A lucid observation of Kleros and the path to follow

[clesaege]

@yadf1994

The current model of “decentralized justice” has not achieved the mass market adoption required for the long-term survival and growth of the protocol. I think Kleros has to pivot the efforts toward becoming the ultimate oracle for Prediction Market

Being an oracle for prediction markets is “decentralized justice”. But maybe the branding as “subjective oracle” could be seen as more practical and less idealistic. Focusing more on what it does instead of how it does it.

@yadf1994

placing those platforms such as Seer at the center of its ecosystem

I am obviously super bullish on Seer, but we should probably avoid putting something “at the center” if we want to keep attractivity to other projects.

Note that for now the strategy for Seer has been to be a base layer prediction market. This worked great to attracted other prediction markets projects on top of Kleros (futarchy.fi, DeepFunding, Will it merge?). Here prediction markets projects get Kleros arbitration as default (it would be an effort to remove it instead of it being an effort to integrate it). Note that this even brought projects not using Seer to Kleros as they were reusing elements of the codebase (cf Butter even if they do not seem active anymore).

@yadf1994

The signals from our community and our usage metrics (such as PNK price, TVL, etc)

Definitely agree on that: What can be measure can be optimized.

@yadf1994

Lost lead on Prediction Markets (Gnosis - DXDAO)

To give more context on that:

• We got approached by Gnosis to be an Oracle for Omen. We also had a token swap (PNK - GNO, which ended very good for us as GNO increased a lot).
• Omen was given the dxDAO.
• Some dxDAO members wanted to develop their own oracle. I initially told them that if they were to remove Kleros from the plan, we would launch a version with Kleros as the Oracle.
• I was then convinced to cut a deal with the dxDAO. It ended up with both oracles being available with Kleros as default and the coop giving some PNK for liquidity incentives.
• It initially went very well with the US election. Kleros getting both its largest dispute and its PNK all time high.
• The dxDAO failed to develop Omen. It was clear that some improvements needed to be made. I actively lobbied the dxDAO team to put work into Omen. It seems they would do it, but actually never did.
• I think Shayne (of Polymarket who was a dxDAO member) lost confidence in the dxDAO team way sooner and went to make its own PM also using Gnosis initial work (conditional token).
• I did try to get Polymarket to use Kleros, but they first went the central way and then with UMA which gave them some liquidity incentives.

Overall we were there early, but we probably were not enough aggressive.

@yadf1994

we lack the killer app capable of making the protocol take off.

Agree on that. UMA first had Across as a dapp they developed internally. Once you have big dapps, you get more likely to get more dapps.

@yadf1994

Omen generated several million dollars in TVL and a $2.5 million lawsuit.

Just to clarify it was a Kleros dispute (the terminology may make some people think it was a state court lawsuit ^^).

@yadf1994

Moreover, the current runway is less than 5 years, with no significant recent revenue. A status quo will simply imply the end of Kleros.

Revenue sources could be:

• Further PNK grants (probably only be possible when PNK market caps gets significantly higher than coop treasury), but the recent KIP-88 hints in this direction.

@yadf1994

A solution: Leveraging Prediction Market and Seer

When talking to crypto people, there is indeed way more interest for prediction markets (as it is now hyped and the majority of the dispute resolution space) than any other Kleros related products.

@yadf1994

Prediction Market as the priority: Most of the economic, marketing, and development efforts of the DAO should be primarily deployed to push and scale Prediction Market.

Maybe not “most” as we should still support previous projects as no one wants to use a subjective oracle used by almost no one. But I’d agree on “most of the new”.

@yadf1994

However, Kleros can continue its current profitable activities with a minimum level of resources required.

I think you hint to that here too. Don’t break everything, but focus new efforts (and remove ressources from projects with low impact/cost ratio after some “last chance to show traction” period.).