On July 15th, 2018, the Kleros IICO successfully raised 5793.58 ETH (2,3M€ at current price valuation) after a two-month fundraising, this IICO round issued 16% of the PNK token supply to around 220 investors. Kleros was the first project in the world to use the concept of interactive coin offering shared by Vitalik Buterin, Jason Teutsch and Christopher Brown.
What Is the Kleros Project?
Kleros is a decentralized dispute resolution project, this project is part of the “structural” projects related to decentralized applications (Dapps). Kleros offers a middleman service for Dapps and their users. If the service provided by the application does not create a dispute, Kleros only acts as a trustless third-party service for payment (escrow).
If a dispute arises, each party can unilaterally apply for arbitration via Kleros. Arbitrators (jurors) are selected among the owners of PNK tokens (the ERC-20 token of Kleros) who have registered in arbitration courts specialized in certain types of disputes. This service has a cost, payable in ETH (arbitration fees) which is provided by the parties to the dispute or simply drawn from the funds previously locked (escrow).
The jurors make a decision that will favor a party. Arbitration fees are distributed to all arbitrators (in ETH). Jurors who have issued a minority decision lose part of their tokens PNK for the benefit of the other majority Jurors. An appeal procedure is also a possibility (at a cost).
Kleros is tailored for Dapps which are its primary audience but it is conceivable that a decentralized, reliable and relatively inexpensive arbitration system will attract outside the traditional blockchain ecosystem. Dispute management, after-sales service and “support” is an expensive budget for companies, an alternative solution for online business disputes can be attractive.
The PNK token is an ERC-20 token based on Ethereum: it is a utility token with a fixed supply (1B units) which can not be replaced by ether. Kleros has built economic incentives so that owners of PNK tokens can hope for a profit through their work (by being a Juror hence earning arbitration fees) or by betting on the growth of the Kleros project and thus of the arbitration instances. During this period, exchange tokens are unavailable (reduction of available supply).
Moreover, there is no burn mechanism (money supply reduction) or dividend mechanism to support the value of the token. We consider this asset as a very high-risk investment with a high potential reward. Kleros can become a major player in the arbitrage field or simply fail to find its audience.
The high technical skills of the team, the ambition of the project and the value proposition of Kleros is why we have decided to follow this asset at Coinhouse.
What are the next steps for Kleros?
The Kleros team recently announced its first crypto-economic experience to test the robustness of their decentralized dispute resolution layer through a community experience: the Doge List.
During this experience, the owners of PNK tokens will be invited to decide if a photo corresponds to one of the mascots of the crypto universe: Doge’s Shiba Inu.
This experiment will allow jurors to build a photo registry of this legendary dog (TCR for Token Curated Registry). During this experience, anyone can submit a photo of either a Shiba Inu or of anything else (a reward is provided for those who will be able to rig the game by submitting and make the jurors “certify” a cat picture).
Any participating PNK holder may be selected to judge whether an image corresponds to a Doge or not. If the juror takes a majority decision, he receives a small amount of ETH (arbitration fee) and the PNK tokens “at stake” of the jurors who made a minority decision. The “losing side” jurors will receive some arbitration fees for their work.
This crypto-experience starts on July 31, 2018, and is open to any PNK holder, registration happens here