The rise of globalization and the digital economy as a result of the connectivity offered by the internet has created an entirely new digital realm that has surpassed modern geopolitical jurisdictions.
Kleros, is a decentralized application built on Ethereum, aims to provide the solution to the inevitable controversies that will arise in this global digital medium by harnessing the power of blockchain and the mechanics of game theory.
This guide will teach you how and where to buy the Kleros PNK token and will also provide more information about the project.
Bitfinex: a trusted exchange
Headquartered in Hong Kong, Bitfinex is owned and operated by iFinex Inc – a financial services company that also owns Tether Limited, the issuer of the USDT stablecoin. The broker is popular for having one of the most liquid order books on the market, ensuring that users looking to buy and sell cryptocurrencies have no problem doing so.
Like many other top brokers, Bitfinex offers a versatile platform for anyone looking to enter the cryptocurrency market. Investors can buy and trade cryptocurrencies, bet cryptocurrencies, and lend their coins to earn returns.
The ease of use is impressive at Bitfinex, with the broker combining an intuitive platform with a low deposit threshold. Deposits on Bitfinex can be made via direct crypto transfers, bank transfers and card payments. Card payments are processed through a third party, so investors may have to pay more fees.
In addition to its trading interface, Bitfinex offers easy access to services such as margin trading, derivative offerings, and lending. Investors looking to make high-volume purchases can use Bitfinex’s OTC trading service, while those looking for low-risk gains can use the broker’s betting protocol.
Bitfinex uses a maker-taker fee structure for its operations. Fees vary between 0% and 0.2%, with fees that decrease as investor order volumes increase. In addition, the exchange does not charge any fees for large orders through its OTC desk. Bank transfers incur a 0.1% fee for deposits and withdrawals, although accelerated withdrawals incur a 1% charge. Cryptocurrency withdrawals incur a small fee, depending on the coin being withdrawn.
The exchange protects funds and user data using 2FA, advanced API key authorizations, and the storage of 99% of funds in cold storage.
Gate.io: Solid platform with many coins
Gate.io is a cryptocurrency trading site that aims to offer its members an alternative to the exchanges that currently dominate the market.
The site has been in operation since 2017 and aims to capture a portion of the cryptocurrency trading market by offering its users has hassle-free access to a number of hard-to-find coins and emerging projects.
The site is also designed to help investors find specific information related to both their favorite coins and general market trends.
Trading mainly takes place on a web-based trading platform that is similar to most cryptocurrency exchanges. The site incorporates a number of features such as an order book, trading history, and charting.
How does Kleros work?
At its most basic level, Kleros connects users who need resolved disputes with a pool of crowdsourced jurors who have the necessary skills to resolve their disputes quickly and conveniently. The Kleros protocol is opt-in, which means that users can implement Kleros as a dispute resolution protocol directly in their smart contracts.
For example, a freelancer is hired by an employee, and the smart contract between them refers to Kleros as the award protocol for their contract. In the event of a dispute, the funds are locked in the contract and the kleros arbitration process begins. A court is taken from a crowdsourced pool of jurors, relevant information is sent to jurors, and jurors vote on the case. The vote is revealed, the majority is considered the winner and the smart contract is executed, sending funds to the party to which the jurors voted in favor.
It is a very simple process that offers simplicity and convenience to users, however, there is much more that works behind the scenes to make the platform safe and viable as a level of dispute resolution.
In particular, the platform uses blockchain to ensure transparency and integrity in the jury selection process. In addition, game theory mechanics based on important concepts and their native Pinakion token (PNK) provide the necessary incentive model for jurors to act honestly within the system.
Kleros’ incentive model uses an optimized version of the Schelling coin concept that derives from the Schelling point game theory concept. A Schelling Point is a focal point as a solution that people tend to use in the absence of communication because it seems natural or special to them. This is important in distributed systems where users do not trust each other. The concept of Schelling Coin was outlined by Vitalik Buterin and is designed to be a token that aligns itself by telling the truth with economic incentives.
As for Kleros, their platform employs an optimized version of this concept to incentivize jurors to vote consistently with others through economic incentives with their PNK token. Jurors who vote indirectly against the winning majority are penalized, and those who vote in the winning majority receive tokens redistributed by jurors who did not. This redistribution is based on a proprietary formula, and jurors must wager a certain amount of tokens as a deposit before a case begins. Jurors also receive arbitration fees for their work.
Jurors self-select in subcourts with specific focuses as part of a larger autonomous pool of jurors serving a wide variety of potential cases. When selection for a case begins, a random process is used that uses sequential proof of work to select jurors from the pool. The likelihood of a juror being selected for a case is directly related to the amount of PNK tokens they deposit. Contracts for a case specify how and on what jurors can vote and how many jurors are needed.
The whole process is automated, and Kleros functions as an autonomous ethereum organization. The need for sustainable security and scalability is critical to the platform for this reason. The mechanics of game theory provide the necessary economic incentive while the design of the platform is to use a decentralized governance mechanism based on a liquid voting mechanism. This governance mechanism can be used for the following.
- Set policies on how to arbitrate disputes
- Add, remove, or edit sub courts
- Changing parameters in secondary courts
- Change one of the smart contracts on which Kleros is based.
Appeals are also part of Kleros’ functionality and play an important role in mitigating corruption, while also mirroring important legal processes of current state governments. A party may appeal the Kleros judgment if it is not satisfied. Each new appeal has twice the number of original jurors plus one, so appeals fees increase exponentially and discourage users from endlessly appealing or bribing jurors because the cost is too high as more appeals are made.
Kleros Use Cases
Kleros is designed to be a multi-purpose dispute resolution platform and can function as a legal adjudication service in a wide variety of cases. Important types of cases include escrow dispute resolution, social network policy violations, and oracle resolutions.
For escrow disputes, this applies to a multitude of cases revolving around goods or services exchanged in off-chain means. Kleros may resolve disputes between employers and employees, rental contracts or inadequate goods sold on an online store.
Social network policy violations include preventing spam and mitigating policy violations by requiring users to make deposits before a case begins. Kleros can resolve the dispute directly or, if the context is more ambiguous, there are other options such as removing content that can be specified directly in the smart contract.
Finally, oracles provide an interesting use case for decentralized data feeds to be used by smart contracts to extract information from the outside world. With Kleros, one party can submit a question, and everyone can send an answer with a deposit. If the answer is unanimous, then it is returned by the oracle, otherwise, the resolution of Kleros’ disputes ensues. The oracle then returns the solution decided by Kleros’ dispute resolution process.
Team and Partners
The team behind Kleros is led by co-founders Frederico Ast (CEO) and Clement Lesaege (CTO). Their token sale is currently active and is one of the first, if not the first Interactive Coin Offering as established by Vitalik Buterin, Jason Teutsch and Christopher Brown as an improvement on the traditional ICO model.
Kleros has partnered with both Dether.io and Ink Protocol to help provide decentralized arbitration. Users of the Dether payment platform will be able to use Kleros’ peer to peer justice protocol to arbitrate disputes, and Ink Protocol provides an important integration for Kleros to be able to test two key use cases for their platform, escrows and curated lists.
PNK tokens and interactive coin offering
The PNK token plays a fundamental role in the game theory dynamics of the Kleros platform. The amount deposited by jurors is directly related to the likelihood that they will be selected for a case and works as an economic incentive for jurors to act honestly in cases.
Token holders also have voting power tied to the amount of PNK tokens they hold, thus providing incentives to hold tokens for governance purposes. Jurors are also paid on a case-by-case basis in the form of arbitration fees that are actually paid in ETH rather than PNK.
As mentioned above, Kleros is one of the first platforms to implement the Interactive Coin Offering format. In essence, this format attempts to allow investors to have more information at their disposal while participating in a fluid bidding system governed by a smart contract. The success and results of this IICO will be fascinating to watch and see if other platforms will start using the same model.
Hot wallets, also called software wallets, are one of the most popular cryptocurrency storage options. They are always online, hence the affiliation with the ‘hot’ tag. Investors can easily get a hot wallet once they open an account with a crypto exchange. This allows them to store and manage their private keys, which prove their ownership of their assets to the blockchain network. Hot wallets are usually more convenient for everyday crypto transactions and can be custodial or non-custodial.
A custody wallet is responsible for storing assets on a third-party exchange or platform. The user only places an order for a transfer or receipt, and the exchange signs the transaction, just like the traditional banking system. Meanwhile, a non-custodial or self-custodian wallet gives full responsibility to the end user.
Hot wallets are usually free, but are largely considered less secure due to their constant internet connectivity. One instance of a hot wallet is the Binance Wallet.
A hardware wallet is a device that has been created to provide an extra layer of security when interacting with your various cryptocurrency wallets.
Normally you would use your private key to move funds, the problem is however, if your computer has been compromised with malware or viruses, it is possible that your private keys will be captured and used to steal your funds.
With a hardware wallet, private keys are stored on the device and never exposed to the computer, which means that even if you are infected with such a program, your private keys will remain safe. These options are the safest way to store your cryptocurrency if you have more than a small amount.
Popular examples of cold storage offers are the Ledger and Trezor line of hardware portfolio solutions, read our reviews:
A mobile wallet is essentially a hot wallet on a smartphone device. They offer users an even more convenient way to use their coins for daily tasks. Mobile wallets store and manage users’ private keys, allowing them to pay for the things they love with their digital assets.
These wallets are usually free and always online for transactions to be processed. The most popular mobile wallets are eToro Money Wallet and Coinbase Wallet.
A desktop wallet is a PC version of a hot wallet. It is essentially software that an investor downloads into their personal computer or laptop for easy interaction with their digital coins. They also offer a browser extension that allows users to interact using an extension instead of downloading the entire software. Desktop wallets are also prone to hacks due to their online nature. A popular example is the Exodus Wallet.
The paper wallet is probably the oldest form of crypto wallet. They are no longer common in the modern cryptocurrency industry. Contains users’ public and private keys. The paper wallet is the least secure type of wallet as it can be easily lost, stolen or burned.
Kleros offers a dispute resolution protocol for the modern digital world that replaces traditional jurisdictional areas as the world leans toward globalization. The potential of smart contracts to disrupt transactions and agreements between parties in an efficient and automated manner will inevitably lead to the need for a decentralized justice system.
With the right incentive mechanisms applied by proven game theory mechanics and the underlying blockchain providing the necessary transparency and integrity, Kleros seems to be becoming the justice protocol of the future.