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2 Previous Work: SchellingCoin mechanism
Game theorist Thomas Schelling developed the concept of Schelling Point (also known as Focal Points)
(18) as a solution that people tend to use to coordinate their behavior in the absence of communication,
because it seems natural or relevant to them. Schelling illustrated the concept with the following
example: “Tomorrow you have to meet a stranger in NYC. Where and when do you meet him?”.
While any place and time in the city could be a solution, the most common answer is ”noon at the
information booth at Grand Central Terminal”. There is nothing that makes noon at Grand Central
Terminal a location with a higher payoﬀ (any other place and time would be good, provided that both
agents coordinate there), but its tradition as a meeting place makes it a natural focal point.
Schelling points typically arise when communication is impossible, but also when, while commu-
nication is possible, no party can provide the other with a reason to believe that what he says is ...
What if the contract had a clause stating that, should a dispute arise, it would be solved by a
Kleros court? Kleros is a decentralized application built on Ethereum. After Bob stops answering her
email, Alice taps a button that says “Send to Kleros” and ﬁlls a simple form explaining her claim.
Thousands of miles away, in Nairobi, Chief is a software developer. In his “dead time” on the bus
commuting to his job, he is checking Kleros website to ﬁnd some arbitration work. He makes a couple
thousand dollars a year on the side of his primary job by serving as a juror in software development
disputes between freelancers and their clients. He usually rules cases in the Website Quality subcourt.
their customers. Chief deposits 2 pinakion, the token used by Kleros to select jurors for disputes. The
more tokens he deposits, the more likely is that he will be selected as juror.
About an hour later, an email...
4.1.1 Options for jurors
Contracts will specify the options available for jurors to vote. In the introductory example, options
may be: “Reimburse Alice”, “Give Bob one extra week to ﬁnish the website” and “Pay Bob”.
The smart contract will also specify the behavior of the contract after the ruling is done. In the
“Reimburse Alice” transfers funds to Alice’s address.
“Give Bob one extra week to ﬁnish the website” blocks new disputes for one week and removes
this option from further dispute.
“Pay Bob” transfers funds to Bob’s address.
Solving disputes may require parties to disclose privileged information with jurors. In order to prevent
outside observers from accessing this information, the natural language contracts (English or other)
and the labels of the jurors voting options are not put on the blockchain. When the contract is
created, the creator submits hash
Second, pinakion provides jurors the incentive to vote honestly
by making incoherent jurors pay
part of their deposit to coherent ones.
4.2.2 Jury selection
After candidates have self-selected speciﬁc courts and deposited their tokens, the ﬁnal selection of
jurors is done randomly. The probability to be drawn as a juror is proportional to the amount of
deposited tokens. Theoretically, a candidate may be drawn more than once for a speciﬁc dispute
(but in practice it is unlikely). The amount of times a user is drawn for a dispute (called its weight)
determines the number of votes he will get in the dispute and the amount of tokens he will win or lose
during the token redistribution.
Imagine that 6 token owners signed up for the dispute and deposited 10,000 in total with the
Token Owner Activated Start End Weight
0 999 0
1500 1000 2499 1
500 2500 2999 1
3000 3000 5999 2
Random numbers are generated with sequential proof of work (10) using a scheme similar to Bu¨nz
et al. (11) adapted to also work for Proof-Of-Stake blockchains
: We start with seed=blockhash and let all parties input a value localRandom to
change the seed such that seed=hash(seed,localRandom). This allows any party to change the
seed. We want the seed to not be chosen by any one party. This way every party can change
the seed, but not choose it, because choosing a particular seedAttack would require the attacker
to determine localRandom such that hash(seed,localRandom)=seedAttack which is diﬃcult due
to the preimage resistance of cryptographic hash functions.
Computing the master random value
: Every party who has a stake in the random number
runs sequential proof of work on the seed. Starting with
seed, they compute
prevent the use of rainbow tables. The address is the Ethereum address of the juror, it is required
in order to make the commitment of each juror diﬀerent, thus preventing a juror from copying the
commitment of another. When the vote is over, they reveal
, and a Kleros smart contract
veriﬁes that it matches the commitment. Jurors failing to reveal their vote are penalized (see Incentive
After a juror has made a commitment, his vote cannot be changed. But it is still not visible to
other jurors or to the parties. This prevents the vote of a juror from inﬂuencing the vote of other
Jurors can still declare that they voted in a certain way, but they cannot provide other jurors a
reason to think that what they say is true. This is an important feature for the Schelling Point to
arise. If jurors knew the votes of others jurors, they could vote like them instead of voting for the
We let any party ab...
In appeals, both parties have to deposit the arbitration fees. The appellant also has to deposit
an extra stake proportional to the appeal fees which will be given to the party winning the
dispute. This way if a party makes frivolous appeals to harm the opposing party, the opposing
party will get a compensation for the time loss, while if the appeals are ﬁnally ruled to be legit,
the stake will be returned to the appellant
A discussion about the fee structure deﬁned by arbitrable smart contracts will be part of future
If, after the jury has reached a decision, a party is not satisﬁed (because it thinks the result was
unfair), it can appeal and have the dispute ruled again. Each new appeal instance will have twice the
previous number of jurors plus one. Due to the increased number of jurors, appeal fees must be paid
new amount jurors
fee per juror
fee already paid).
If a verd...
Figure 4: Token redistribution after the vote with seven jurors. Tokens are redistributed from jurors
who voted incoherently to jurors who voted coherently. Bob lost the dispute and pays the arbitration
fees. The other deposits are refunded.
revealing one’s vote is twice as large than the penalty for voting incoherently (2
This incentivizes jurors to always reveal their vote.
In case of appeal, the tokens are redistributed at each level according to the result of the ﬁnal
appeal. If at one level no one voted coherently, the tokens are given to the winning party.
When there is no attack, parties are incentivized to vote what they think, other parties think, other
parties think. . . is honest and fair. In Kleros, the Schelling Point is honesty and fairness. One could
argue that those decisions being subjective (for example, compared to a Schelling Coin mechanism
for a prediction market), no Schelling Point would arise. In (18), the ...
MVP of Kleros released on the test net
Start of the first pilot
Full version with real use cases
Release of version with miltiple subcourts