: Parties to a dispute can unilaterally apply for arbitration via Kleros.

2. Juror Selection: Jurors are selected from among PNK token holders who have staked their tokens in the relevant court. The selection is random, with the probability of selection based on the amount of tokens staked.

3. Arbitration Fees: Arbitration fees are paid in ETH and are distributed to all arbitrators. Jurors who make a minority decision lose part of their staked PNK tokens, which are then redistributed to the majority jurors.

4. Appeal Procedure: An appeal procedure is also available, which involves additional fees.

Kleros offers economic incentives to PNK holders to participate in the system:

1. Arbitration Fees: Jurors earn ETH fees for their work in resolving disputes.

2. Token Appreciation: As the Kleros platform grows and more disputes are resolved, the demand for PNK tokens increases, potentially leading to appreciation in their value.

In the event of a successful 51% attack, Kleros has a fallback defense mechanism. The community can fork the system, removing the attacker's holdings and creating a new version of PNK. This allows the community to recover from the attack and maintain the integrity of the platform.

Overall, Kleros (PNK) provides a decentralized and trustless dispute resolution service, leveraging blockchain technology and economic incentives to ensure fair and reliable arbitration.

The token Kleros (PNK) has several strengths that contribute to its potential success:

1. Decentralized Dispute Resolution: Kleros offers a blockchain-based, decentralized arbitration system, providing fast, secure, and affordable dispute resolution for various applications. This unique service can attract a wide range of users, including decentralized applications (DApps) and traditional businesses.

2. Utility Token: The PNK token is an ERC-20 utility token with a fixed supply of 1 billion units. It serves multiple purposes, including protecting the system against malicious actors, incentivizing jurors to adjudicate disputes honestly, and facilitating platform governance through voting.

3. Economic Incentives: The token's design includes economic incentives for owners to participate in the arbitration process. Jurors can earn arbitration fees in ETH by making decisions, and those who make minority decisions lose part of their PNK tokens, which are then distributed to the majority jurors. This mechanism encourages honest and active participation.

4. Technical Expertise: The Kleros team has demonstrated high technical skills, which is essential for the development and maintenance of a complex decentralized system. This expertise helps build trust in the project's ability to deliver on its promises.

5. Community Engagement: Kleros has conducted various experiments and community experiences, such as the Doge List, to test its decentralized dispute resolution layer. These initiatives help build a community around the project and provide valuable feedback for improvement.

6. Partnerships and Adoption: Kleros has established partnerships with other projects, such as Ethfinex, DeversiFi, and Gnosis DutchX, which can increase its adoption and expand its user base.

These strengths position Kleros as a promising project in the decentralized dispute resolution space, with a unique value proposition and a well-designed token economy.

Kleros (PNK) is considered a high-risk investment with a high potential reward. The financial risks associated with Kleros include:

1. Volatility: The value of PNK tokens can fluctuate significantly, making it a high-risk investment. The token's price has varied from $0.006 to $0.4849 in the past, indicating significant price swings.

2. Gas Fees: Kleros operates on the Ethereum blockchain, and high gas fees can make it expensive for users to interact with the platform. This can lead to reduced usage and negatively impact the token's value.

3. 51% Attack Risk: The risk of an attacker acquiring 51% or more of the PNK tokens is a significant threat to the platform's viability. If such an attack were to occur, it could compromise the integrity of the decentralized dispute resolution system.

4. No Burn Mechanism or Dividend: Unlike some other tokens, PNK does not have a mechanism to reduce the supply of tokens or distribute dividends to holders. This can make it difficult to maintain the token's value over time.

5. Dependence on Ethereum: As Kleros is built on the Ethereum blockchain, any issues or limitations with Ethereum, such as high gas fees, can affect the performance and adoption of Kleros.

6. Market Adoption: The success of Kleros depends on its ability to attract users and gain traction in the market. If the platform fails to gain significant adoption, the value of PNK tokens could decline.

Overall, investors should be aware of these financial risks and consider them carefully before investing in Kleros (PNK).

• Federico Ast: President of Kleros, involved in the project since its inception and has been instrumental in shaping its vision and direction.
• Clément Lesaege: Co-founder of Kleros, worked with Federico Ast to develop the project, and has been involved in its early stages.
• William George: Research director at Kleros, responsible for leading the research program in cryptoeconomics to improve the efficiency, security, and flexibility of the platform.