Proposal: Kleros Cooperative Coommunity Fund (KCCF) DAO and funding the appeals


#1

Motivation Inspiration Rationale

  • Longevity.
  • Prosperity.
  • “If you are not paying for the product, you are the product.”

1. Kleros Cooperative Coommunity Fund (KCCF) DAO to receive 10% arbitration fees.
2. This fund to be used for funding the appeals (appeal unsurance)

Background

https://kleros.slack.com/archives/C5WM5BZTJ/p1556027742027000

Have you ever thought of 10% of ruling fees going to Kleros cooperative community fund?
Ensuring long term prosperity of the project.
Currently it feels like work is sponsored by original ICO (ETH) and PNK…
I think it’s OK to recycle 10% of the fees back to Kleros.

https://kleros.slack.com/archives/C5WM5BZTJ/p1556037258028100

For now, there is still a significant part of PNK which are reserved for future funding. But in a more distant future this could be an option (among others).

I am a participant in an experiment: https://tokens.kleros.io Invested some ETH and wasn’t careful enough. It was a worthy investment as it enabled me to discover what is it like to be part of the appeal and experience the process.

Problems

1.

Even though you paid the deposit, even though jurors voted in your favour, you’ll still have to fund 0.91 ETH appeal and you will always lose to someone who has way more ETH as they are able to outspend you anyway in the next next next next round of appeal.

2.

Currently there is not enough traffic on the website, not enough adoption, not enough education and understanding about game-theory incentives

3.

It is unlikely to expect strangers on the internet to throw ETH into experimental pilot and become a party n the middle of a heated internet debate.

(some users on Telegram disputed the 3. statement as they funded the appeals of complete strangers)

Initial discussion

http://t.me/kleros/54467 - “I think it’s just a UI, funding appeals of winning parties is quite lucrative.” - How lucrative is quite lucrative?

https://t.me/kleros/54422 - “Of course game theory is extremely useful to understand and predict how rational agents should behave.” - Do you remember Gnosis ICO?

Real-life analogy

Access to justice is a basic principle of the rule of law.

Access to justice cannot be prevented by not having enough ETH to fund the appeal in the crowdfunding process.

There could be any number of reasons

  • 50 / 50 cases where there are no clear game-theory monetary incentives
  • PNK whale with fat fingers
  • Someone AFK (away from keyboard)
  • Listing in some sub-sub-sub-court and no enough traffic on the website
  • MetaMask having outage (see here)
  • CryptoKitties paralyzing Ethereum network
  • Fighting against a whale who will outspend you anyway (attrition warfare)
  • Xmas break
  • Chineese New Year
  • Some really annoying neo-nazi former lawyer making really good arguments
  • anything and everything, there could be any number of issues…
  • …jurors in the previous round were wrong being the most obvious one :slight_smile:

Cost-benefit analysis, risk-reward ratio

It could happen that initial juror ruling was wrong and the appeal will win, KCCF DAO will lose the appeal funding fee, especially in the light that original litigant and community did not fund the appeal.

It’s the price worth paying anyway.

As a participant in the Kleros community, I want voluntarily pay 10% to the fund to ensure that frivolous litigants will always face the justice - it is in the best interest of the system, Kleros, justice.

It’s de facto an insurance policy.

Time notice

72 hours or more

The respondent in the appeal process can fund the appeal fees themselves.

In that way, they will be eligible for all the payouts.

72 hours or more

Community crowdfunding

Those personally involved can use real life (social media) ways to gather ETH crowdfunders

The KCCF DAO should kick in only after these two periods have elapsed.

(potential) attack vector

User Will on Slack replied:

Isn’t there a room for attack? Let’s say a bad actor tries to slip in a trojan submission and he uses another address to challenge himself
If the submission successfully passed, he can appeal it and now finally reveal the trojan, leading to the rejection off the submission and thus getting free money from the DAO

Funding

  • Initial ETH deposit from the crowdsale
  • Ongoing 10% fee of the arbitration
  • Some of the appeals will be won, some of the appeals will be lost.
  • If the fund goes below 10 ETH - topup. If the fund goes above 100 ETH - redistribute.

TODO: analyze what is the ratio in the current cases. Potentially it will be a number between 25% and 75%. If too little or too many appeals are won it means that something else is wrong.

3rd party service? (advanced)

It is possible that based on this post, a game-rational 3rd party will create an insurance service. The cost of arbitration is 20% higher, but in case of any appeal, the service handles it all the way without your involvement.

Closing remarks

10% fee can be discussed separately, it can be a separate proposal.

I believe that 10% fee and funding appeals are conveniently bound together, creating beneficial game-theory incentives for the ODR (online dispute resolution) system as the whole:

  • More trust in the system
  • More resilience
  • Preventing bullies
  • More than just theoretical game theory

#2

Funding appeals should be financially interesting.
I’ve seen a few cases where the winning side was not funded, I believe it happened because cases requiring funding by the winning side were not shown with a special symbol which caused people to miss them.
On the badge side, with less disputes, appeals were alway funded by the winning side. Since the amount of disputes is lower, people saw all of them.
If you want to make a fund to fund appeals of the winning side, you can just ask people to contribute to it and split benefits. No need to ask funding from Kleros because insuring appeals should be profitable.


#3

Some initial feedback from Telegram conversations…

User: Martijn H: https://t.me/kleros/54961 + https://t.me/kleros/54965 + https://t.me/kleros/54984

User: Marc Zeller (admin): https://t.me/kleros/54913

User: Akim XS2: https://t.me/kleros/55044

User: Laurence :singapore:(admin): https://t.me/kleros/54946

Personal opinion (user of the system)

Me, as a user of the system…

  • …I want to ensure prosperity and longevity.

  • …I want Kleros to provide stable and reliable foundation.

  • …I want Kleros to charge money and I want this money to be reinvested into the product.

  • …I believe 10% of the arbitration fees (rest goes to jurors involved in the dispute) is a sensible, realistic, market price for using the services.

Real life example: https://www.gov.uk/make-court-claim-for-money/court-fees (courts do charge fees)

EDIT: Removed one bullet point that could be easily misinterpreted out of context, sorry for the inconvenience caused.

Personal motivation (real life example)

Whether I win or not is not important. I know I’m taking part in the experiment and I want the system to be resilient, anti-fragile. Here is the issue on GitHub: https://github.com/kleros/tokens-on-trial/issues/31

"Even though you paid the deposit, even though jurors voted in your favour, you’ll still have to fund 0.91 ETH appeal and you will always lose to someone who has way more ETH as they are able to outspend you anyway in the next next next next round of appeal”

I acknowledge the fact that game-theory should incentives (in theory) should incentivise crowdfunding appeals that are likely to win.

At the same time, there could be any number of issues (outlined in the original message) why rational participants of the market may not do this.

Probably my biggest worry - ETH whales with outspent capacity deciding which cases get funded - it will be them effectively making the decision, not the qualified jurors with the expertise in the relevant field.

Game theory attack feasibility and mitigation

To be discussed, to be established.


#4

Recent update to the UI

Now it is much more obvious what is happening in the current state:

If the loser is fully funded, the winner of the previous round should also fully fund the appeal, in order not to lose the case.

See: https://tokens.kleros.io/token/0xa4fe9176c544526237225c44ce1acabca230a7ecab8f6e90a14f0d1705b52744

It is appreciated that wording has been updated but I still have doubts about rational game-theory incentives, access to justice and all other points mentioned in this thread.


#5

Excellent posts, ideas and info here Michal. I think it’s an extremely interesting proposal and one we will likely see a lot of discussion around.

"If you are not paying for the product, you are the product.”

Fully agreed in general however, in Kleros’ case I don’t think it holds true as there are no further profit making mechanisms after cases are closed. No data is provided or held on jurors nor would there ever be anything to sell (if we wanted) to further entities.


#6

Me: https://t.me/kleros/56180

I don’t see Appeal Fund as “tax”. I see it as resilience, longevity, antifragile, insurance against frivolous whale litigants.

In the blockchain realm you pay fees.
Gas is a fee.
Arbitration fee is a fee.
Jurors stake PNK and get rewarded in ETH.
Someone who is unhappy can challenge the decision and pay fee.
As you see, money is moving left and right.

It’s a freedom baby. I voluntarily decide to dedicate 10% of my fees towards customer service and what not (anything and everything really) to ensure resilience and longevity of the system.

User: Abeer https://t.me/kleros/56194

If a case has potential merit of winning in appeal, people should be willing to fund it anyway. It’s the ones that bring a pessimistic likelihood of success with them that are the most likely to go unfunded. But the fund throwing money in cases like these would essentially just be burning its money.

All appeals funded automatically

See the intial post:

Some of the appeals will be won, some of the appeals will be lost.
Potentially it will be a number between 25% and 75%. If too little or too many appeals are won it means that something else is wrong.

Jurors should make the decision

See the follow-up post:

Probably my biggest worry - ETH whales with outspent capacity deciding which cases get funded - it will be them effectively making the decision, not the qualified jurors with the expertise in the relevant field.


#7

ETHWHales should act in their best interests, funding cases which are going to lose is bad from a financial perspective.
You could make a fund to fund appeals, but there is no need of a juror tax for that.


#8

I keep hearing the same argument over and over again.

I’m totally aware of that.

And keep saying the same rebuttal over and over again.

It won’t be jurors (qualified entities who sign up to specific court) making decisions.

It will be ETHWHales who will decide which cases will get the privilege of being evaluated by the jurors.

See also original post about any number of potential reasons why game-theory rational incentive appeals will not get funded. The reason on top of the list:

50 / 50 cases where there are no clear game-theory monetary incentives

Cases with no consensus, conflicting views, no clear outcome will not get funded. Such cases require more work, careful analysis, in-depth scrutiny by the jurors - as only jurors, specific to the court have enough expertise to evaluate.

On the opposite side of the spectrum, there are cases with a predictable outcome where funding an appeal is likely to win money - but why such and such decision in the first place? (beyond scope of this post)

I also keep hearing word “tax”?

I have not used that word anywhere in the proposal.

Everything is voluntary.

Your choice.

My choice is to follow UN Human Rights and Access to Justice.


#9

Well you can put it to vote but:

  • I think it’s unlikely to pass.
  • It could only be implemented in next Kleros release which can take around 1 year.

#10

Interesting scenario

https://tokens.kleros.io/token/0xa5eff5969faa02a390b455672486d8b46e2312fc22f30fb033b4207cc14a4701

It would be nice to have more clarity regarding the timeline, see this issue: https://github.com/kleros/tokens-on-trial/issues/26

Here is my attempt to explain

  • Logo submitted. It is on the list.
  • Now there is a request to remove it.
  • That request to remove it was challenged.
  • Jurors voted in favour of the challenger (logo should stay)
  • There were a few voting rounds, 3 jurors in the first, 7 jurors in the second, 15 jurors in the third, now there is crowdfunding for the fourth…
Appeal Cost: 2.015 ETH
Arbitration Fee Stake: 2.015 ETH
Total Required: 4.03 ETH
Amount Paid: 0 ETH
Amount Still Required: 4.03 ETH

As of Today (Monday 20th May 2019) it’s an equivalent of $1000.

Previous round

python3 monitor.py 69
15 jurors drawn on last round
Each juror has staked 3750.0 PNK and might earn 0.065 ETH on this case
Yes votes: 1 (6.67 %)
No votes : 10 (66.67 %)
Refused to arbitrate : 0 (0.00 %)
Pending votes: 4
Outcome: No
Absolute majority was reached
Majority jurors who voted No receive 1875 PNK and 0.087 ETH each
The case is still open, stay tuned for possible appeals
Jurors of this case have staked a total of 10432196 PNK on Kleros

Who will fund the appeal?

Previous round was 10-1

What if there is yet another around?

What it ETH whale has more than 51% of total ETH supply? (just kidding)

What are the monetary incentives of funding the appeal? (what is the risk reward ratio)

Join Kleros juror chat


#11

Very interesting case indeed. Not just the case itself but the policies which have been brought into question due to this case.

In this case, the question of who will fund the appeal is an open one but there are some incentives to do so if the original applicant believes there is a chance to over turn the current ruling. Either through new evidence or argument.

If so, the potential ETH winnings would be quite nice.


#12

Most recently voted round with 31 jurors

$ python3 monitor.py 69
31 jurors drawn on last round
Each juror has staked 3750.0 PNK and might earn 0.065 ETH on this case
Yes votes: 13 (41.94 %)
No votes : 18 (58.06 %)
Refused to arbitrate : 0 (0.00 %)
Eveyone voted.
Outcome: No
Absolute majority was reached
Majority jurors who voted No receive 2708 PNK and 0.092 ETH each
The case is still open, stay tuned for possible appeals
Jurors of this case have staked a total of 13522372 PNK on Kleros

Current round of crowdfunding (clock is ticking)

https://tokens.kleros.io/token/0xa5eff5969faa02a390b455672486d8b46e2312fc22f30fb033b4207cc14a4701

Kleroscan

http://kleroscan.com/dispute/69

Different representation of data

0xC2e02535829667715E089C7c4dec3BdCB5c484F5	No x7 3.5m PNK $40k
0x010afb8548a5D1a3a3D62f58CA0a5A1329974206	No x4 1.5m PNK $17k
0xF035561dcE033DeD865E15E69dB06cfFC88d9213	No x4 1.1m PNK $12k
0xBEB1FD865fEEa5006c74Bcb615Ebb00F1a05d469	No
0x9bfDA54A453F503d487f2F32554dE73f03E24853	No
0x81C69A185076558c2766c79aa96b555DF019C167	No

0x60DA07cFb273051AA9827dABFfcD298c305cd00D	Yes x4 12m PNK $138k (I guess not all staking)
0x5e7B645d5Bf86750CB1913122ba8A8545e2A9FD1	Yes x3 2.3m PNK $26k
0x733Fa895A5baaC4D774F96D48630E6277CA33351	Yes x2 2.1m PNK $24k
0x503c671DEdBCaD5470C58a80a52d9f8ce9A23886	Yes
0x85564BCF11414fBac4C1a2FB694C16574EE4e940	Yes
0xc30A1dfC9C42648210aA472bDc02Df98232e4820	Yes
0xA5aaCd9faAb88D345DEb55036257913202F40c05	Yes

It was 13-18 in votes but 6-7 in unique addresses, just like https://en.wikipedia.org/wiki/2000_United_States_presidential_election popular vote.

How deep the rabbit hole goes?

Will we see another round?

Will this experiment help us get meaningful conclusions?

(thinking about dedicating separate thread for #robotinagate but it is highly related to both parties paying for appeal)

Related issues


#13

Some additional metrics:
1st round: 3 yes (100%) vs 0 No (0%)
2nd round: 4 yes (57%) vs 3 No (43%)
3rd round: 1 yes (10%) vs 10 No (90%)
4th round: 13 yes (42%) vs 18 No (58%)


#14

Jurors ruled in favor of the other party, not the challenger

It’s just the fact that the winning party did not supply enough ETH to have the privilege of getting a fair trial.

As highlighted in the initial post, there could be any number of contributing factors, not always related to justice, truth, fairness:

Everything is on the blockchain, here is the main contract: https://etherscan.io/address/0xebcf3bca271b26ae4b162ba560e243055af0e679

3 transactions that funded the appeal:

4 transactions that funded previous round:

In the current shape there are incentives for group of Kleros power users to come together and discuss behind closed doors and evaluate if there is money on the table:

(personally I did stay away as I have enough excitement in my real life)

Access to justice shoudl not be the privilege of a few.

To get majority of the votes and lose because someone else outspent you… F••k that shit, I want to become 1% as well: https://en.wikipedia.org/wiki/Plutocracy