F.A.Q - A Selection of Answers

kleros · July 19, 2018, 3:25pm

Kleros Token Sale: Frequently Asked Questions
Original Medium Post

What is Kleros?

Kleros is the blockchain dispute resolution layer that provides fast, secure and affordable arbitration for virtually everything. Watch this explainer video

What are some use cases of Kleros?
Kleros is a multipurpose arbitration system able to handle a large number of disputes:

● Alice claims that the good she bought from Bob in an e-commerce platform is defective. The jury votes for Alice and she is reimbursed.

● Alice raises money with a crowdfunding campaign. The jury votes that she failed to meet critical milestones. Buyers are reimbursed.

● Alice flags Bob for an inappropriate comment in a decentralized social media platform. The jury decides that Bob violated the terms and conditions. He loses reputation points and the content is removed.

● Alice flags Bob’s song for plagiarism on a decentralized music platform. The jury determines that the song was plagiarized. Revenue from the song is redirected to Alice.

● Alice flags Bob for cheating in an online gaming tournament. The jury analyzes the recording of the game and votes that Bob is guilty. Bob is banned from the platform.

Kleros provides fast, secure and affordable arbitration for many different use cases.
Do you have a prototype?
Yes, we have a prototype running on Kovan test net. Here you can see a contract creation interface for escrowed payments, and here you can see the interface where jurors rule disputes. In this video you can see an explainer of the proof of concept:

What’s the name of your token?
The protocol token is named pinakion (PNK). The name comes from the bronze ID plaque used to select jurors for popular trials in Ancient Athens.

A pinakion, the bronze ID plaque used to select jurors for popular trials in Ancient Athens.
Why do you need a token?
PNK is required to protect the system against the sybil attack and to provide jurors an incentive to adjudicate disputes honestly. Users adjudicating disputes honestly will, on average, earn money. Users trying to game the system will, on average, lose money. PNK cannot be replaced by ETH as this would greatly increase the risk of a 51% attack on Kleros. To learn more about the token, read our white paper.

How many tokens will be created?
1 billion PNK will be created. We will sell 16% in a first token sale. Another 50% of the tokens will be kept in reserve for selling in future rounds tied to milestones and for incentivizing early jurors in the platform.

Which currency can I use for my contribution?
We only accept contributions in Ether (ETH). If you hold any other currencies, you can convert them into Ether on an exchange.

Is there a minimum contribution for the KYC?
There is no minimum contribution.

What is the KYC process?
Please see the link here for full details.

What’s your token sale method?
We’re using the Interactive Coin Offering (IICO), a new token sale protocol advocated by Vitalik Buterin, Jason Teutsch and Christopher Brown that seeks to make token sales more egalitarian for large and small buyers.

Why are you using the Interactive Coin Offering?
In capped sales, a fixed amount of tokens is sold at a fixed price. Buyers know the valuation of the project. However, participation isn’t guaranteed. In uncapped sales, on the contrary, valuation is not fixed. The pro is that everyone can participate. However, buyers cannot be sure of the valuation at which they will buy the tokens and can be diluted more than what they would be comfortable with. By letting participants choose a personal cap, the IICO provides buyers of every size two desired properties: certainty of participation and certainty of valuation. To learn more about our token sale strategy, read this article.

How does the IICO work?
When making your bid, you can choose a personal cap. This puts a ceiling on the valuation at which you will participate in the sale. Thanks to this, you can be certain that you won’t have to pay a higher price than the one you selected. If you want to be 100% sure to participate in the sale, the interface gives you the option not to select a personal cap. Find out exactly how the IICO works here.

How do the stages of the token sale work?
Following the IICO protocol, the Kleros token sale will take place in a number of phases optimized for price discovery and convergence towards an equilibrium price for PNK:

In the first phase of the sale (the “Full Bonus Phase”), participants can make contributions that take advantage of the sale’s full bonus and withdraw them with no penalty.

In the second phase of the sale (the “Partial Withdrawals Phase”), participants can make contributions and also withdraw them, but this time, with a penalty. The bonus also starts decreasing linearly at this phase, while the penalty for withdrawals increases linearly.

In the third phase of the sale (the “Withdrawal Lockup Phase”), voluntary withdrawals are no longer permitted. Also, new contributions must have a personal cap that is strictly more than or equal to the current valuation.

At the end of the sale, tokens are distributed to participants who stayed in the sale and ETH is refunded to participants whose personal cap was exceeded. In some cases, the cut-off contribution might receive a partial ETH refund and some tokens.

To understand how the mechanism works in more detail, see this post: https://medium.com/kleros/how-interactive-coin-offerings-iicos-work-beed401ce526

Don’t you think it’s too risky to be the first to use an unproven token sale method?
It’s clear that the current model of token sales is broken and the IICO is a step forward to fix it. Kleros is seeking to modernize justice and the IICO reinforces this principle in token sales. We think it’s the right thing to do.

Why are you running your token sale in more than one round?
Instead of doing one large sale at the beginning of the project, when our product is in an early stage, we believe it’s more responsible to conduct our sale in a number of rounds, as we can prove our ability to deliver on our promises. We will sell 16% of the tokens in the first round and conduct other rounds as we achieve critical milestones. To learn more about our token sale strategy, read this article.

What will you do with the 50% of the tokens you are not selling in the first round?
Part of these tokens will be sold in further rounds as we complete critical milestones. Another part will be used as an additional incentive for early jurors in the platform.

How much do you want to raise?
IICO is a market based method. This means that the revenue from the token sale will be determined by market forces. We are not targeting a specific amount.

Can I participate in Kleros presale?
There is no presale.

Why didn’t you do a presale?
While many teams do a presale before the public sale, we didn’t feel it was the right move for us. We wanted to have a working prototype before accepting outside resources. Moreover, presales usually have large discounts which favor large scale buyers. We wanted all buyers, big and small, to participate in equality of conditions during the public sale.

How was the project funded?
The entire project was self-funded by the team.

How can I get a bonus in the token sale?
In order to incentivize price formation, the Interactive Coin Offering rewards participants making their contribution early in the sale with a 20% bonus. The bonus decreases smoothly down to 10% at the beginning of the second stage of the IICO, and then down to 0% by the end. To have a larger bonus, you should make your contribution at an early stage in the sale.

How do the three stages in the sale work?
Stage 1. May 15 to June 15. 20% bonus and the contributor can manually withdraw the contribution without penalty.

Stage 2. June 15 to July 1. The bonus starts to decrease linearly and the contributor can manually withdraw the contribution WITH penalty.

Stage 3. July 1 to July 15. The contributor cannot withdraw the contribution manually. Only automatic withdrawals.

What happens if you raise a big amount of money in the first round? Will you still do the others?
The IICO allows buyers to select a personal maximum valuation and be reimbursed if it is exceeded. This is why it’s unlikely that Kleros’ token sale will generate a extremely high amount of money. Should that event happen, we would increase the tokens to allocate to the Juror Incentive Program.

How would that Juror Incentive Program work?
Users have to stake PNK in order to be drawn as jurors in the platform. Jurors who vote coherently with the majority are transferred the PNK lost by jurors who vote incoherently. The Juror Incentive Program will reward jurors who vote coherently with extra PNK. It’s as if jurors who voted coherently would “mine” PNK with their honest vote.

How will people acquire PNK after the initial offering?
Users will be able to buy tokens in the secondary market.

In which exchanges will PNK be listed?
It’s likely that PNK will be listed on the decentralized exchanges. We expect to make some announcements about the listing of PNK on well known exchanges.

When will I receive my PNK?
You will be able to withdraw your PNK immediately after the end of the token sale.

Why can’t I have my tokens right after I send my contribution?
Because of the mechanics of the Interactive Coin Offering, you will not be sure whether you will actually get PNK before the end of the token sale. If you select a personal cap, there is a chance you will be refunded your ETH and not get any PNK. If you selected no Personal Cap, the amount of PNK you will receive will only be determined at the end of the sale. When the token sale ends, you will be able to redeem your PNK and have them transferred to your wallet.

Is there a lock up period for the tokens after the token sale is over?
Buyers will be able to use and transfer the tokens as soon as the token sale ends.

What will be the price of PNK at the beginning of the sale?
Because of the dynamics of the IICO, the price of the PNK will be defined during the sale.

How can I get a bonus?
Since an IICO is designed to create price formation over time, early participants are incentivized with a bonus. This bonus starts at 20% and decreases linearly to 0 over the duration of the token sale. For a detailed look at how the IICO mechanics work, click here.

Who wrote the code for the token sale?
We wrote the code ourselves.

Who audited the code?
The code is being audited by a bounty program and will be audited by an external audit. At the time of this writing, the code was already reviewed by at least 21 people.

How will tokens be allocated?
Team Members: 18%

First Round of Token Sale: 16%

Airdrop: 4%

Subsequent Rounds and Juror Incentive Program: 50%

Kleros Cooperative Development Reserve: 12%

How will you spend the money raised in the token sale?
We estimate to use the revenue from the token sale for product development (45%), research (25%), ecosystem development (10%), communication (10%) and legal & operations (10%).

What are your product milestones?
At this moment, we already have an MVP running on Kovan test net with escrow disputes. The next milestones in our product roadmap are the following.

July 2018: First Pilots. We will test the Kleros MVP with artificial disputes solved by traditional methods and see how results compare. This first version will have real economic incentives for jurors but not enforcement. In order to conduct this test, we have already started our Early Jurors Program with 5,000 jurors.

October 2018. First Version with Real Enforcement of disputes. We will use Kleros to adjudicate disputes with real enforcement on the Ethereum main net.

April 2019. Release of a version with multiple sub-courts. We will implement subcourt hierarchy to allow jurors to specialized in some particular kind of disputes.

How do I know you’re legit?
You can take a look at the Kleros prototype, code, conference presentations, publications, and of course, the Kleros team. To see the achievements of Kleros’ team since the beginning of the project in April 2017, read this post.

Are American participants allowed in the sale?
US non-accredited investors are not eligible to participate in the sale. Citizens of countries in the EU sanction list are not eligible. Buyers will be checked against lists of restricted individuals. If you’re an American accredited investor, you can contact us at [email protected].

What is Kleros’ legal entity?
Kleros is incorporated as a Société Coopérative d’Intérêt Collectif (SCIC), a type of cooperative under French law. Governance is shared between three colleges: founders, producers (contractors and employees) and users (jurors, parties in disputes, partners). All revenue from the token sale will be kept as an unshareable reserve. Funds can only be used for project development and cannot be distributed as dividends. To learn more about Kleros’ legal entity, read this.

Token Sale Specific FAQ
OUR TOKEN SALE FAQ
What do I need to set up before the sale?
If you want to use the IICO interface, then you need to use a web3 enabled browser.

Web3 is what’s referred to when interacting with decentralised applications or networks. In this case installing Metamask is the easiest option. Below you will find a list of web3 enabled browsers.

Desktop

Google Chrome with Metamask extension
Firefox with Metamask extension
Brave with Metamask extension
Mist
Mobile

iOS : Trust
Android: Trust
How much gas should I enter in MetaMask?
MetaMask will automatically calculate the amount of gas needed and add a little bit more just in case. You don’t need to worry about this.

I don’t know what a web3 browser is and I don’t want to learn? I just want tokens. What should I do?
You can access our simple interface and send ETH to an address from your wallet. In this case, the process will work exactly as an uncapped sale. When you have logged into our contract you will see links to both ‘Simple & Interactive’. If you choose ‘Simple’ you can just send ETH to our contract address and you will receive tokens at the end of the token sale. (July 15th)

This is too complicated. I just want to buy tokens. What should I do?
The IICO gives you more control over your contribution, but it may not be suited for everyone. If you don’t care about caps on valuations, you can select the simple interface and send your contribution to the address. In this case, no personal cap will be set. It works exactly the same as bidding in an uncapped sale.

How is the withdraw and bonus timeline of the sale structured?
Following the IICO protocol, the Kleros token sale will take place in three phases.

Phase 1. Full Bonus Phase. May 15 to June 15. If you make your bid during this stage, you will get a 20% bonus. If you withdraw your bid during this stage, you will be refunded your entire contribution. For example, if you contribute 10 ETH on May 15 and then decide to withdraw on June 14, you will be refunded the whole 10 ETH.

Phase 2. Partial Withdrawal Phase. June 15 to July 1. On June 15, the bonus starts to decrease linearly. If you decide to withdraw during this phase, you will only be able to do so partially and you will have a ⅓ penalty on your bonus for the part that is not withdrawn. For example, if you make a contribution of 10 ETH on June 20, you will get a ~16.666% bonus. If you withdraw on June 25, you are refunded 3.75 ETH and your new bonus is ~11.111…%.

The formula for calculating the bonus in Phase 2 and Phase 3 is:

startingBonus * ((endTime — now) / (endTime — phase2StartTime))

The formula for the amount that is refunded is:

contribution * ((phase3StartTime — now) / (phase3StartTime — phase2StartTime))

Phase 3. Withdrawal Lockup Phase. July 1 to July 15. Starting July 1, voluntary withdrawals are no longer permitted. Also, new contributions must have a personal cap that is strictly more than or equal to the current valuation.

At the end of the sale, tokens are distributed to participants who stayed in the sale and ETH is refunded to participants whose personal cap was exceeded. In some cases, the cut-off contribution might receive a partial ETH refund and some tokens.

To understand how the mechanism works in more detail, see this post: https://medium.com/kleros/how-interactive-coin-offerings-iicos-work-beed401ce526

I have a support query whilst participating in the sale, can anyone help?
Yes, we have a built in chat and support function on the IICO page. If you feel you need extra guidance you can click there and an operator will get back to you. (Subject to availability)

Why are you having a 1 month period for free bonus? Doesn’t this incentivize people to buy at the end?
This is the first time someone does a token sale using IICO. We want all participants to have enough time to carefully evaluate how the sale works. One month of 20% bonus and the possibility to manually withdraw is a reasonable amount of time for people to understand the dynamics of the sale. We are not driving the sale based on FOMO.

It there a lockup period for buyers in the first round of the sale?
No. Tokens can be sold after the first round ends on July 15. Tokens will not be redeemable until this date. This ensures the correct price valuation and token distribution is fair for all.

What is Kleros token allocation?
Team Members: 18%

First Round of Token Sale: 16%

Airdrop: 4%

Subsequent Rounds and Juror Incentive Program: 50%

Kleros Cooperative Development Reserve: 12%

What amount of tokens will be liquid immediately after the sale on July 15?
The 16% of PNK distributed during the first round will be immediately liquid after the sale ends. There is no lock-up period for buyers.

Members of the team cannot sell tokens before they have worked at Kleros for at least 1 year. After one year they can sell a limited fraction of their tokens. They can sell everything after working on Kleros for 3 years. By the time the first round ends, members of the team will be able to send X% of their tokens.

We have conducted a token airdrop of 0.5% during April. These tokens will be liquid after the end of the first round.

Subsequent Rounds and Juror Incentive Program (50%) and Kleros Cooperative Development Reserve (12%) will not be liquid after the end of the first round.

Will PNK be listed in exchanges?
PNK will be listed on the decentralised exchanges along with some of the larger names in due course. We will release information regarding this in the coming weeks.

Can I get tokens using a wallet different from the one I used for KYC?
No. You have to make your contribution with the wallet you declared in the KYC. But of course you can transfer the PNK to a different wallet after you receive them.

What’s the price of PNK?
Because of the dynamic of the IICO, the price of PNK will only be determined during the sale.

How is the price of PNK determined?
The price of PNK is determined by a process of iterative consensus in which contributors react to market data. Because of the IICO protocol bonus structure, different contributors will end up acquiring tokens at different prices: the bigger the bonus, the cheaper you will get your tokens.

price = contribution / tokensReceived

And (with bonus in fractional format, e.g. 0.2)

tokensReceived = tokensForSale * ((contribution * (1 + bonus)) / (valuationWithBonusesTakenIntoAccount))

At the end of the sale you can get an estimate of the token prices everyone paid by dividing the valuation by the tokens for sale.

When I did the KYC, I declared I wanted to contribute less than 5 ETH. Now I changed my mind and want to contribute more. But now the interface won’t let me place my bid. What should I do?
To contribute more than 5 ETH, you need to do the reinforced KYC. Do it here.

What does personal cap mean?
Personal cap is the value you place on the token sale. If you think the Kleros sale is worth no more than 5000 ETH for example, you can select that as your personal cap. This means if the total contribution exceeds 5000ETH you will be withdrawn from the sale and your ETH returned. If you don’t want to deal with any types of Personal Cap there is an option which allows you to send ETH and receive tokens regardless of the total sale contribution.

I accidentally withdrew my bid, what do I do?
There’s nothing you can do with that bid anymore. The amount that is locked in, is locked in, and it will only be refunded if the bid has a personal cap and it is exceeded. The bonus penalty is also final.

How long does the sale run for?
The sale runs for 2 months, from May 15th to July 15th, 2018.

Why 2 months?
To allow for proper market liquidization and price formation.

Why would I want to place my bid as soon as the auction begins, when I could just wait right before June 15th?
To avoid network congestions that cause high gas prices and the possibility of your transaction not being mined.

How can I withdraw a bid?
Click on the withdraw button next to the bid in the “Interactive” interface.

Why would I want to withdraw my bid?
If you regret making it and don’t want tokens anymore.

Which currency can I use for my contribution?
We only accept contributions in Ether (ETH). If you hold any other currencies, you can convert them into Ether on an exchange.

How do I buy ETH at an exchange? Can you recommend me one?
You can purchase ETH via large exchanges like Coinbase, Poloniex, Bittrex and more. LocalEthereum is also a great place to safely and conveniently acquire ETH. Even if you can use an exchange to buy ETH, you should NOT send your contribution to the sale from your account in the exchange. If you do that, your funds will be lost.

I accidentally sent the contribution from my account at an exchange. How can I get my ETH back?
You can’t.

Can I buy PNK by transferring money from my bank account?
Unfortunately we don’t deal with any fiat currencies but you can use any of the methods listed above to buy ETH and then use that newly purchased ETH to participate in our token sale.