Kleros: Radical Politics, Revolutionary Technology, And … E-commerce Small Claims Court?

“The first casualty of any battle is the plan of attack.” – Cory Doctorow

I recently had the opportunity to talk with Federico Ast, the founder and CEO of Kleros. Prior to our conversation, I was unclear about the company’s “deep why,” and how that fit with the use case most frequently cited for the technology: to provide small claims court for online disputes. I’d read both that Kleros could lower operating costs for Ebay, and that it could revolutionize the justice system – sometimes in the same article, as if they were one and the same. It didn’t compute that they could be. One seemed so safe, so innocuous, so not revolutionary, while the other seemed, well, a bit ambitious, to put it lightly.

But by the time we hung up, I became convinced that Kleros might just embody the heuristic offered by Cory Doctorow at Devcon4 for how to fight corruption of power in tech and government through decentralization and policy change. Doctorow said:

“We don’t know how to get from A to Z, but we do know how to get from A to B. We know whatever the higher point of whatever we are seeking is … so we move one step toward our objective, and from there we get a new vantage point and it exposes new avenues of freedom we can take. I don’t know know how we get from A to Z. I don’t know how we get to a better world, and I actually believe that because the first casualty of every battle is the plan of attack, that by the time we figured out the terrain, it would have been obliterated by the adversaries who don’t want us to go there. And so instead I think we need heuristics. And that heuristic is: See where your freedom of motion is at any moment, and take it.”

Two Libertarians Walk Into a Hackathon

Before founding Kleros with CTO Clément Lesaege, Ast was active in a local Buenos Aires political party, El Partido de la Red (the Net Party) co-founded by Democracy Earth’s founder, Santiago Siri, with tech entrepreneur Esteban Brenman and political scientist Pia Mancini.

In response to Argentinian political corruption and the growing use of the internet for political organizing, Siri and Mancini developed DemocracyOS, a user-interface for democracy. DemocracyOS allows individuals to build and submit, debate, and vote on political proposals. The Net Party’s platform was that its candidates would vote not according to their individual preferences, but according to the will of party members using DemocracyOS. Ast described DemocracyOS and the Net Party as “a Trojan horse in the local political system.”

Lesaege is also embedded in democratic, internet-centric politics. As a member of the French Pirate Party, he ran for local office twice. The Pirate Party is a Swedish-based movement largely centered around freedom of expression via copyright and patent reform. It also emphasizes increased institutional transparency as well as civil liberties and privacy for individuals. In an interview published on Medium, Lesaege told Kleros community manager Stuart James that “there is a lot of similarity between pirate and crypto philosophy.”

The similarities between Lesaege and Ast’s political philosophies are no accident: Rather, those shared sympathies are the basis of their professional relationship. Lesaege and Ast were introduced by Susanne Tarkowski Tempelhof, the founder of Bitnation, a smart contract framework to create “decentralized borderless voluntary nations.” Tempelhof was a judge at an Ethereum hackathon in 2016 where Leseage and another Kleros co-founder, Nicolas Wagner, worked on a decentralized court hack. Ast wasn’t a part of the hackathon, but had been conducting research into the use of blockchainand collective intelligence in justice systems. Tarkoski Tempelhof, who Ast described as an Anarchist Capitalist, “knew what I was working on and she put me in contact with Clément and that’s how Kleros started. We were like, we are part of the tiny network of people interested in upgrading politics from a libertarian point of view.”

Problems Without Existing Solutions

Blockchain-related projects are often accused of being solutions in search of a problem. While the criticism isn’t entirely on point, it’s not completely off-base, either. In my estimation, it’s more that we often have solutions for problems most people don’t care about, or at least not enough to persevere the nightmare that is blockchain onboarding.

The problems we seek to address are often ideological in nature and affect generally well-functioning, robust systems. For example, we may believe that centralized social media platforms invade our privacy, exploit our labor, compromise our freedom as individuals, contribute to growing wealth inequality, perpetuate violence, sow political polarization, proliferate fake news, destroy democracy (in a bad way), censor individual expression, and lead to the generation of nonsense terms like “female presenting nipple” – but we also really like how easily it allows us to connect with others and learn stuff.

If there’s one thing I have learned from advertisements selling prescription drugs, it’s that if given the option, most people would rather take a pill with a long list of potentially horrible side effects than try more work-intensive solutions like therapy or exercise.

And sometimes, our solutions address side effects to institutions upheld through violence or the threat thereof. For example, we might agree that growing wealth inequality is a threat to individual freedom and social cohesion, and we might even see a possible solution, made possible by blockchain, to address the inefficient allocation of resources wrought by central planning or by capitalism (depending on your ideological leanings). We have grown to depend on products made available to us through central planning and capitalism. But these are also structures and institutions upheld by laws, courts, police, and militaries.

A Solution for a Problem Without an Existing Solution

In a 2017 paper published on Medium, Ast laid out the vision for Kleros as a “decentralized court system for the internet.” He describes e-commerce as an area lacking in adequate dispute resolution and arbitration frameworks. He says, “Existing dispute resolution technologies are too slow, too expensive and too unreliable for an online real-time world.” To address this gap, he offers “Kleros, which leverages crowdsourcing and blockchain technology to build a fast, transparent and decentralized dispute resolution protocol.”

Ast points to Uber and Airbnb as examples of platforms where disputes between individuals are fairly common but that lack reliable protections for both customers and service providers. Moreover, arbitration in these instances is difficult because damages are often of sufficiently small value that the cost of taking it to court would defeat the point.

Both platforms and social media in all its iterations, must manage conflicts between users quickly and fairly. Poor reputation scores could damage a driver or host’s ability to make an income, having immediate negative consequences, but existing protections for customers and service providers leave much to be desired.

Even when a platform does, hypothetically, offer protections to users, the process by which decisions are reached is often opaque, making it difficult for customers trust that decisions reached by a centralized platform are in their best interest. “Centralized e-commerce platforms probably don’t want to rule against a big customer, right?” Ast asked in our interview.

This is where Kleros could help. He argues that e-commerce platforms could increase user trust and lower operating costs by outsourcing customer disputes to Kleros, where “an impartial jury, incentivized with Kleros’ system,” would rule on the dispute. “In this way,” Ast says, “a centralized platform could offer transparent and fair [arbitration].”

But it’s not problems with e-commerce dispute resolution that prompted the genesis of Kleros. Ast told ETHNews, “E-commerce is a low hanging fruit for Kleros technology and a good way to test it and learn. But the tools we are building have a much larger potential.” He added: “My motivation for going into crypto is to help produce large-scale society change. And that’s the long-term vision of Kleros.”

Before Kleros Can Realize Its Potential, It Has a Ways to Go

As it stands, the Kleros system is only capable of incentivizing fair arbitration in a fairly narrow set of cases. There must be only two parties in a dispute, and only one party can win. The Doges on Trial experiment is a good example of that: A person submits an image that is either a doge or is not a doge, according to a set of predetermined criteria. If someone argues that an image is not a doge, they can take the party who submitted the alleged non-doge to trial. And then the jury can reliably determine whether or not the image is a doge, as defined by the predetermined criteria. Only one party can win.

In real life, disputes are often more complicated than two people disagreeing about whether or not an image is of a doge. Ast and the Kleros research team are well aware of this, and actively researching how to engineer the Kleros system to arbitrate on multiparty disputes, and to determine partial fault.

Thinking Big

“I’m an alumni at Singularity University,” Ast told ETHNews. “When I was there, I learned a concept they call ‘moonshot trajectory.’ If you want to build some exponential technology for asteroid mining, then you may want to start by some lower hanging fruit such as oil and gas mining.”

Bigger picture, the decentralized, transparent, cryptoeconomic-incentivized arbitration system made possible by Kleros has wide-reaching possible applications – online and off. For one it can bring more transparent, fair, and cost-effective arbitration to generally centralized institutions. It can also create social cohesion through value-aligned dispute resolution for decentralized communities. As for specific applications, Ast pointed to future decentralized social media platforms in which “you can’t go to the owners of the platform to appoint judges to resolve disputes.”

But Ast also suggested that Kleros “would eventually also be adopted in statecourts.” He hedged this by adding:

“Kleros will not ‘compete’ with state judicial systems (at least in the foreseable future). But governments will probably adopt some features of Kleros to make state justice systems more fair and transparent (in the same way that they will adopt some Democracy Earth tools to make elections more transparent and resistant to fraud).”

Some governments already are adopting Kleros, although not the internationally recognized kind. Liberland, the capitalist libertarian utopia slated to be built between Croatia and Serbia, plans to use Kleros for its justice system. President Vít Jedlička of Liberland told ETHNews that plans are already in the works to use the Kleros framework for lending and escrowservices.

Note: For more on the technical specs of Kleros, or the mechanics of how it decisions are reached through Kleros-style arbitration, Stuart James wrote a great explainer of the Kleros Doges on Trial (MetaMask required) pilot.